Expect an uncertain start to trading on Asian and Australian stock markets today after the US ended on a very weak note thanks to a mixed up jobs report for September that was as expected clouded by hurricanes Irma and especially Harvey.
On top of that there’s a new hurricane – Nate – sweeping into the Louisiana region and it it makes landfall it could rush into parts of the south and west of the US missed by Irma and Harvey.
It had already shutdown most of US oil and gas production from the Gulf Of Mexico until further notice.
But this will be a one off and won’t change investor optimism that the global economy is looking stronger and stronger at a time when inflation and central banks remain relatively benign.
On top of this we have the continuing hope by US investors that Donald Trump will get his tax changes passed by the US Congress – something that could mean a boost for uS company profits. But that is no means certain and could take months to happen, if at all.
The development of Hurricane Nate is the latest immediate threat to investors – especially in energy and insurance companies.
North Korea remains a big threat, with no sign of any rational solution, and Trump is reported to be on the verge of abandoning the Iranian nuclear deal a move that could see America faced with a second rogue nuclear state.
The US third quarter earnings season is about to start (see separate story) and there could be more surprises on the downside thanks to those hurricanes.
Eurozone shares fell 0.3% on Friday and the US S&P 500 lost 0.1% as North Korean tensions flared up again. As a result of these soft global leads ASX 200 futures fell 6 points or 0.1% pointing to a softish start to trade this morning.
That will be a very different start to Friday’s big rise – 58 points, or 1% to and at 5,710. For the week, the ASX was up 0.5%. The All Ordinaries index climbed 57 points and also added 1% cent to finish the week at 5,777.
Markets elsewhere in Asia are looking at similar starts while investors will be keeping an eye on the Chinese markets which re-open today after last week’s long holiday.
Watch for the Australian market to not move either way until local investors see what happens in Chinese commodity markets – especially iron ore. That will become clearer in the mid-afternoon.
For last week as a whole US shares rose 1.2%, Eurozone shares rose 0.2% and Japanese shares were up 1.6%.
Bond yields were mixed: up in the US, flat in Japan and Germany but up in Spain and Italy after the Catalan mess and down in Australia (to 2.81%).
While metal prices rose, oil and gold prices fell. The $A also fell back below 78 US cents as the $US continued to recover. The Aussie will start around 77.72 – the lowest it has been since July.
On Wall Street, the Dow and S&P 500 finished the week in negative territory on Friday, but the Nasdaq Composite managed to mark a fresh record.
The Dow closed little changed at 22,773, the S&P 500 index finished slightly lower, off 0.1%, ending an eight-day winning streak to close at 2,549. The S&P 500 was down 0.1% which also halted its streak of record closes, the longest in 20 years, at six in a row.
The Nasdaq saw a gain of less than 0.1%, but enough to post its 55th all-time high of 2017.
US non-farm payrolls shrank by 33,000 in September, undercut by hurricanes Harvey and Irma. The unemployment rate, however, fell to 4.2% from 4.4%, while wages increased by 0.5% to an average of $US26.55 an hour, and were up 2.9% from a year earlier, after a 2.7% rise in the year to August.
Programmed Maintenance Services is expected to disappear as a listed company on Wednesday after an expected sign off by the Federal Court after shareholders on Friday approved the $773 million takeover by Japanese services group, Persol.
Programmed said 98.5% of votes cast at Friday’s meeting in Perth were in favour of the takeover. That means the delisting will happen midweek once the Federal Court approves the scheme of arrangement results.
Programmed managing director Chris Sutherland will continue to run the company.
Persol offered shareholders $3.02 per share in cash, including a fully franked special dividend of 16 cents a share. Its offer of $3.02 per share was a 68% premium to Programmed’s July 13 closing share price of $1.80. No wonder shareholders grabbed the money and ran.
