Good morning. Here’s what’s happening as Thursday begins.
First, the scoreboard (7:55am AEDT):
• Dow: 20780 +37 (+0.2%)
• S&P 500: 2363 -2 (-0.1%)
• SPI 200 Futures (March – delayed pricing): 5,758 -11 (-0.2%)
• AUD/USD: 0.7708 +0.0033 (+0.4%)
And the news.
1. Stocks: Australian shares could tread lower at open while focus will again be on another big earnings day. Wall Street fluctuated near all-time highs. The dollar fell and Treasuries advanced after the Fed minutes signalled rates could be raised “fairly soon,” though officials were confident they would not have to rush to tighten. Oil fell from its highest level in more than a week.
2. The Fed is getting ready: The Federal Reserve plans to raise interest rates “fairly soon” if the economy remains on track, according to minutes from the January/ February policy meeting released Wednesday. At that meeting, the Federal Open Markets Committee voted to leave its benchmark interest rate unchanged, just as markets had expected. The Fed would like to see more progress towards its target of 2% inflation and even more evidence that the labour market is improving. The staff’s assessment of the economy in Wednesday’s minutes included several references to “downside risks.” However, the meeting was held before data releases on jobs and inflation early in February that crushed estimates. US existing-home sales in January also rose more than expected to their highest level in nearly a decade
3. Data today: Australia reports capital expenditure data and it should give more clarity on non-mining investment. That in turn could play into the Reserve Bank of Australia’s interest rate calculations. Australia also has labour force data and average weekly earnings. Japan has leading economic index and foreign ownership of stocks and bonds. US has jobless claims, house price index and petroleum report.
4. Central bankers out there: Takahide Kiuchi, member of the Policy Board at the Bank of Japan speaks to business leaders. ECB board member Peter Praet speaks at a conference on “Brexit and the implications for financial services” and to round off the day Federal Reserve governor Jerome Powell discusses economic outlook and monetary policy.
5. Company reporting: Australia company earnings reporting dominates led by Qantas, Nine Entertainment, Crown, Iluka, Ardent Leisure, Perpetual and Platimum Asset. Barclays, BAE and British American Tobacco post earnings in the UK. Chesapeake Energy and Gap Inc. are among US firms reporting.
6. Aussie dollar in the death zone: The Australian dollar pushed higher overnight, thanks largely to a renewed bout of US dollar weakness following the release of the minutes of the US Federal Reserve’s February monetary policy minutes. After trading just below the 77 cent level for most of the overnight session, the currency pushed higher following the release of the Fed minutes, largely on the back of renewed US dollar weakness. That caution saw the Aussie pop higher as a consequence, taking the AUD/USD back above 77 cents, a region that it’s struggled to overcome in the past. We’ve nicknamed it the “death zone” given the Aussie has not been able to rally beyond this point for several months.
7. Iron ore slips: Iron ore spot markets fell modestly on Wednesday having hit a fresh multi-year high a session earlier, weighed down by a rare bout of weakness in Chinese futures. The spot price for benchmark 62% fines slipped 0.59% to $94.30 a tonne, according to Metal Bulletin, marking the first decline seen in five trading sessions. It has rallied 19.6% year to date. Lower grade ores underperformed during the session with the price for 58% tumbling 2.4% to $64.79 a tonne.
8. More changes at Deutsche Bank: Deutsche Bank is set to announce another shakeup in its senior ranks, according to people familiar with the matter. Dixit Joshi, who previously led the bank’s fixed-income sales force as head of the institutional client group for debt, is expected to move to the role of group treasurer, according to people familiar with the matter. In that role, he will have a part to play in developing and managing Deutsche Bank’s funding and capital strategy.
9. Unilever reviewing options: Get your thinking caps on. Anglo-Dutch consumer goods group Unilever said it was reviewing its options to drive shareholder value, just days after it swiftly rejected a surprise $143 billion takeover bid from Kraft Heinz. It expects the review to be completed by early April.
10. Citi favours Germany: Citigroup is considering Frankfurt as a new European base for its markets and trading arm as part of its Brexit plan. Citigroup has 370 people in Frankfurt and could shift 200 more to Germany’s financial centre from London to maintain access to the European single market after the UK leaves the European Union.
And for the bonus:
That’s the Credit Suisse chart showing the unstoppable 35-year “golden age” for bonds .