October – the stock market’s friend, especially for banks

MELBOURNE, AUSTRALIA – SEPTEMBER 22: Generic ‘Big Four Banks’ – ANZ Bank, Commonwealth Bank, NAB Bank and Commonwealth Bank. General view of people walking past bank atms on 22 September, 2015 in Melbourne, Australia. (Photo by Paul Rovere/Fairfax Media) Generic banks”Everybody” knows October is the stock market crash month – except it’s not. This century, October has been the Australian market’s second-best performer.

And “everybody” knows Australian banks are on the nose, shunned by the world, a whiff of sulphur about them. But they’re due for a bounce-back and should be the market’s top performers for the next little while.

Or so has written Bell Potter’s Richard Coppleson in his Coppo Report. Coppleson doesn’t write as a chartist, a mere graph-paper person, but based on the fundamentals of dividend flows and the reporting season for three of the Big Four next month.

The Coppo Report reckons investors, with their love of fat dividends, buy the banks ahead of their profit reports and going ex-dividend next month.

“Over the last 20-odd years I have seen it happen again and again – the only exceptions come when there is a big ‘global macro’ event that is causing markets to be hit across the globe,” Coppleson writes.

With the September reporting season over and the stocks paying their dividends into investors’ accounts, those investors go hunting with that cash for where they can next harvest dividends. Enter National Australia Bank, ANZ Banking Group and Westpac reporting in November. This is not just the self-managed super fund “army”.

“There are some funds that follow the dividends around and provide big distributions,” Coppleson says. “I know these funds will be buying the banks for their income. So what we see is a ‘rotation’ out of the stocks that have already paid dividends into the next ones that do.”

September saw $16.4 billion in dividends paid, with another $7.3 billion rolling out this month – $23.7 billion looking for a home after the banks have been sold off but just ahead of three of them being likely to announce $8.2 billion in dividends.

Coppleson explains that the “45-day rule” means retail investors must hold shares “at risk” for at least 45 days to be eligible for franking. The ex-dividend dates for the Big Three are roughly November 6 for the ANZ and NAB and November 14 for Westpac.

“I have seen quant studies done over the years that prove this, whereby the banks ‘outperform’ in the four weeks prior and two weeks post going ex-dividend (I have been quoting this number for 15 years and it seems to occur most times),” he writes.

The Coppo Report has been well followed for its experienced reading of dividend flows. It ignores the psychology of the open season declared on banks by the government in its attempt to negate Labor’s royal commission policy. I suggest this, too, will pass.

For all the headlines and failures, the fact remains that our banks are big, profitable, sound businesses paying very handsome dividends. The bank levy is barely a scratch.

Looking away from the doom-and-gloom merchants chasing headlines, the consensus view is building that the “brave” Treasury and Reserve Bank forecasts for the Australian economy over the next year could well come true. The International Monetary Fund is the latest mob to fall in line with predicting stronger growth next year.

And given the hunk of the Australian economy that our big banks are inextricably part of, that’s a positive for their outlook after the headlines die down.

Disclosure: The Pascoe family super fund holds bank shares, in keeping with just about every other Australian superannuation fund.

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AFL trade live coverage: Lever joins Dees, what about Stringer?

AFL GF 2017 Richmond vs Adelaide.. Adelaides Jake Lever goes for the ball. 30th September 2017. Photo by Jason South 15 April 2017. AFL Round 4. Greater Western Sydney Giants v Port Adelaide Power at Manuka Oval/UNSW Canberra Oval. Giants’ Devon Smith in action against Port Adelaide on Saturday night.Photo: Sitthixay Ditthavong

Jack Watts of the Demons (left) and Jared Polec of the Power contest during the Round 18 AFL match between the Melbourne Demons and the Port Adelaide Power at MCG in Melbourne, Saturday, July 22, 2017. (AAP Image/Julian Smith) NO ARCHIVING, EDITORIAL USE ONLY

The Age, News, 30/09/2016, photo by Justin McManus. AFL Grand Final Parade. Western Bulldogs and Sydney in the Grand Final Parade through Melbourne. Tom Campbell and Jordan Roughhead.

