Market Update - 5 November 2012

• Friday started with fresh PMI figures in the Euro Zone and they showed manufacturing activity continuing to struggle across the board with most countries hitting multi month lows. Meanwhile construction activity in the UK beat expectations as data there continues to outperform.

• In the US, non-farm payroll figures released showed the country added 171k jobs in October, more than the 125k survey, while the previous 2 releases were revised higher by a collective 84k. The participation rate grew 0.2% however, which sent the unemployment rate to 7.9% from 7.8% last month.

• Obama and Romney both jumped on the data to support their respective arguments but I think most would agree that people are already made up now, an average of polls have Obama very slightly ahead but crucially he is up in the key swing states of Ohio, Wisconsin and Iowa. Election results expected on Wednesday here.

• Market traded on fundamentals, kinda rare if you ask me in the recent market, but shortly after the positive datas with uncertainty in elections, risk aversion came back again. For now it seems Obama have a slight nudege ahead after how he handled hurricane Sandy and also with jobs data improving, the Americans might been keen to give him another terms.

• If Romney does win it might bring some investors confidence back to America and we could see the US Equities and also US Dollar stronger, but of course my view could easily be invalidated by market’s reaction and perception.

• USDMYR opened higher at 3.0600 as market awaits the presidential election, it’ll be interesting to see who’s the next US president when we wake up on Wednesday.

• Greece was the centre of attention in Europe again and will be until the parliament votes through the latest austerity package on Wednesday night, last week saw splintering in support for the government from several high profile coalition partners, markets will be on edge until that hurdle is cleared. PIMCO stuck the knife in, MD Andrew Bosomworth saying, "Greece is insolvent and it's going to default. It's just a question of how and when that is realized." Stocks in Greece fell 12% on the week, their biggest fall in 2.5yrs.

• Equities tried to rally on the payrolls but the e-mini fell 1.8% from its morning high, closing down 0.94% while the DOW lost 140pts or 1.05%. Stocks in Europe eked out gains, the Eurostoxx up 0.52%, led by Spain. Treasury yields fell 1bp to 1.715% after touching 1.78% early. The greenback was the star performer out there with it reaching its highest level since April vs the Yen, gold down 2.1% to $1678 and the Euro down a big figure. Commodities were softer as oil hit a 4 month low on a closing basis at $84.86, down 2.4%.

• The Feds Williams (mild voting dove) didn’t help matters by suggesting the Fiscal cliff would likely be dealt with by some austerity measures.

• Looking ahead it’s going to be busy this week with retail sales here today, RBA and The Cup tomorrow, G20 meetings today and tomorrow, the US election tomorrow night and Aussie unemployment, BOE & ECB all on Thursday