insto - Australian financial markets

Gone are the days of the talent shortage. Now there is a surplus of good candidates in the market, changing the balance of power – but the Government's boost to the bonds market means the search for good bankers has already re-started, reports Alexandra Cain.

US stocks swung into the red following a late broad-based sell-off.

The S&P500 fell 1.1 per cent despite upbeat comments from the Federal Reserve. Its statement, considered to be the most optimistic for some time, said that economic activity had picked up and interest rates will stay low for an extended period of time. The Fed also provided a timeline for exiting its mortgage bond purchase program.

While markets reacted positively to the Fed’s statement a fall in commodities prices, as oil dipped below US$70/barrel, sparked a late sell-off in stocks.

US stocks reached new year highs as economic data supported Fed chairman Ben Bernanke's declaration that the recession is likely to be over.

Speaking at a Q&A session, Bernanke said that the recession has ended from a technical point, helping the S&P to gain 0.31 per cent.

US bonds traded lower on the stronger economic data. The 10yr yield increased 3bps to 3.44 per cent as monthly retail sales rose 2.7 per cent, regional manufacturing improved and producer prices rebounded.

 Traders and investors in the Northern Hemisphere returned from their summer breaks to start a new month and promptly offloaded financial stocks.

US equities indices slid sharply, driven by a sell-off in banking shares. The S&P500 lost 2.2 per cent to close at 998.4 below the 1,000 mark for the first time since 19 August. The session is also the first time stocks have fallen for three consecutive days since June.

Another sharp fall in Chinese stocks drove US stocks lower on the last trading day of August.

The S&P500 stocks index fell 8 points or 0.81 per cent to 1,020 while the Dow declined a half a per cent to 9,497. The session was the last in August with the indices posting a monthly gain of about 3.5 per cent

US stocks had another strong session to close the week, boosted by positive housing data, a rising oil price and a brighter outlook from the Fed chairman.

The S&P500 index gained 1.9 per cent to close at a year high of 1,026. The move higher was driven primarily by housing sale stats which showed a 7.2 per cent monthly increase, the biggest rise in at least ten years and three times higher than analysts had forecast.

US stock markets strengthened at the close despite poor retail and jobs data dampening strong numbers from Walmart.

Citigroup, rated A+/A2 has priced a three year government guaranteed domestic bond offer at a margin of 43 basis points over swap/BBSW. This is at the tight end of the initial 43 to 47 basis points price guidance.

The deal volume is A$1.25 billion with a fixed rate tranche size of A$450 million carrying a 5.50 per cent coupon, and a floating rate tranche size of A$800 million.

Maturity date of the bonds is 20 August 2012. Settlement is 20 August 2009.

While Q2 09 might not rival the previous quarters for high octane drama, there was plenty of activity to keep credit markets on high alert, writes Jonathan Shapiro.

The broad recovery in credit markets gathered pace as investors courted riskier assets in search of opportunities. Equity markets had their best quarter in decades but credit and corporate bonds in particular were high on the shopping list with the period seeing some of the heaviest ever inflows into bond funds.

“The return of fund inflows into global credit, which facilitated unprecedented levels of corporate issuance, defined the second quarter in credit markets. Renewed confidence in equity markets was also a key factor in the quarter, allowing corporates to recapitalise and de-gear their balance sheets,” said Mark Reade, Citi’s Australian based credit strategist.

US stocks hit new heights on upbeat jobs numbers, more solid earnings and firmer Chinese markets.

The S&P500 gained 1.19 per cent while thel Dow Industrial closed up 0.92 per cent.