MELBOURNE, AUSTRALIA – APRIL 14: Jake Stringer flies for a mark during round 4 AFL North Melbourne v Western Bulldogs at Etihad Stadium on April 14, 2017 in Melbourne, Australia. (Photo by Pat Scala/Fairfax Media)

Chris Mayne of the Magpies (left) and Stewart Crameri of the Bulldogs contest during the Round 1 AFL match between the Collingwood Magpies and Western Bulldogs at the MCG in Melbourne, Friday, March 24, 2017. (AAP Image/Julian Smith) NO ARCHIVING, EDITORIAL USE ONLY SINGLE USE PRINT & ONLINE $$.

15 April 2017. AFL Round 4. Greater Western Sydney Giants v Port Adelaide Power at Manuka Oval/UNSW Canberra Oval.Giants’ Matthew Kennedy tries to catch the Power’s Jarman Impey.Photo: Sitthixay Ditthavong

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9yo Pippa brings 128 NSW councils to heel

9yo Pippa brings 128 NSW councils to heel Pippa Kennard, 8, as won Science Technology Association’s Young Scientist Award for her project of mapping the most popular dog breeds for council areas across the state. Picture Chris Lane

Pippa Kennard, 8, as won Science Technology Association’s Young Scientist Award for her project of mapping the most popular dog breeds for council areas across the state. Here she is photographed with the map. Picture Chris Lane

Pippa Kennard, 8, as won Science Technology Association’s Young Scientist Award for her project of mapping the most popular dog breeds for council areas across the state. Here she is photographed with the map. Picture Chris Lane

TweetFacebookPippa phones 128 councils for science project.“We got a new puppy, a Border Collie cross Kelpie called Bounty and I just wanted to know what kind of dogs lived in our street,” Pippa said.

Then she started wondering what kind of dogs lived in other parts of NSW.

“Istarted ringing a few vets but decided there were too many,” Pippa said.

“Ithought we could go to the boss of the local government association and get a list but they told me I would have to ring each council in NSW.

“So Icontacted every council and asked them what was the most popular breed in the area. Some got back straight away with a list while others we had to contact again and again.

“I learned how to use Excel by watching YouTube and started entering the numbers under different dog breeds.

“Ithen consolidated these. If I had red cattle dogs and blue cattle dogs Iwould just call them cattle dogs.

“I got a map of NSW with each council and colour-coded each of the most popular breeds. Each council has its most popular dog on the map.

“If I had to say which was the most popular dog I would have to say Maltese,” she said.

The map shows a lot of green in the far west for Kelpies. The city areas are blue for Maltese.

Cattle dogs are the most popular breed in far northern NSW. Jack Russells are the most popular breed in southern NSW along the Victorian border.

Bull Terriers are the most popular on the South Coast and parts of the far north coast, while Labradors are the most popular in the Hay Shire, as well as further west along the Victorian border.

In Sydney the Maltese rules except out at Campbelltown and Blacktown where the Bull Terrier is the most popular breed.

The Poodle rules in the northern reaches of the Hills Shire and in the eastern suburbs while the Border Collie is the most popular along the Hawkesbury.

Pippa’s father, Richard, said she was tenacious in pursuing their information.

“She had to make her phone calls before or after school. Most days she would call two or three councils,” he said,

“She developed a confidence over time. She got good at how to ask to be transferred to different departments and could tell when she was being fobbed off.

“Some councils were very helpful and thought it was great to deal with an (then)eight-year-old girl and others weren’t interested in helping her.

“The main thing was that no-one had ever done this type of research before.

“Blue Mountains Council was very helpful. She asked them how they got their list of dog breeds together and then went to the other councils and told them how to do it.”

For her efforts, Pippa has won her Primary Scientific Investigation Category for Years 3 to 6 in the 2017 Young Scientists Award, a major project of the Science Teachers’ Association of NSW (STANSW).

The awards will be presented at the University of Wollongong on November 1.

Pippa said that when she grows up she would like to do something that involved talking.

“I liked the project because I could talk to people over the phone,” she said.

And the main lesson Pippa learnt from her research?

“Big projects take a long time and if you give up you don’t get anywhere,” she said.

The Leader

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Two in three Australians think religion does more harm than good

A bigger share of Australians than respondents in most other countries think religion does more harm than good in the world, new polling has revealed.

But we are also more comfortable with religious diversity than the international average.

The survey of more than 17,000 people across 23 countries by polling firm Ipsos found opinion is evenly divided about the influence that religion has in society.

