Fear over Syrian situation causes fall in equity markets

Share Markets:

Weak economic news on US durable goods orders saw the US equity markets treat 'bad' news as 'good' news and the market rose.

Later in the day fears over developments in Syria, and potential US involvement, saw the US equity market fall.

The Dow ended the day 0.4% lower. London enjoyed a bank holiday while in Germany, the Dax edged 0.2% higher.

Bonds:

The mild retreat from equities saw US treasury prices move higher (yields fell).

Ten year US bonds yields fell 3 basis points to 2.79%.

German long bonds also saw yields fall, moving down to 1.89%. Yesterday in Australia, 10 year government bond yields fell 4 basis points to 4.01% while 3 year bonds yields fell just 1 basis point to 2.78%.

Foreign Exchange:

The USD ended the night much as it began it but with some intra-day movement as data was released.

Overnight the AUD traded in a 70 basis point range against the USD but ended broadly where it began. After gains in recent days, the AUD lost ground against the NZD yesterday.

Commodities:

The price of oil fell on the back of the soft US durable goods orders.

Gold ended the day a touch higher with the rise coinciding with stronger US statements on affairs in Syria.

Copper futures fell on the US economic news but LME prices were unchanged due to the holiday in London.

Australia: 

No data released.

New Zealand:

The trade deficit was much wider than expected, at NZ$774m in July, from a deficit of NZ$374m in June. Exports fell 4.0%, led by a fall in dairy exports.

Imports surged 27.2% in July to their highest since October 2008, driven by aircraft imports.

United Kingdom:

The UK, except Scotland, enjoyed its Summer Bank holiday and no data was released.

United States:

US durable goods orders fell 7.3% in July, the steepest fall in almost two years, and weaker than most forecasts.

Volatile aircraft orders were a driving factor (down 52%) after a successful Paris air show for Boeing a few months back saw orders rise temporarily mid-year.

Auto orders rose a modest 0.5% but defence posted a 22% fall after a cumulative gain of 80% through the June quarter.

Core capital goods orders excluding defence and aircraft fell 3.3% in July, the first fall after four months of modest gains.

Even so, core orders are up 9.1% over the year compared to just a 0.6% rise for total orders. Less encouragingly, core capital goods shipments fell for a second month, suggesting some loss of momentum in business investment spending as the year has progressed.

US Dallas Fed factory index rose from 4.4 to 5.0 in August, indicating perceptions of improving business conditions, despite the production, shipments and orders components all recording sharply slower growth.

The jobs index rose to its highest in a year but hours worked fell to a near four year low.


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