Good morning. Here’s what’s happening as Tuesday begins.
First, the scoreboard (7:50am AEDT):
• Dow: 20417 +148 (+0.7%)
• S&P 500: 2329 +13 (+0.6%)
• SPI 200 Futures (March): 5,730 +53 (+0.9%)
• AUD/USD: 0.7646 -0.0020 (-0.3%)
And the news.
1. Iron ore at highest since 2014: Iron ore spot markets continue to surge tracking the gravity-defying surge in Chinese futures. The benchmark price is now back above $90 for the first time in years. The price for benchmark 62% fines soared by 6.5% to $92.23 a tonne, at the highest level since August 20, 2014. The metal has gained 17% this year and has run up 141% from the record low of $38.30 a tonne struck in mid-December 2015
2. Australia, Asia open: It’s risk on in markets again and expect stocks in the region to climb. US equity benchmarks scaled another record high, the greenback climbed against its peers while bonds weakened. Investors jumped back into the reflation bandwagon after President Donald Trump last week indicated details on his pro-growth policies were imminent.
3. Data today: The biggest is China PPI and inflation data that will give a further glimpse of how the second-largest global economy is tracking. It also has implication for Australia, which counts the Asian nation as its largest trading partner. Australia has business confidence data. Japan releases industrial production data. US business optimism and PPI data will be released.
4. Fed speak: Federal Reserve Chair Janet Yellen will give her semiannual monetary policy testimony before the Senate Banking Committee. Other Fed speakers include Richmond Federal Reserve Bank President Jeffrey Lacker, Atlanta Federal Reserve Bank President Dennis Lockhart and Dallas Federal Reserve Bank President Robert Kaplan.
5. Company news: Treasury Wines, Challenger Australia and GPT Group release earnings. AllianceBernstein and Molson Coors post earnings
6. Aussie dollar hits bump: The Australian dollar came under renewed selling pressure in overnight trade, undermined by strength in the greenback that was fuelled by higher US bond yields. Along with speculation towards Trump’s tax policies, investors may be positioning for Janet Yellen’s semi-annual monetary testimony before the US Senate Banking Committee.
7. Australia’s energy policy’ impact on voter behaviour: Australia’s fight over energy policy is a perfect example of why voters are turning away from the major political parties.
8. IPO rebound: JPMorgan’s head of global equity capital markets, Liz Myers, can name a bunch of reasons 2017 could see a strong rebound in initial-public-offering activity around the world. Here is why.
9. China is the key to global reflation: Blackrock believes that China is key to the global reflation story playing out for longer. Its new China GPS economic indicator helps explain why. The GPS suggests that China’s composite PMI can climb further from current levels, with the momentum of this upswing showing no signs of fading yet. China reports consumer prices later in the day.
10. Ford has big plans for driverless technology: Ford will invest $1 billion over the next five years in Argo, a new driverless car company. The investment in Argo marks a big shift in Ford’s strategy, which has previously focused on in-house efforts to develop autonomous driving. And Elon Musk has a stunning prediction for what cars will be like 10 years from now.
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