Wall St treads water ahead of US election

US stocks ended slightly lower as investors exercised caution ahead of next week's presidential election.

Other big events on the cards in the US this week include a meeting of the Federal Reserve, which starts on Tuesday, and the latest unemployment figures out on Friday.

The Fed is not expected to raise US interest rates until next month.

Economic data showed that personal spending in the US rose by 0.5 per cent in September driven by spending on durable goods, the strongest rise in three months.

Personal income increased by 0.3 per cent over the month.

Confidence was also boosted by more company mergers.

Over the weekend, General Electric said it would merge its oil and gas division with drilling firm Baker Hughes to create a new company worth $US32 billion.

A merged firm would be the world's second largest oilfield services provider, but the deal is based on oil prices increasing to $US60 a barrel by 2019.

GE shares fell 0.4 per cent to $US29.10 and Baker Hughes lost 6.3 per cent to $US55.40.

Telco CenturyLink says it will buy rival Level 3 Communications for $US24 billion.

CenturyLink shares plunged 12.5 per cent to $US26.58. Level 3 shares rose 3.8 per cent to $US56.15.

Medical firm Zimmer Biomet Holdings fell 14 per cent to $US105.40 after releasing its quarterly report. It was the biggest decline in the S&P 500.

Bank of England's Carney to stay on until Brexit complete

Markets in Europe lost ground, with the FTSE 100 in London, the DAX in Germany and the CAC 40 in Paris all ending in the red.

Bank of England governor Mark Carney announced he would stay as the boss of the UK's central bank for an extra year until June 2019 to oversee Brexit.

But he declined to stay until 2021, the full eight-year term he could have served.

"I would be honoured to extend my time of service as governor for an additional year to the end of June 2019," Mr Carney wrote in a letter to UK finance minister Philip Hammond.

"By taking my term in office beyond the expected period of the Article 50 process (for Britain to leave the EU), this should help contribute to securing an orderly transition to the UK's new relationship with Europe."

The pound rose on the __news to $US1.22.

The Australian market is also looking like it will fall in line with global markets, with the ASX SPI 200 down 0.2 per cent in futures trade.

Oil prices fell on doubts that major oil producers will go through with a planned cut in production, although OPEC officials did approve a document outlining the group's long term strategy.

Spot gold fell on the higher greenback but came off its lows in late trade.

Australian dollar steadies ahead of RBA rates decision

The greenback rose as concern faded about the FBI probe into Democratic presidential contender Hilary Clinton's use of a private server for emails.

The Australian dollar is steady against the US currency, with most economists surveyed by Reuters predicting that the Reserve Bank will leave official interest rates on hold today.

Only five out of 60 economists have forecast a cut in rates.

ANZ's economists are among those who think the RBA will hold its horses.

"Despite the soft underbelly in last week's CPI report, the RBA is likely to make few changes to its statement as it continues to balance the weak underlying inflation pulse with rising financial stability concerns," they noted.

"The statement will likely be broadly consistent with last month's, reiterating that inflation is low and likely to remain so."

ANZ sees Friday's Statement on Monetary Policy as being of more interest.

Reserve Bank leaves interest rates on hold at 1.5pc, cites 'brisk' home price growth

The Reserve Bank has left interest rates on hold at a record low 1.5 per cent for the third straight month.

Rates last fell in August, when the bank elected to lower its cash rate target from 1.75 per cent to a fresh record low of 1.5 per cent.

The decision to stay on hold for November came as no surprise to economists, only five out of 60 of whom had expected rates to fall this month.

November has, in the past, been a favoured month for the RBA to move, with six consecutive Melbourne Cup Day rate changes between 2006 and 2011.

However, Cup Day rate moves appear to have gone out to long odds since, with the bank sitting pat for the fifth straight year.

It appears the housing market has returned to the forefront of the RBA's thinking, after the bank had played down price growth in Sydney and Melbourne repeatedly over recent months.

"Turnover in the housing market and growth in lending for housing have slowed over the past year," observed new RBA governor Philip Lowe in his post-meeting statement.

"The rate of increase in housing prices is also lower than it was a year ago, although prices in some markets have been rising briskly over the past few months."

The latest property price indices from CoreLogic, released this morning, showed home prices rose 0.5 per cent nationally over October and 7.5 per cent over the past year, with stronger gains in Sydney, Melbourne and Canberra.

