US Shares Recover From Weak ISM Data

US:

It was an interesting trading session for the Dow Jones which opened virtually flat but plunged over 200 points after the Institute for Supply Management reported a much lower than expected non-manufacturing PMI. Despite this, the market managed to recover and even closed positive for the day, up 0.47%. The weak data has added to investor concerns over economic growth in the US and the possibility of an upcoming recession. Nevertheless, the Atlanta Fed GDPnow tracker is currently forecasting third quarter GDP growth of 1.8%. The S&P 500 finished even stronger than the Dow Jones, climbing 0.80%.

AU:

The ASX 200 followed US stocks lower yesterday, closing the day down 2.21% in one of the worst days since August. This added to Wednesday's losses to produce a weekly loss so far of 3.3%. Later today, Australia will report its retail sales data which is forecast to have grown by a healthy 0.5% for the month of August. This would be a significant bounce from the prior month's figure of -0.1%.

Commodities and Currencies:

The Australian dollar has been buoyed by weakness in the US dollar, rising to $0.675 after being as low as $0.667 just two days ago. The US dollar index has come off its recent highs, having failed to break through 100, currently trading at 98.91. Gold prices have continued to bounce, rising another US$5 overnight to US$1,507. The AUD gold price is also back near highs at $2,233 per ounce.

The spot price of gold is currently up 0.4% at US$1,507 per ounce.

The AUD is currently up at US$0.675.

This article was written by William O'Loughlin – Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3633.