Our market is going to start the week lower after Wall Street ended a positive week on a decidedly mixed note and world iron ore prices again fell on Friday night.
The Dow rose, but there were small losses for the S&P 500 and the Nasdaq.
As a result our market will be down 18 points according to share price futures dealings and it could be more given the 1.6% drop in the iron ore price.
That will continue the negative tone of the past week which saw the market lose around 1.8% in value, thanks to worries about China, the local property market and the health of local banks which have all seen big losses so far this month.
The Commonwealth Bank lost 3% last week to end on $77.81 and Westpac Banking Corporation fell 0.4% to $33.17.
The National Australia Bank lost 1% to end on $33.90, while ANZ shares, which entered a correction during the week dropped 2.8%, to finish the week on $31.92.
The Aussie dollar will start the week eying another dip, this time under the 89 USc level.
MSCI’s global share index dipped 0.16% on Friday, but still had its fifth weekly gain in the last six, while the main US indexes had their sixth positive week in the past seven.
In the US on Friday, the S&P 500 closed virtually flat at 2,010.41. The Dow added 14 points, or 0.1%, rising to 17,280.06, notching its 18th record close this year.
The Nasdaq Composite fell 13.64 points, or 0.3%, to 4,579.79.
Despite Friday’s weakness, US sharemarkets still ended the week higher with the S&P 500 up 1.3%.
Eurozone shares gained 0.9% and Japanese shares rose 2.6% (and are now up 0.2% for the year, and at a seven year high after a rise of 1.3% on Friday).
Chinese shares fell on soft data but only by 0.1% thanks to signs of monetary easing.
Gold and oil both has less than stellar weeks, again, while bond yields were mixed (the US 10 year bond is now yielding just over 2.57%).
In currencies, the $US continued its ascent which saw the Australian dollar remain under pressure.
It ended last week on 89.25 and will test the 89 USc level this week, especially if the news from the mid-month Chinese manufacturing update tomorrow is weak.
In fact the Dow notched its third straight record high in a row on Friday, but couldn’t take the S&P 500 or the Nasdaq with it.
The record float of Chinese Internet company Alibaba and the enthusiasm that generated didn’t spill over into the wider market, despite the best attempts of lots of brokers and business media to try and do just that.
Shares of Alibaba surged 38.1% higher to $US93.89 on its first day of trade after its IPO raised $25 billion, the largest in history on any market.
After trading, Fitch Ratings affirmed its Triple-A rating for the US, while Moody’s did the same for the UK AA rating. It also reaffirmed France’s lower rating of AA1, and its negative outlook.
Fitch said in its US rating statement that the country still has an “unparalleled financing flexibility as the issuer of the world’s pre-eminent reserve currency and benchmark fixed-income asset, and as home to the world’s deepest and most liquid capital markets”.
The rating firm said, “Renewed brinkmanship over the federal debt ceiling is possible in 2015, although its suspension in February 2014 was in a timely manner and in a way that avoided casting uncertainty over the full faith and credit of the U.S”.
The rating decision came too late for the bond market, which saw the yield on the 10 year bond end higher at 2.578%.
In Australia the ASX 200 lost 1.8% to 5433.1 points, while the All Ordinaries fell 1.7% to 5437.3 points, as investors sold the big four banks.
On Friday, the ASX 200 and the All Ords each rose 0.3% as the big four banks regained some support following the ‘no’ vote in Scotland the prospect of which had led to fears of a sell-off in currencies, shares and especially bank stocks.
