US Stocks Shrug off Turkish Aggression in Syria

US:

All of the three major US indices rose last night, with the Nasdaq 100 leading the way with a 1.13% gain. The Dow Jones and S&P 500 rose 0.70% and 0.91% respectively. The minutes of the most recent Federal Open Market Committee meeting were released which showed that most members agreed with the 25 basis point cut while a couple of participants thought a 50 basis point cut was necessary. The main concerns of the committee are the trade war and the global economy and certain economic models are apparently showing increased chances of a US recession. US stocks also shrugged off news that Turkey is about to invade northern Syria. The ASX 200 is set to open higher this morning on the back of gains in the US.

Commodities and Currencies:

Gold prices barely reacted to the FOMC minutes but are nevertheless holding above US$1,500 per ounce for the time being. Gold has been broadly strong in recent days as a result of the Federal Reserve announcing that it may resume expanding its balance sheet. Although it is not calling this quantitative easing the result is the same either way. Oil prices are stuck near multi-month lows despite signs of an increasingly tight market. Production from OPEC in September was substantially lower than the prior month due to the attack on Saudi processing infrastructure while rig counts in the US continue to decline. Rig counts are now 20% down from the peak reached earlier in the year. Historically, rig counts have been a leading indicator for US oil production although production hasn't yet followed rig counts lower.

The spot price of gold is currently up 0.13% at US$1,506 per ounce.

The AUD is currently down 0.04% at US$0.6726.

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.