With the trading week shortened by the Thanksgiving public holiday, we have a mass of economic releases crammed into Tuesday and Wednesday, but it was geo-political headlines that were moving the markets early on Tuesday.
By Peter Martin
Tuesday, November 24, 2015
US stock index futures fell sharply before the opening bell on Wall Street, after news broke that Turkish F-16s had shot down a Russian Su-24 fighter jet on the Turkish/Syria border. The plane crashed in Syrian territory; Russian officials maintain it remained exclusively within Syria for the duration of its flight, but the Turkish military claimed the plane had been warned repeatedly that it was violating Turkish airspace and the action was within its rules of engagement. Russia and NATO, of which Turkey is a member, have been conducting separate airstrikes in the same airspace over Syria since the end of September. NATO ambassadors are due to meet later today in Brussels to discuss the incident.
Dow Jones futures were trading down more than 100 points prior to the opening in New York, while the RSA, Russia’s leading stock index, fell more than 2% and crude oil prices jumped. US crude oil futures rose 2.9% to $43.00 a barrel. The losses shown by index futures were reflected for the most once the stock market opened and shortly after the opening bell the Dow Jones was down 90 points or 0.51% at 17,702, while the S&P 500 Index shed 0.40% to stand at 2078.2.
A number of economic indicators were released pre-market on Tuesday morning. The Bureau of Economic Analysis announced its second estimate for third-quarter US GDP, revising growth to 2.1% from the 1.5% that was originally reported as part of the advance estimate. The larger headline growth figure is a little misleading, skewed upward by higher inventories —which is not really a healthy sign for the economy — while consumer spending was tweaked downward. Those higher inventories could well act as a drag in the fourth quarter if businesses decide to wind them down a little. The GDP price index was amended up a touch to +1.3% from +1.2%, which doesn’t alter the complexion of the inflation outlook significantly.
The Case-Shiller 20-city home price index jumped a better-than-expected 0.6% in September (seasonally-adjusted), which pushes the annual change in the index higher to +5.5%, which was up 5.1% in August. The gains were broad, with no declines seen in any of the 20 cities measured. On an annual basis, San Francisco leads the way with an impressive 11.3% advance. The healthy prices shown in this report should help to attract more sellers to the market, which would help to give the housing sector a much-needed shot in the arm.
Rounding out the economic calendar for Tuesday we have the Conference Board’s consumer confidence index and the Richmond Fed Manufacturing Index, both for November, and on Wednesday we have a long list of releases including last week’s jobless claims, October’s consumer spending and PCE price index, November’s flash services PMI reading and the final November reading for the University of Michigan’s index of consumer sentiment.
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