Good morning. Here’s what’s happening as Thursday gets underway on global markets.
First, the scoreboard (7:50am AEDT):
• Dow: 20609 +104 (+0.5%)
• S&P 500: 2349 +12 (+0.5%)
• SPI 200 Futures (March): 5,757 +31 (+0.5%)
• AUD/USD: 0.7716 +0.0054 (+0.7%)
And the news.
1. Inflation boost: Readings showing faster inflation in major economies and strong retail sales data in US spurred investor appetite and bets that the Fed could raise interest rates by as early as March. That fueled a selloff in Treasuries and lifted the dollar. US equities pushed to fresh all-time highs. Australian shares may tread water at open, catching a breath after touching a two-year high and amid weaker commodity prices.
2. Data today: Australia has jobs data with the unemployment rate expected to stay put at 5.8%. Japan releases data on overseas bond investment and foreigners holding of Japanese stocks. ECB releases account of latest policy meeting. US has jobless claims, housing starts, business outlook survey and money supply.
3. RBA speak: Luci Ellis, Assistant Governor at the Reserve Bank of Australia speaks at the Australasian Housing Researchers Conference in Melbourne.
4. Company news: Telstra, Insurance Australia Group, Origin Energy, Magellan Financial, Mirvac, STar ENetrtainment, South32 and Sydney Airport are among companies releasing earnings.
5. Australia reported to plan cuts to housing tax breaks: A crackdown on capital gains tax concessions is in the offing for property investors as the government tried to seize the mantle on housing affordability and provide revenue to help replace soon-to-be dumped budget cuts, the Australian Financial Review reports. The policy change, which would be unveiled in the May budget, comes after more than a year of savaging Labor’s proposal to halve the capital gains discount as an assault on badly needed investment.
6. Reassessing iron ore: Iron ore spot markets slipped for a second consecutive session on Wednesday, although they’re still up significantly for the week. The spot price for benchmark 62% fines fell 0.72% to $91.05 according to Metal Bulletin, taking its decline over the past two sessions to 1.28%. Despite the slide, it’s still up 5.11% for the week, leaving the year to date gain at 15.4%.
7. Australian dollar: The Australian dollar pushed above 77 US cents this morning, entering a “death zone” of sorts that it’s struggled to overcome in the past. With the rally overnight, the AUD/USD currently sits at the highest level since November 10 last year.
8. Buffet likes airlines: Warren Buffett’s Berkshire Hathaway made a significant commitment to the US airline industry by raising its stake in Delta and American while taking a new position in Southwest Airlines. The is a striking about-face for the legendary investor who, at his company’s 2013 annual meeting, called the airline industry a “death trap for investors.” And David Tepper’s Appaloosa went big on pharma stocks in the fourth quarter. Billionaire Chase Coleman’s Tiger Global made a nearly $US500 million bet on Fiat and Izzy Englander’s $US35 billion hedge fund made a big bet on Target.
9.One of Wall Street’s top equity analysts reveals his biggest fear for 2017 : The head of US equity strategy at JP Morgan on what keeps him up at night? His answer was loud and clear: An ongoing trend of US dollar strength.
10. China lending explodes: Domestic lending in China shot up in January in a sign the country’s credit boom is still accelerating. According to a report by Deutsche Bank, loans denominated in renminbi went up by RMB 2 trillion ($US297 billion) in January.