Lower oil prices unlikely to translate to bowser savings

Share Markets:

The Friday night session was mostly positive on the back of upward revisions to US economic growth data.

The Dow rose 1.0% and the S&P500 was up 0.9%. Both markets remain close to their all-time highs despite some recent volatility. European markets were mixed.

The Dax fell 0.2% but the French CAC40 index rose 0.9%. The FTSE100 rose 0.2%. Markets appear wary of higher US interest rates but are looking forward to stronger US economic growth.

In Europe, economic growth is slow and the ECB seems likely to add to its stimulus program.

Interest Rates: 

US bond yields rose marginally on the positive US GDP data but European markets were largely unchanged.

Foreign Exchange:

The US dollar index rose to a fresh four-year high. Since July, the index has risen 8% without any correction of significance.

The euro fell to a fresh two-year low while the AUD consolidated in the US 87 cent range.


The price of oil drifted lower on the back of stable supply out of Saudi Arabia. Copper lifted on the US GDP data while gold was little changed and still above US$1200 per ounce.

Australian export iron ore prices remain weak at around US$80 per tonne.


No significant data released on Friday.


The Conference Board leading index of activity in China rose 0.7% in August. This was weaker than the 1.2% rise seen in July and the 1.3% rise reported for June.

While positive, the rise in August does not suggest an acceleration in activity in the coming months and may point to further Chinese government stimulus measures later in 2014.


German consumer confidence slipped from 8.6 to 8.3 in the report labelled October but surveyed earlier this month.

That is its second monthly decline from the 8 year high of 8.9 in July-August. In contrast, French consumer confidence was steady at 86 in September; well down on the post GFC peak in 2010 at 94.


Japan's CPI rose 3.3% over the year to August. After stripping out the impact of the April increase in sales tax, inflation stands closer to 1.1%, which is less than the 2% target set by the Bank of Japan. It remains possible that

Japan will engage in a further round of monetary stimulus in order to achieve its target.

New Zealand:

No significant data released on Friday.

United Kingdom: 

UK house price inflation decelerated to 5.0% in the year to September, according to the Hometrack index, which peaked at annual growth of 6.1% in the year to May.

United States:

Annualised US GDP growth was revised upwards from 4.2% to 4.6% in the final Q2 report. There were no standout contributors to the stronger growth estimate; rather all components of the economy saw modest revisions which summed to the equal fastest quarterly growth rate since Q1 2006.

US consumer sentiment was unrevised at 84.6 in the final September outcome for the University of Michigan index.

The outlook component was revised a little lower, but was still 4.1 points higher than in August.

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