US Stocks Did Something Overnight That We Haven't Seen Since The GFC

Originally published by AxiTrader h2 Quick Recap/h2

The High Court ruled that the British parliament must get a vote before prime minister Teresa May can trigger the Article 50 to start the Brexit process. That saw sterling rush higher as notions of a soft, perhaps no, Brexit grew giving Sterling a strong bid tone.

Elsewhere stocks continue to slide in the US and it's hard to see a circuit breaker this side of the election result. Even a strong non-farm payrolls tonight could hurt stocks if it reinforces notions the Fed will raise rates in December.

Crude is looking for its own circuit breaker for current weakness as well and slipped further overnight.

• A lot of chat about the continued falls in the S&P 500 which has stretched now into its 6th days of losses. Apparently that’s a stretch that it hasn’t had since the dark days of the post-Lehman markets funk. But as yet there are still no signs of a circuit breaker until we get to the election so the stretch could continue.

• At the close of trade the S&P is down 0.44% at 2087 – still looking for 2080 – the Dow Jones Industrial Average is at 17,930 largely unchanged and the Nasdaq 100 is off 0.92%. Facebook Inc (NASDAQ:FB) has had a bad day.

• The polls appear to show that Hillary Clinton is back in the lead. But what we are really seeing is an election that appears too-close-to-call. The NYT/CBS poll has Clinton ahead by 3 points while others are neck and neck at 44 and the ABC News/Washington Post poll that got everyone talking earlier this week has Mrs Clinton just in the lead again.

• It makes for a really interesting trading day in our time zone Wednesday when the result are going to be release

• The High Court in Britain delivered it decision on Brexit saying that a vote of Parliament was needed for Britain trigger Article 50 to exit the EU. Some see it as a blow to Teresa May’s plans for a hard exit and realistically it does lower those chances from the UK’s side. But don’t forget there are two sides to this negotiations. Anyway forex traders liked it and GBP was bid in the aftermath running quickly up to 1.24.

• Also helping GBP was the Bank of England’s decision to leave rates on hold at 0.25% and signal that rates are now neutral and it has no plans to ease rates again this year.

• Some interesting data in the US services sector last night the ISM non-manufacturing PMI came in at a weaker than expected 54.8 from 57.1 and against the 56 expected while the Markit services printed the same number but that was up from last months 52.3. US factory orders printed up 0.3% for the month while jobless claims rose to 265,000 last week

• Egypt has devalued its currency – the pound – by more than 30% and then floated it overnight as the nation fights its economic woes.

• The local market was flat yesterday after early weakness. SPI traders are betting that we see further weakness today though with the December contract 20 points lower at 5173 this morning.

• That’s actually not a terrible result all things considered because the SPI traded down to 2144 in the past 24 hours which is just below the support zone at 5150 that I’ve been watching. I don’t have a buy signal yet and naturally the Aussie market's future is not its own given everything happening overseas but if this level can hold it will be a good sign for the market to end the week.

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• Today is a huge day for local markets though – not because of non-farms tonight – but because the RBA will release it’s quarterly statement on monetary policy. Yesterday the release of the Dun and Bradstreet business expectations survey, which hit a 17 year high, underscored why the RBA is comfortable walking away from any plans to ease further and signaling comfort with current economic and interest rate settings.

• Traders will be watching closely to see what the RBA says about growth, employment, the Australian dollar, and the outlook for housing and any implications for the banks.

• Speaking of which Shayne Elliott at the ANZ Banking Group (AX:ANZ) is shrinking his bank to a higher share price. ANZ made strong gains yesterday after making a big reduction in profit but adding the sale of its life business to the already announced wealth management sale. He’s also warned on mortgage lending as well. Investors like decisive action and a sense of control in what has been an awfully volatile year for sentiment and Elliott has been rewarded.