It showed 49 per cent of respondents across all countries agreed with the statement “religion does more harm in the world than good”.

But the proportion of Australians agreeing with that statement was well above the international average at 63 per cent.

“Australia is one of the more negative countries regarding the perceived harm that religion does,” David Elliott from the Ipsos Social Research Institute said.

Only Belgium (68 per cent) had a higher proportion than Australia who agreed religion does more harm than good, while Germany and Spain were on par with Australia.

Even so, Australia had an above-average share who felt “completely comfortable” being around people with different religious beliefs to their own (84 per cent).

“While many of us do not have a positive view of religion, we are not translating this negativity to fear or dislike of individuals who have different beliefs to our own,” Mr Elliot said.

“In this regard, we are among the more tolerant nations globally. This tolerance may reflect our multi-cultural society or maybe driven by beliefs that negative impacts of religion are more an issue globally than locally.”

The 2016 census, released in July, found a record 29.6 per cent of Australians described themselves as having “no religion”, up from 22 per cent five years earlier, while a further 9.6 per cent did not state a religious affiliation.

Just over 60 per cent of the population identified with a religious faith on census night.

But the Ipsos Global @dvisor survey found only 27 per cent of Australians agreed with the statement “my religion defines me as a person”. That was well below the share of Americans agreeing with the statement (49 per cent) but higher than in Great Britain (23 per cent). Japan had the lowest share who felt religion defines them as a person (14 per cent).

International opinion was also split when it comes to the importance of religion to a nation’s “moral life”. Half of those across the 23 countries surveyed agreed with the statement “religious practices are an important factor in the moral life of my country’s citizens”. Only about four in 10 Australians concurred with that statement, a much smaller share than the two in three Americans who agreed.

One in six worldwide said that they “lose respect for people” after finding out that they are not religious. The share of Australian respondents sharing that sentiment was even smaller at one in eight.

In Australia, 25 per cent agreed that religious people make “better citizens”, a much lower share than in America (45 per cent) and Russia (44 per cent) and India (62 per cent). The international average agreeing that the religious make better citizens was 32 per cent.

Japan was least likely to think that religion does more harm than good in the world (26 per cent) followed by Russia and South Korea (both with 36 per cent).

The share in the United States who think religion does more harm than good in the world was also well below the international average at 39 per cent.

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Hunter’s population growth ‘terrifying’: Hilton Grugeon

Outspoken: Hilton Grugeon (right) answers a question during Wednesday night’s meeting at the East Maitland Bowling Club. Picture: Lachlan LeemingHunter development heavyweight Hilton Grugeon has called Maitland and Australia’s rate of population growth “terrifying”.

In a lengthy address at the Maitland business chamber’s Wednesday meeting, the larger-than-life developer weighed in on a number of local and state issues, including the city’s hospital saga and contamination at Williamtown.

Of Maitland’s continued growth, Mr Grugeon said roughly 50 people a week were moving to the region – with the pressure on for education, employment opportunitiesand services to keep up.

“Our current rate of growth, both in our area and our country, is bordering on terrifying,” he said.

“It’s not sustainable, but you’ve got to run with it and know where the exit door is when there’s a downturn.”

Related content:

Council approves controversial seniors housing development24-unit given tick for city’s eastHilton Grugeon hits back at ICACMr Grugeonalso said the area was not a “high priority” for government funding because of its status as a safe Labor seat.

“This area is not a high priority. The message is don’t ever be a safe seat. Neither party in government needs to give us anything,” he said when answering a question about the development of Maitland’s new hospital.

“Whether (the hospital) has a private component or not I don’t really care, as long as we get it.”

When asked if he’d ever consider purchasingland around the Williamtown contamination zone, Mr Grugeon said he’d “never willingly go near it”.

“I wouldn’t. With contamination of that nature, there’s never an outcome.”

The outspoken businessman had no shortage of one liners regarding a number of local issues.

He called the Maitland overpass near the railway station“half a solution by a government halfway through its term”.

When asked what brought him to Maitland from his native Newcastle in 1985, Mr Grugeon simply replied‘Land’.

His best swipes were saved for local and state governments, and he needed little encouragement to voice his opinion on them.

“Dealing with local government departments has a lot in common with preschool kindergarten children,” he quipped, before stating that “a government with balls would move parliament out of Sydney”.

