Good morning. Here’s what’s happening as Tuesday begins.
First, the scoreboard (8:05am AEDT):
• US markets were closed Monday
• SPI 200 Futures (March): 5,748 -9 (-0.2%)
• AUD/USD: 0.7683 +0.0021 (+0.3%)
And the news.
1. Stocks under pressure: Australian shares are poised to slip in early trade though focus will shift to another mammoth earnings day with the likes of BHP Billiton reporting. US markets were closed Monday for President’s Day holiday. European stocks pared gains to finish lower as a slump in Unilever shares after Kraft Heinz withdrew its takeover bid. That offset gains across most industries. The pound headed for biggest advance in more than two weeks against the dollar. Oil climbed for a third day and gold rose.
2. Data today: Australia has minutes of February 2017 Monetary Policy Meeting. Flash PMIs in Japan, US and Europe are due. UK releases public sector net borrowing.
3. Fed speak: Traders will be parsing three Federal Reserve speakers views on the pace of the US rate increase. The speakers are: Minneapolis Federal Reserve Bank President Neel Kashkari participates in a fireside chat on the economy and the role of the Federal Reserve, Philadelphia Federal Reserve Bank President Patrick Harker speaks on the economic outlook and San Francisco Federal Reserve Bank President John Williams speaks to students of Boise State University on “Getting to Know the Fed.”
4. Company news: BHP Billiton, Scentre, Seek Caltex, APA Group, Oil Search report earnings in Australia. Globally Macy’s, Walmart, Morningstar, Anglo American, HSBC are among companies releasing results.
5. Iron ore up and up: Spot iron ore prices hit another multi-year high on Monday. And with Chinese futures soaring again overnight, it suggests the bullish move may not be finished yet. According to Metal Bulletin, the spot price for benchmark 62% fines jumped by 2.18% to $92.34 a tonne, surpassing the previous multi-year peak of $92.23 a tonne struck on Monday last week. It now sits at the highest level since August 20, 2014.
6. Aussie dollar pushes up: The Australian dollar drifted higher overnight, benefiting from thin trading conditions as a result of the President’s Day holiday in the United States. But it’s still below the 77 cent level, a region that it’s struggled to overcome in recent months.
7. Go to the government for a full time job: With wages data due Wednesday, this one is quite timely. If you’re looking for a full-time work in Australia, consider a job in the public service. Full-time employment growth in the sector has outpaced all others since the start of 2013. Construction, along with “others” primarily linked to the services sector, have also added full-time workers over the past four years.
8. Chinese money going cold in London: That’s what investment bank Jefferies thinks. Investment in prime office space in London is taking a double hit from both Brexit and a slowdown in interest from Chinese and Hong Kong-based buyers. Jefferies analysts Mike Prew and Andrew Gill said in a note to clients that rental expectations for commercial real estate such as industrial, retail and office space are shrinking with a drop in demand following the Brexit vote in June. A depreciating yuan and curbs on capital outflows are making it more expensive for the Chinese to invest. That leads us to wonder how their Australian appetite is?
9. Oxford in Paris: Staying on with Brexit and its fallout. The Oxford University is in talks to open its first foreign campus to keep a foot in the European Union after Brexit.
10. Investors fleeing Europe: Investors have pulled €1.04 billion ($US1.1 billion) out of European investment grade credit funds over the last week, JPMorgan said in a note to clients on Monday, the largest weekly outflow on record. The exodus of investors from the European bond market is a result of “a non-trivial risk of hitting an electoral landmine,” JPMorgan says, with elections looming in the Netherlands and France.
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