Dr Lowe also had a warning for property investors that this price growth is unlikely to be sustained.

"Considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities," he noted, repeating consistent warnings from the RBA about the risk of a glut and price falls in some areas.

"Growth in rents is the slowest for some decades."

No more rate cuts?

Some analysts are interpreting the banks concluding statement - "the board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time" - as indicative that interest rates have bottomed.

"The Reserve Bank has clearly signalled that it is happy with the current level of the cash rate. It has also signalled that rate cuts are off the agenda for now," CommSec chief economist Craig James wrote in a note.

"Rates may have bottomed but that doesn't mean they are likely to rise within the next year."

It is a view that many analysts are being pushed towards, even those who had been predicting further rate cuts, such as Capital Economics.

"While the chances of further rate cuts have diminished, it is far too soon to conclude that the RBA's low underlying inflation problem has been solved," concluded its chief economist Paul Dales, who is still retaining his forecast of two more rate cuts.

"So if underlying inflation fails to rise as fast as the RBA hopes in the second half of next year, then the bank may yet cut rates to 1 per cent."

Westpac's chief economist Bill Evans is of the view that something will have to go pretty dramatically wrong with the Australian economy to prompt further rate cuts.

"The policy easing in 2016 has been in response to the inflation shock earlier in the year but now policy is likely to refocus on the real economy," he wrote in his analysis.

"Our current forecast of 3.3 per cent growth next year, supported by 1.6 per cent growth in employment, is unlikely to signal the need for lower rates.

"However, with inflation only likely to track along the bottom of the 2-3 per cent target band next year there will be scope to ease further should growth, and the labour market in particular, profoundly disappoint.

"That is not our forecast but we acknowledge that if rates are to move next year it will be down rather than up in 2017."

Financial markets seem to agree, with the Australian dollar heading about half a cent higher to 76.5 US cents.

South Australia's unemployment worries keep consumers from spending, Bank SA survey reveals

South Australian consumers continue to be worried about unemployment despite the latest Bank SA survey showing business confidence at its highest level in three years.

Bank SA said consumer confidence, which was measured on intentions to make a big purchase, has been recorded at its worst level in 20 years.

But the bank's State Monitor report, which was based on a phone survey of 300 consumers and 300 small business owners and managers, also showed business confidence was at its highest level in three years, with many business owners indicating a stronger intention to hire more people during the next three months.

The state's jobless rate remains the worst in the nation at 6.7 per cent in September.

Bank SA's managing director Nick Reade said consumers were worried about job security, with 37 per cent of those surveyed raising concerns about employment.

"[It's] probably one of the worst results in 20 years. In the survey, [consumers are holding off on] any large expenditure whether it be household goods or holidays or significant things like that," he said.

"They're worried about unemployment, therefore they're sitting on their hands in terms of investing."

He said the upbeat business market was not being felt by consumers and would not appear in the figures until they felt job opportunities appeared.

South Australian Treasurer Tom Koutsantonis said consumers should be buoyed by the survey's finding that there had been a 26 per cent jump in the number of business owners intending to hire more staff.

"There's a lot of negativity out and about in the community. That negativity is being led by opponents that want to talk down our economy, people that want to say South Australia's best years are behind it rather than ahead of it," Mr Koutsantonis said.

"But I think what business is showing is that our best years are ahead of us, conditions here are good."

He said the State Government's budget was in surplus, taxes had been cut and a state grant to create jobs was being taken up by small businesses.

Gloomy outlook leads to cuts in MPI, industrial GDP

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The Office of Industrial Economics (OIE) is revising down the country's manufacturing production index (MPI) and industrial GDP as the global economic outlook remains poor, according to the OIE's director-general Verasak Supprasert.

Mr Verasak said the OIE would announce its new forecasts this month, when the MPI is expected to be revised down from the previous forecast of 2%-3% and industrial GDP would be cut from the earlier forecast of 2.5%-3.5%.

"We need to revise down the indices because the economic prospects on the domestic and global fronts remain poor and that has rendered our earlier forecasts unrealistic," he said.

In the first nine months of this year, the country's MPI rose 0.06% to 108.32, slightly up from 108.26 in the same period of last year.

The rise is well below the forecast of 2%-3%.

For the third quarter alone, the MPI dropped 0.5% from 106.57 in the same period of last year to 106.07.

