News & Analysis

Dow ends last two sessions higher but drops for the month; Oil drops 10% in OCT; Focus moves to BOE rate decision.

Nov 1, 2018 | Market Updates

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20:30 GBP Manufacturing PMI
23:00 GBP BOE Inflation Report – MPC Official Bank Rate Votes – Monetary Policy Summary
23:30 GBP BOE Gov Carney Speaks
01:00 USD ISM Manufacturing PMI

October comes to an end, stock indices finished the month higher but recorded solid losses overall. October historically can be a bad month for stocks. Overnight the Dow gained 241 pts but lost 5.1% for the month its largest monthly fall since January 2016. The S&P500 capped off the month with a 29 pts rally but lost 7.2% for the month it’s worst month since September 2011. The Nasdaq gained 144 but lost 9.2% its biggest monthly decline since 2008. General Motors shined overnight jumping by 9.1% 9.1% after the company reported quarterly results that easily topped expectations. The company said it sold fewer cars in the third quarter, but at a higher price, boosting its bottom line.

“The earnings story is flip-flopping between being very good and pretty good,” said Craig Birk, CIO at Personal Capital. “There’s also some optimism that a breakthrough on trade could happen.” “The drop this month came out of nowhere. Usually, that’s a sign of a correction and not a bear market,” he said. “Usually a bear market rolls more slowly.”

Oil lost 10.8% in October having its worst month since July 2016. Global growth worries hitting demand outlooks despite new sanctions on Iran. “In spite of the increase of crude oil inventories, crude futures prices are being supported by the inventory decline in refined products,” said Andrew Lipow, president of Lipow Oil Associates in Houston. USOUSD dropped 148 cents ending the month on a low closing at 64.88.

The USD finished the month mixed to risk, the AUD pulled back. While the EUR fell after failing to hold London session gains. The GBP gained adding 60 pips. The USD dropped to the Yen after two solid sessions higher. Risk mirrored the USD to the Yen as the GBP gained and the AUD and EUR lost ground. Gold continued to pullback losing a further $8 and closing lower for a third straight session.

This morning risk is higher to the USD. Gold is trading slightly higher. Focus moves to the Bank Of England tonight, prates are expected to remain on hold and detail conditions necessary for policy tightening. After its 2-day surge, the ASX200 is trading a further 20 pts higher continuing its recovery rally.

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Sources; CNBC – All times are AEDT

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