“Thegovernment should be driving everything out of Sydney, starting with themselves,” he said, advocating decentralisation from the country’s capital city.

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Counting on your super to fund your retirement? Don’t.

BRISBANE, AUSTRALIA – JANUARY 07: generic, retirement, seniors , pension, old age, superannuation, nest egg on January 7, 2016 in Brisbane, Australia. (Photo by Glenn Hunt/Fairfax Media)Australians make up barely 0.3 per cent of the world’s population and yet hold $2.1 trillion in pension savings — the world’s fourth-largest such pool. Those assets are viewed as a measure of the country’s wealth and economic resilience, and seem to guarantee a high standard of living for Australians well into the future.

Other developed nations, aging even faster than Australia and subject to fraying safety nets, have held up the system as a world-class model to fund retirement. In fact, its future looks nowhere near so bright.

Australia’s superannuation scheme is a defined contribution pension plan funded by mandatory employer contributions (currently 9.5 per cent, scheduled to rise gradually to 12 per cent by 2025). Employees can supplement those savings and are encouraged to do so with tax breaks, pension fund earnings and generous benefits.

The gaudy size of the investment pool, however, masks serious vulnerabilities. First, the focus on assets ignores liabilities, especially Australia’s $1.8 trillion in household debt as well as total non-financial debt of around $3.5 trillion. It also overlooks the nation’s foreign debt, which has reached over 50 per cent of GDP — the result of the substantial capital imports needed to finance current account deficits that have persisted despite the recent commodity boom, strong terms of trade and record exports.

Second, the savings must stretch further than ever before, covering not just the income needs of retirees but their rapidly increasing healthcare costs. In the current low-income environment, investment earnings have shrunk to the point where they alone can’t cover expenses. That’s reducing the capital amount left to pass on as a legacy.

Third, the financial assets held in the system (shares, real estate, etc.) have to be converted into cash at current values when they’re redeemed, not at today’s inflated values. Those values are quite likely to decline, especially as a large cohort of Australians retires around the same time, driving up supply. Meanwhile, weak public finances mean that government funding for healthcare is likely to drop, forcing retirees to liquidate their investments faster and further suppressing values.

Fourth, the substantial size of these savings and the large annual inflow (more than $100 billion per year) into asset managers has artificially inflated values of domestic financial assets, given the modest size of Australia’s capital markets. As retirees increasingly draw down their savings, withdrawals may be greater than new inflows, reducing demand for these financial assets. This will be exacerbated by labour market changes, including lower job security and slower wage growth, which will reduce employee contributions into the scheme. Values, which depend on a growing pool of pension savings, will inevitably suffer.

Fifth, the system has accelerated the financialisation of the Australian economy. The large inflows and around 600,000 self-managed superannuation funds feed an industry of financial planners, asset managers, asset consultants, accountants, lawyers and custodians, as well as banks and stockbrokers. The more than $20 billion annually paid in fees and costs is of questionable economic value.

Finally, the system may well fail in its primary objective — that is, to minimise the need for the government to finance retirement. The typical accumulated balance at retirement age is around $200,000 for men and around $110,000 for women. The averages are artificially increased by a small pool of people with large balances, yet they’re still well below the $600,000 to $700,000 estimated to be necessary for homeowning and debt-free couples to finance their retirements, which may last 20 or more years.

The federal government will need to cover the shortfall for a large proportion of the population. In fact, it will lose doubly, having already suffered a loss of revenue from the generous tax breaks provided for the schemes (estimated at $30 billion annually and increasing), which have been used, especially by wealthy individuals, as a way to reduce their tax burden.

Future generations will also be affected adversely, having to finance payments to older generations through higher taxes or additional government debt, reduced wealth transfers from parents, and lower benefits than those awarded to their predecessors. Retirement out of reach for most

The whole system illustrates the fallacy of all retirement schemes, whether underwritten by governments, employers or by individuals themselves.

Such arrangements can only work in an environment of high incomes, strong investment returns and limited post-retirement life expectancy. Alternatively, they are sustainable where a rapidly rising population and workforce finance payments to a smaller group of post-retirement workers.

The real lesson of that experience may be that the idea of retirement is unrealisable for most workers, who will almost certainly have to work beyond their expected retirement dates if they want to sustain their lifestyles.