"Several sectors have seen a decline in production. In some industries the production capacity has dropped significantly," said Mr Verasak, adding that the production capacity of the automotive industry fell by 9.54% in September as carmakers revised down their production plans to match the tepid economy.

In the third quarter alone, the production capacity of the automotive sector declined by 2.5% from the same period of last year to 483,356 units due to weaker demand from both the domestic and overseas markets.

Meanwhile, the production capacity of the garment and textile industry dropped by 8.28% due to weakened demand from major export markets such as Europe, Japan and the Middle East, where the economies are also facing a slowdown.

However, the OIE expects the garment and electronics sectors to play a bigger role in supporting the MPI for the full year.

"The Industry Ministry expects strong demand for black garments will continue to rise from now until the first and the second quarters of next year. This would help compensate for the fall in exports in the garment sector," he said, referring to the black clothes that Thais will wear for several months to mourn the passing of His Majesty the King.

Likewise, demand in the electronics sector is also expected to rise in the last quarter of this year, especially in Asean, the US and Europe.

Ittichai Yotsi, director of the Bureau of Industrial Economic Research, said he expected rising demand in the neighbouring countries of Cambodia, Laos, Myanmar and Vietnam would help boost the MPI in the last quarter of the year.

He said the government is pinning hopes on the policy to promote the Eastern Economic Corridor (EEC). The project spanning three eastern provinces is intended to form a new engine to drive economic growth.

Mr Ittichai said the EEC would not only help support the overall economy but ensure the MPI and industrial GDP would not fall too low.

Warehouse supply to fall on export lag

Infrastructure and occupancy changing

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New supply of warehouse space is expected to fall as Thai exports experience a downturn from the continued global slowdown, according to property consultant Knight Frank Thailand.

Marcus Burtenshaw, executive director and head of the commercial agency, said some rental warehouse developers have postponed their expansion on the new logistics parks.

However, occupancy rate trends to be stable as net take-up increases at the same rate as the influx of new supply.

Rental rate is forecast to remain constant due to the balance of new supply and new demand, putting pressure on price competition and preventing a price rise.

In addition, progress on infrastructure, including the Laem Chabang port expansion, and the road and rail network development, is still a key positive factor that drives private investment and logistics space demand.

New supply needs to be constrained in areas of falling occupancy. Despite this, the underlying fundamentals that originally established each of the major strategic distribution locations are the same.

Demand for warehousing space continues to grow, as e-commerce begins to assume an even bigger role in the retail landscape in Thailand.

According to the company's research, total warehouse supply at the end of the first half of 2016 was 3.73 million square metres, an increase of 4.1% from the same period last year.

The latest peak in addition of supply was still from 2014 when the country's largest developer completed its three largest projects. Since then, the market saw relatively incremental increases in supply to cope with a slowing growth in demand.

For the remainder of 2016 to 2017, approximately 300,000 sq m of warehouse supply is expected to enter the market. Of this space, up to 250,000 sq m will be in Samut Prakan as the location offers a healthy level of demand and high levels of occupancy.

Total occupied space for the period was 2.9 million sq m or 78%, an 8.7% increase. Both supply and occupied space have been increasing at a similar rate, keeping an occupancy level relatively stable around 77.5 to 78.5%.

Warehouse occupancy rate as of the first half of 2016 was 78.0%, a small jump of 0.5% from last year's figure. The Eastern Seaboard saw the highest jump in occupancy whereas Greater Bangkok enjoyed the highest warehouse occupancy rate.

Pathum Thani and Ayutthaya still witnessed a continued reduction in occupancy rates since the great floods in 2011. The situation was made worse by the addition of new supply.

Warehouse rental rates remained relatively stagnant. As of the first half of 2016, the average warehouse rental rate was 156.9 baht per sq m per month.

Highest growth was seen in the Eastern Seaboard with a 0.5% increase from 148.9 baht to 149.6 per sq m per month.

Bangkok maintained its position as the most expensive area along with Pathum Thani, with the highest asking rent of 185 baht per sq m per month. Khon Kaen had the lowest asking price of 110 baht.

The current monthly rental rate was at maximum of 185 baht per sq m in Bangkok and Pathum Thani, followed by a maximum of 180 baht in Samut Prakan, Chonburi and Chachoengsao.

Warehouses command variable rents, depending on location, design, conditions and the age of the building. Modern logistics parks usually provide docks, raised floors, a floor loading capacity of up to 3 tonnes per sq m and ceiling heights of 10 m.