US markets lower, Aussie dollar flattens out, Tsipras back at the helm in Greece, ASX futures down 76 points

Traders in the US seemed to get a little annoyed with the rubbish job that the US Federal Reserve is doing in setting expectations for the market with regard to interest rates. No sooner had Yellen made her speech--construed by most as 'dovish' or biased toward an extension of easy monetary policy--than dissenting policy makers came out and made their views about when rates should rise known. This may have been a deliberate tactic by the Federal Reserve's committee to ready the market for a 2015 rate rise if Yellen's speech had inadvertently quashed that notion, or it could have just been plain dissension - whatever the reason, the market didn't like it and stocks sold off.

ASX futures responded pretty sharply, finishing down 76 points or 1.5% - this puts us back in the middle of the short-term 5,000-5,250 range, as indicated on today's first chart. The talk of a 2015 rate hike still being targeted by certain Fed officials did put some strength back into the US dollar index (today's last chart), which had the effect of halting the recovery of the Australian dollar (second chart).

Some of you may have read about the latest Greek election result, where Alexis Tsipras was given a second chance to lead Greece out of its troubles. His Syriza party's result was weaker than that secured in January this year, winning 145 seats vs. 149 during the previous election, and Syriza's coalition partner (ANEL) dropped 3 seats; however, it was still enough to rule with an expected 6-seat majority. I've read the victory speech and congratulatory comments from regional leaders, and it doesn't answer the question that all investors and traders will want to know,  "Will this government be more or less co-operative with 'Europe' than the previous?" So let's wait and see whether--given the circumstances--Tsipras feels as though his mandate to serve the far left is more or less significant than after the January election.

In Australian politics, I note that far-right conservative commentators were pretty welcoming of new PM Malcolm Turnbull's cabinet yesterday and this morning. Not sure what impact this might have on markets, but pro-business policy management is probably the safest ground that Turnbull can tread right now, with the more polarising policies being stuck in purgatory as he balances the weight of votes given to the Liberal coalition on what was sold at the time of the last election with more progressive policies, which will become known when campaigning really heats up next year.


Source: Rivkin, Saxo Bank

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This article was written by Scott Schuberg, CEO of Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3600.

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