Governments have implicitly recognised this fact by abandoning mandatory retirement requirements, increasing the minimum retirement age, tightening eligibility criteria for benefits and reducing tax concessions for this form of saving.

If the world’s best pension system can’t succeed, we’re going to have to rethink retirement itself.

Satyajit Das is a former banker whose latest book is “A Banquet of Consequences.” He is also the author of “Extreme Money” and “Traders, Guns & Money.” He lives in Sydney.


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Ten new cockroach species uncovered in Tasmania

Ten new cockroach species uncovered in Tasmania DISCOVERY: QVMAG natural sciences collections officer Simon Fearn displays some of the 10 new cockroaches discovered in Tasmania since 2014. Picture: Phillip Biggs

DISCOVERY: QVMAG natural sciences collections officer Simon Fearn displays some of the 10 new cockroaches discovered in Tasmania since 2014. Picture: Phillip Biggs

TweetFacebook Discover the new cockroaches found in TasmaniaPictures: Phillip BiggsMost people squirm even atthe word cockroach, but did you know 10completely new species have been discovered in Tasmania since 2014.

Three of the new specieswere found inQVMAG natural sciences collections officer Simon Fearn’s backyard.

While some might be turning away in disgust at the thought of more cockroaches, Mr Fearn said the bad rap was not justified.

About five out of 5000 species of cockroaches were pests, contaminating food and spreading disease.


Tasmania has an ‘enormous’ snake population but low bite riskTasmanian-produced documentary Sixteen Legs showcases survivors“Most of these never come into your house, they just live in the bush and they play a vital role in breaking down nutrients and leaf litter, and pollinating plants,” Mr Fearn said.

“Just a handful of urban, introduced cockroaches are giving the whole group a bad name, whereas the majority are actually doing us a service.”

The new species have never been recognised by science before because no one ever noticed them, Mr Fearn said.

“They have yet to be formally described by a taxonomist.”

That was whennew species were given a scientific name after a taxonomist compared the species with all other specimens of species, which was a lengthy, scientific process.

It was a crucial point as it meant it would be established and recognised as a new species by the scientific community

“As you can imagine, there are not a lot of taxonomists in the world whospecialise in cockroaches.”

He estimated only two or three people in the world, and only one in Australia, who were able to scientifically describe cockroaches as someone needed to have a comprehensive knowledge of the entire species.

“We are constantly finding cockroaches in our field work that have yet to be named.”

It might take years for any of them to be named, Mr Fearn said.

He has also discovered several mainland cockroaches in Tasmania after they hitching a ride across Bass Strait.

As for the other crittershe has found in his quarter acre block, Mr Fearn said he has already documented 700 different species.

“At the rate tropical forests are being cleared around the world, there would be no question that there would be lots and lots of insects becoming extinct.”

The Examiner

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$2.5m centre for medical cannabis

Funding success: University of Newcastle clinical pharmacologist Professor Jennifer Martin will lead a national approach to medicinal cannabis research.Newcastle will leadthe national approach to research into medicinal cannabistreatments.

The University of Newcastle hasbeen granted $6 million from the National Health and Medical Research Council for various projects.

Of this money, $2.5 million was allocated to setting up a the Australian Centre for Cannabinoid Clinical and Research Excellence.

Professor Jennifer Martin said thenational infrastructure, governed fromNewcastle, could”rapidly translate the [cannabinoid] research into practice and into policy”.

Professor Martin, a clinical pharmacologist at UoN, will head-up the centre with Professor Nadia Solowij from the University of Wollongong.

The initiativeis a partnership between theUniversity of Newcastle,Hunter Medical Research Institute, Hunter-New England Health and teams fromseveral universities across Australia.

“It’s essentially saying we need a nationally integrated, collaborative framework, where as soon as we receive data from avariety of clinical trials with any of the cannabinoid productsfrom around Australia,or indeed new datafrom overseas, we can rapidly translate that intopolicy andpractice,” she said.

Professor Martin said a coordinated, national strategy was “really important” in turning research intopractice.It was particularlyimportant, she said, tohave a national, coordinatedresearch andpolicy strategy acrossthe states and commonwealth.

She expected, where evidence was shown, to see cannabinoid treatments “much moreavailable in Australia within the next five years”.

“We have had some community input from patients in the community that have access to cannabis and who have found that those products are helpful.

