Local Markets Commentary

The Australian market faces negative US equities leads as the Reserve Bank of Australia (RBA) convenes its first policy meeting under a new governor.

Most key commodities also traded lower overnight. Gold extended Friday’s fall. Oil gained further. Copper turned and fell. Iron ore continued to wane, to where (Tianjin Port) prices were Thursday last week.

The $A ultimately ended overnight trade little changed, after climbing above ~US76.75c yesterday evening, but has gained this morning.

Locally today, the RBA convenes a policy meeting from which it will release a statement 2.30pm AEDST.

Monthly job advertisements and building approvals are due 11.30am, and Dun & Bradstreet is expected to report the results of its business expectations survey.

Post-trade, the RBA releases its monthly commodity price index.

Overseas Market Commentary

UK and US equities markets diverged overnight, UK equities bouncing from a Friday fall but major US indices opening, trading and settling lower.

In the UK, the British pound traded 1% lower against the $US on a ‘by 31 March’ government promise to commence European Union (EU) separation negotiations.

Chancellor Philip Hammond discarded a deficit target in favour of targeted spending to support the UK through possible ‘turbulence’ while sorting new EU and international relationships.

A September final manufacturing PMI of 55.4 pleased, representing a 2.1 gain on August, the best monthly improvement in 27 months. The lower £ boosted manufacturing and export sentiment even further in stocks trade.

Final September manufacturing PMI readings for the euro zone and Germany came in flat, at 52.6 and 54.3 respectively.

US data releases proved mixed.

The ISM’s September manufacturing index returned to expansion mode with a 2.1-point rise to 51.5.

A 51.5 final September Markit manufacturing PMI represented a 0.5-point slip.

August construction spending pulled back a further 0.7%, in a second consecutive monthly fall, to the least in eight months.

Overall vehicle sales declined 0.5%.

Tonight in the US, ISM’s New York activity index is

Overnight, major vehicle manufacturers in the US reported a notable variance in September year-on-year sales. Fiat Chrysler’s slid 9%, Ford’s dropped 8% year-on-year, Holden’s fell 6% but Toyota’s rose 5%.

Netherlands bank ING said it was targeting a €900M reduction in annual costs and needed to cut 7000 (13%) jobs, the majority across Belgium and the Netherlands.