• The market is down five points. The Dow Jones was down 178 at 16,196. The market fell heavily at the opening after disappointing manufacturing data from China, extending losses over the day (down 233 at one point) before a mild recovery at the end of the day.
  • The market fell initially after the Chinese HSBC Flash PMI fell to 49.6 from 50.5, compared to expectations of 50.3, along with reports of troubles in China’s shadow banking system. Domestic data was generally weaker than expected and earnings results were uninspiring.
  • The S&P fell 16 points to 1828.
  • Oil was up 0.68% at US$97.39.
  • Gold rose $23.60 to US$1262.20 per ounce.
  • The US$ was weaker against most major currencies. The Aussie dollar was weaker and is currently trading at US87.66c.
  • VIX Volatility index fell 0.08% to 12.86.
  • US treasury markets rose — the yield on the 10 year bond fell nine basis points to 2.779%.
  • European shares were weaker — the UK FTSE fell 0.78%, the German DAX fell 0.92% and the French CAC fell 1.02%.
  • European bonds were stronger — the yield on the Euro 10 year fell five basis points at 1.708%. The UK 10 year bond yield fell 8 basis points to 2.807%.
  • Base metal prices were weaker — led by zinc, down 2.18%, lead down 1.86% and copper which fell 1.34%.
  • Iron ore was up US$0.40 at US$123.90 a tonne.

STORIES

  • Dow down 176.
  • ASX Futures down 31. Barring any further new bad news, our market won’t suffer the full brunt of last night’s falls since there was already a reaction to the Chinese data in our market yesterday.
  • Bonds up in the US. Two year yield at a one month low. 10 year yield at a two month low (2.773%).
  • US dollar hit a low for this calendar year.
  • The HSBC Flash Chinese PMI number being blamed for the fall. It fell to below 50 yesterday  to 49.6 from 50.5 compared to expectations of 50.3. The reading below 50 denotes a contraction in in activity.
  • Also talk of issues in the Chinese banking system in the Financial Times and news of censures of Chinese accounting firms.
  • US data was generally weaker. US weekly jobless claims were in line with expectations. The Markit PMI showed manufacturing slowed, falling to 53.7 from 55.0, the leading index rose by a lower-than-expected 0.1% and existing home sales fell to 4.87 million, lower than the previous month and expectations. But US weekly job claims stayed at 6 weeks lows of 326,000.
  • The Aussie dollar fell over on the PMI numbers shrugging off this week’s highest than expected inflation number. A$ now at the lowest since July 2010.
  • The Chinese PMI number caused an almost 60 point fall in our market yesterday. BHP and RIO lost 60c each (1.5% and 1%).
  • Good European PMI numbers overnight — a 31 month high led by Germany. Euro up. The Eurozone PMI rose to 53.9 from 52.7. At a country level, the French number rose to 48.5 from 47.3 and in Germany, it rose to 55.9 from 55.0 — the fastest growth in two years.
  • Gold jumped up $27.
  • Quiet day today. Resmed (RMD) have second quarter earnings release (Profit warning). The Reject Shop (TRS) also has a half-yearly trading update. Quarterly production reports from Gindalbie Metals (GBG) and Beadell Resources (BDR).
  • No economic data here or overseas tonight.
  • Corporate earnings in the US tonight — Bristol-Myers Squibb, Procter and Gamble, Honeywell, Kansas City Southern, Kimberly-Clark, Stanley Black & Decker, State Street, Xerox.
  • Markets closed Monday for Australia Day holiday.
  • Aurizon Holdings (AZJ) – Has transported record volumes of coal from Australian mines to coastal ports for export last quarter. They transported 56.2 million metric tons of coal up 11%. Resources companies seem to be increasing coal production despite weakness in commodity prices. 2Q Iron-Ore Volumes +30% On-Year at 7.8M Tons.