“We’ve had a lot of patients and family advocates that have really pushed that from the Hunter area.Now we need to get the supporting evidence to guide practice,” Professor Martin said.

“We’ve got a community advisory group… but we’ve also got a very strong clinical network of lead clinicians around Australiawith which to guide this centre.”

As part of the $6 million funding allocation, the university also received money for several other projects, mostly fellowships for researchers across a range of medical fields.

The Herald, Newcastle

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Geelong an unlikely new home for Watts: Cats

Geelong are playing down their chances of landing Melbourne’s Jack Watts, claiming a deal for him remains unlikely to be done.

While the Cats’ stance on Wednesday sent Watts a step closer to Port Adelaide, Fairfax Media understands Geelong could still be a player in the trade, depending on what compensation they receive for a departing Steven Motlop.

After Watts’ tour of the Cats’ facilities on Tuesday, which included meetings with coach Chris Scott and superstar Patrick Dangerfield, the race appeared to be down to two clubs.

While Geelong are still some hope of landing Watts, Port Adelaide are now firmly in the box seat.

Cats list manager Stephen Wells said at this stage they wouldn’t be able to compensate the Demons with a suitable trade.

“We’ve met with Jack as an information-gathering exercise and my conversations with both Jack, Paul Connors and also with the Melbourne Football Club, we’ve had to say at the moment that we’re unlikely to be able to do a deal for Jack to come to Geelong,” he told the league’s website.

“But that doesn’t mean we won’t see something change in that regard in the next week or so, but we haven’t offered Jack a contract at this stage.

“The main reason is because we don’t like to commit to a player as far as attracting them to Geelong unless we think we can get the deal done.

“We’ve had good conversations with Melbourne and Todd Viney has made it clear what they’d be expecting for Jack from us and at this stage we don’t think we’d be able to do that deal, so we’re not going to give Jack any false hope or waste anyone’s time.”

Geelong have picks 21 and 34 (after Brisbane received a compensation pick for Tom Rockliff) in the second round of the upcoming draft and at this stage remain unwilling to part with either of them in exchange for Watts.

That could change, however, if and when they receive a compensation pick for Motlop, which is likely to be either 22 or 35.

Fairfax Media understands that a decision about Watts’ preferred destination isn’t likely to be made public this week.

Sydney remain interested in the departing Demon, but the Swans would have to make room in their salary cap before entertaining a trade.

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[email protected]: Flat start in store for ASX

The information of stocks that lost in prices are displayed on an electronic board inside the Australian Securities Exchange, operated by ASX Ltd., in Sydney, Australia, on Friday, July 24, 2015. The Australian dollar slumped last week as a gauge of Chinese manufacturing unexpectedly contracted, aggravating the impact of declines in copper and iron ore prices. Photographer: Brendon Thorne/Bloomberg MARKETS. 7 JUNE 2011. AFR PIC BY PETER BRAIG. STOCK EXCHANGE, SYDNEY, STOCKS. GENERIC PIC. ASX. STOCKMARKET. MARKET.

Stock information is displayed on an electronic board inside the Australian Securities Exchange, operated by ASX Ltd., in Sydney, Australia, on Friday, July 24, 2015. The Australian dollar slumped last week as a gauge of Chinese manufacturing unexpectedly contracted, aggravating the impact of declines in copper and iron ore prices. Photographer: Brendon Thorne/Bloomberg

The local sharemarket is set to open flat as investors turned cautious on Wall Street.

FOMC minutes of the September FOMC meeting where the Fed was shown as still uncertain on the persistence of low-inflation factors. The probability of a Fed hike of the reference rate at the December meeting remained around 75% after the meeting though USD and UST bond yields remained lower while equities in the US remained positive. Beyond US equities, other major indices pushed to record levels with the AS51 closing at 2-month highs, and the Nikkei 225 closing at the highest level since 1996 in a further showing that global sentiment is synchronised and investors remain in a buying mood.

1. ASX: Futures are pointing to a two-point drop at the open as Wall Street inched higher. Yesterday, the AS51 rose to the highest close since August 17 thanks to a 10 of 11 subgroups moving higher, which was led by technology as a key contributor alongside banks. The chorus of equity buying has been a global event as implied volatility from major markets continue to sit at historic lows thanks in large part to faith that much of the global risk scene remains under control.

