Oil prices up as Saudis move

Share Markets: 

US share markets fell, following the lead from Europe where weakness in banking stocks was pronounced.

Speculation has arisen that Germany's largest lender; Deutsche Bank AG might need to raise capital.

The Dow, the S&P500 and the Nasdaq were all down 0.9%. In Europe, the FTSE100 fell 1.3% and the Dax was down 2.2%.

Interest Rates: 

As share prices fell, bond prices were bid up. US 10 year government bond yields fell 3 basis points to 1.58% with similar falls in Germany, Japan and Australia.

Some unwinding of pre-FOMC meeting positions was also thought to sit behind the decline in long bond yields.

There was little movement at the short end of the yield curve with US 3 month treasury yields up just 1 basis point to 0.18% and a similar move in Australia's 90 day bank bill yields to 1.74%.

Foreign Exchange: 

The yen was firmer overnight as investors looked towards the US presidential debate and as concerns over Europe's banking sector rose. The US dollar index was softer and the AUD pushed higher into the US 76 cent range.

Commodities: 

Oil staged a minor rally on hopes of a Saudi led accord while was gold was essentially unchanged.

Copper was marginally weaker and the price of iron ore remained steady at $US56.77 per tonne.

Australia: 

There was no local economic data to report.

Euro zone: 

German business conditions improved in September according to the latest IFO report. The business climate index rose from 106.3 in August to 109.5.

Japan:

The leading index of economic activity held at 100.0 for the final reading for July. This is down from a reading of 100.6 in July.

New Zealand:

The trade deficit widened sharply to NZ$1.27bn in August, from a deficit of NZ$0.35bn in July. Exports fell to a three-year low of NZ$3.39bn in August; dairy exports fell 12.9% for the month.

Meanwhile imports rose to a nine-month high of NZ$4.65bn.

United States: 

New home sales eased back 7.6% in August following a stellar 13.8% (revised) rise in July.

New home sales have picked up steadily since early 2011 but remain well down on the levels seen in 2006 prior to the GFC.

The Dallas Fed Manufacturing index improved from -6.2 in August to -3.7 in September.

The market had been expecting an improvement to -2.5.  The region has been impacted by weakness in the energy sector.

The first US presidential debate begins at 11.00am AEST this morning.



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