Markets Overnight: Merkel Wins, Stocks Mixed, Commodities Red

by Enis September 23, 2013 4:36 am • Commentary

The headliner of the weekend was Angela Merkel and the CDU’s convincing victory in the German elections.  The result was widely expected.

  1. Merkel and CDU Win Election, But Fall Short of Majority – Though the CDU garnered an impressive 42% of the vote, Merkel will now be forced to negotiate an alliance with another party, most likely either the Social Democrats or the Greens.  Regardless, the convincing victory means more of the same from Germany in terms of the Eurozone policies.  The German DAX index opened slightly green, and has traded on both sides of flat ever since.  The Euro also opened slightly higher, but is now red.
  2. Chinese Manufacturing PMI Beats Expectations – The China Sept HSBC Flash Manufacturing PMI came in at 51.2, vs. the consensus estimate of 50.9.  Chinese stocks were the best performers in Asia, with the Shanghai Composite closing up 1.3%.  However, the Nikkei and the Hang Seng closed in the red.  India was down 2%, and the Indian rupee fell back below its 50 day moving average vs. the dollar.
  3. European Manufacturing Weaker, Services Stronger Than Expected – Both France and Germany reported weaker-than-expected manufacturing data (composite Eurozone release of 51.1 vs. 51.7 expected), but better-than-expected services data (composite Eurozone release of 52.1 vs. 51.0 expected).  Every major European market is essentially flat.  Eurozone equity indices all trading very close to unchanged.
  4. Commodities Uniformly Red – Even with the better-than-expected Chinese data, commodities sold off overnight.  Copper was down around 1%, and gold and oil were both down around 0.5%.  The WTI Crude Oil front-month contract is trading convincingly below its 50 day moving average for the first time since June.
  5. Focus on Washington and Government Shutdown Deadline of Sept 30th – The House is not in session until later in the week.  The Senate debates the House bill from last week, and is likely to send it back to the Senate with revisions that continue funding for Obamacare.  The deadline for an agreement to avert a shutdown is a week from today.