2. Australian dollar: The Australian Dollar remains near the lowest levels since July against the US Dollar and is working toward the lowest level against the EUR since summer of 2016. The weakness in the AUD is likely a delight to the RBA who has consciously decided to step out of the normalization conversation of other central banks. This move by the RBA has allowed the Aussie to weaken despite the globally synchronized acceleration of economic data. This weakness seems to have caught hedge funds off as the net-long positioning per the CFTC’s Commitment Of Traders report recently showed the largest bullish exposure anticipating AUD strength since 2013.

3. Japan: Japanese equities saw their highest close since 1996 as the Nikkei 225 Index, which has gained 9% so far on the year added another 0.3% on Wednesday to overcome the early 2015 high. The smooth run-up is expected to have a difficult time holding should a shocking outcome develop in the October 22 snap election cause Shinzo Abe to lose a majority holding of the lower-house. The move higher in equities has not been helped by the JPY much as USD/JPY, historically positively correlated to the Nikkei 225 remains more than 5% lower on the year.

4. Copper: The price of Copper traded to the highest level in 1-month and is close to the daily range of the extreme day of 2017 reached in early September when the price hit an intraday level of 6970 on the LME. The rally in copper has been a bright spot in base metals as other key base metals involved in steelmaking like Iron Ore have fallen below $60 in Dalian on demand concerns on the back of an environmental crackdown in China as Beijing has asked for an output curb through the seasonally weak winter heating season that runs through to March.

5. Wall Street: Wall Street was higher barely after FOMC Minutes showed Fed members do not see the weakness in inflation as only transitory. Looking ahead, this seems to communicate that hikes by the Fed beyond December are not set in stone. Recently, we’ve heard from two voting members of the Federal Reserve, Dallas’ Robert Kaplan and Chicago’s Evan’s who both said it is too early to decide on a December hike. Specifically, Kaplan noted that he is keeping an open mind on US rate hikes and continues to look for evidence that momentum is building in US cyclical forces to ensure as much as possible that the structural headwinds of tighter monetary policy are offset. Such comments from voting Fed members communicate that USD strength is not a given to continue despite the rally in September.

6. Economic Storm clouds continue to gather above the UK: The U.K.’s Office for Budget Responsibility published a report on Tuesday titled the “Forecast Evaluation Report,” explains the group’s downward revisions of predictions to upcoming UK economic data. The timing of this report is worth pointing out as it comes within a handful of weeks ahead of the November 2 meeting where the Bank of England has been expected to engage in raising rates which traders and investors have priced in with a 76% probability indicating they are convinced such a hike will happen. The larger catch is that such a hike would be done in the light of growing signs of economic weakness as opposed to strength.

7. Europe: Confidence in the European economy was not swayed by thanks to the acute concerns of Catalonian independence fading after the Catalan leader put independence on hold for now. Now the focus has shifted to the Oct. 26 ECB meeting where the Governing Council is set to agree upon the future of the bond-buying program for 2018. Derivatives markets have shown a prevalent demand for European assets and options with tenors greater than one month saw that highest premium paid for upside protection (EUR strength) since 2009. Equity market optimism has centered around the EuroStoxx 50 (SX5E) that appears set to test the 2015 highs near 3,800.

8. Market Watch:

SPI futures down 2 points to 5743

AUD/USD moved -0.0001 to 0.7777.

On Wallstreet: Dow Jones 0.07%, S&P 500 0.04%, Nasdaq 0.09%.

In New York: BHP -2.08%, Rio -1.39%.

In Europe: Stoxx 50 0.24%, FTSE 100 -0.06%, CAC 40 -0.02%, DAX 30 0.17%.

Spot Gold moved -0.1% to US$1286.75 an ounce.

Brent Crude moved 0.32% to US$56.79 a barrel.

US Crude Oil moved 0.61% to US$51.23 a barrel.

Iron Ore moved -1.25% to CNY434.5 a tonne.

Dalian Iron Ore moved -2.23% to US$59.65 a tonne.

LME Aluminium moved 0.95% to US$2163 a tonne.

LME Copper moved -0.01% to US$6760 a tonne.

10-Year Bond Yield: US 2.34%, Germany 0.46%, Australia 2.82%.

This column was produced in commercial partnership between Fairfax Media and IG

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