The market is down 40 points. Dow down 185 as St Louis Federal Reserve president James Bullard said the Fed could start to taper at the next FOMC on October 29-30 but also said they needed to be patient with inflation as low as it is. Another Fed Governor, George, said the Fed lost some credibility by not tapering.  Concerns that a protracted debt ceiling negotiation is ahead was highlighted by a Congress vote along party lines to fund the government if Obamacare is ‘defunded’. It is unlikely to pass in the Senate but highlights the budget impasse. 

ASX 200 Futures down 23 this morning.

The Dow Jones finished down 185. It was up 17 at best and down 189 at worst. Triple witching meant high volumes on the day.

The S&P 500 closed down 12 to 1710.

The Bank of India surprised markets by raising rates by 25 basis points suggesting other emerging markets may follow the same path.

The oil price fell 1.62%.

The Gold price fell $36.80. The US gold ETF fell 5.9%.

Blackberry fell 17% after cutting second quarter guidance and announcing a 40% cut in its workforce.

The US 10 year bond yield was down 2 basis points at 2.735%.

BHP was down 1.46% in the US on Friday. The stock closed in the US down 45c on the close here on Friday. RIO down 2.47% in the US.

The A$ fell to 93.72c, it is well down from the peak of 95.25c hit on the ‘no tapering’ decision last week.

European markets mostly down. Spain managed a 0.2% rise.

The Japanese market was down 0.16% on Friday. The Chinese market was closed.

The iron ore price was unchanged at $131.80 and was down $2.70 over the week. 

Metals down — Copper down 0.74%, Nickel down 2.56%.

US Economics on Friday: None of note.

STORIES

  • China — HSBC Flash PMI Index out at 11.45am today. (Consensus: 50.9)
  • Boart Longyear (BLY) — Has had its revolving-credit facility reduced by lenders to $US140 million from $US450 million. BLY has agreed to additional conditions which include new minimum liquidity requirements.   The company last month announced a half year loss and cut thousands more jobs as they undergo the worst conditions since the GFC.
  • Macquarie Group (MQG) — Investor presentation and outlook update — They say their 2014 financial year result is expected to be an improvement on the 2013 financial year, provided that market conditions are not worse than those experienced over the past 12 months. Second half results are expected to be stronger than those in the first half.
  • The NBN Board has resigned — All part of the Coalition’s election win. They have resigned to Malcolm Turnbull the Communications Minister who has been critical of the board for cost blowouts, delays and for contractors losing money. It is also part of the transition from a fibre-to-the-home to a fibre-to-the-node model for the NBN. Ziggy Switkowski is expected to be appointed Chairman.
  • Billabong (BBG) — CBA analysts say the company made the right decision in backing out of a $325 million Alamont Capital deal in favour of the Oaktree/Centrebridge Partners deal. They remain underweight on the stock and say there is significant risk to the company’s forecast cash flows.
  • Servcorp (SRV) — The AFR says the company has quietly rejected a takeover approach from a potential buyer. The company decided not to disclose the approach. Servcorp is seen as a bet on the global economy.
  • Warrnambool Cheese and Butter (WCB – 608c) — The company have told shareholders not to do anything about the bid from Bega Cheese (BGA) calling it opportunistic and fueling speculation that they have had other approaches from Chinese buyers and that there will be another bid for the company. Current price 606c.
  • Europe — The good news is that Angela Merkel flew home with a landslide election victory in German elections at the weekend retaining the status quo in Europe … the best outcome for markets.
  • Debt ceiling negotiations came into focus as Congress introduced a bill to fund the government if they got rid of Obamacare. The vote went on party lines suggesting there is an impasse ahead.
  • India unexpectedly increased its repurchase rate by 25bp to 7.5%.
  • The Abbott government is fast tracking some of Australia’s largest coal, iron ore and gas projects. It was discovered Labor left 50 major gas and energy projects in limbo after changing environment laws.
  • Clive Palmer won the seat of Fairfax on Saturday by just 36 votes although it may result in a recount.
  • Short selling — Reports say Mining services companies are being targeted by shorters as drilling contracts start to dwindle. Retail and media stocks are also on the hit list. Stocks that are specifically being targeted are Transfield (TSE), UGL Limited (UGL) and Boart Longyear (BLY). Bradken (BKN) and Monadelphous (MND) are also on the list. Fairfax Media (FXJ) is the most shorted company with 14% of stock held by shorters. Myer (MYR) is second with 13.4%.