Good morning and happy Friday. Here’s what you need to know today.
First, the scoreboard (8:15am):
Dow: 21,003 -113 -0.5%
S&P 500: 2,379 -17 -0.7%
SPI 200 Futures (March – delayed pricing): 5,739 +4 (+0.07%)
AUD/USD: 0.7572 -0.0104 -1.35%
1. Aussie dollar tanks: The Australian currency’s recent resilience broke overnight as it dropped below US76 cents, losing more than 1.3% against the greenback. The drop follows comments from Federal Reserve Governor Lael Brainard, who stated that an interest rate increase would likely be sooner rather than later. More data supporting the Fed’s recent stance came out overnight, as US jobless claims dropped to a 44 year-low of 223,000 for the week ended February 25, under analyst’s expectations of 243,000. Brainard’s comments have previously been more skeptical about the prospects of global growth, but this week she joined other members of the Fed in touting the prospects of a March rate hike following strong economic data in February. The US dollar is up by 0.4% against a basket of currencies.
2. All eyes on Yellen: Federal Reserve Chair Janet Yellen is due to speak in Chicago on Friday, and markets will be watching closely to see if she continues the hawkish sentiments offered by her colleagues this week. Yellen usually puts a strong focus on the labour market when discussing potential rate increases. In addition to a stronger US dollar, US bond yields also increased over night due to the hype around a Fed move. 10-year US treasuries climbed by 1.14 percentage points to 2.49%. Analysts now place the chances of a rate increase at over 80%, up from about 40% just one week ago. Not all analysts agree with the Fed’s bullish sentiments, citing doubts about the detail of the Trump administration’s growth plans and excessive market optimism around fiscal stimulus.
3. Iron ore set to reverse: Iron ore was up 1.2% overnight to $92.36, but the futures market points to a reversal of those gains. The May 2017 iron ore future on the Dalian Commodities Exchange slumped by 4.15% to 669.5 yuan, leaving it at the lowest levels since early February this year. It traded as high as 741.5 yuan less than two weeks ago. Underpinned by higher steel prices, the benchmark iron ore spot price has now risen 17.1% in 2017, extending its gain from the all-time low of $38.30 a tonne struck in mid-December 2015 to 141%.
4. Oil drops on excess supply: Oil prices dropped by more than 2% overnight to around $52 on supply data out of the US, which reported excess inventory of 520.2 million barrels, the highest weekly amount for over 30 years. While the US stockpile is increasing, OPEC remains committed to its efforts in cutting production to end the supply glut.
5. Stocks to tread water: ASX 200 futures point to a little changed or slightly lower opening after a rally on Thursday. US stocks recorded their worst day since January as investors paused to assess whether the recent rally has run too fast and too far.
6. OECD warns on Australia housing again: Macrofinancial indicators underline the threat from the housing market, with house prices and related indicators pointing to continued vulnerability, the Organisation for Economic Co-operation and Development said in its Australia economic survey. The market may not ease gently but develop into a rout on prices and demand with significant macroeconomic implications.
7. Data today: Australia releases the PMI Services Index for February. PMI services data for the US and UK also comes out today.
8. Bitcoin worth its weight in gold: The price of one Bitcoin climbed above the price of one ounce of gold for the first time ever on Thursday. Bitcoin increased by 1.8% $US1,248.10 in overnight, while gold dipped 0.6% to $US1,242.15.
9. Snap soars on debut: After a successful investor roadshow with share offers heavily oversubscribed, Snap Inc. got off to a roaring start on it’s stock market debut overnight. Shares of Snapchat’s parent company opened for trading at $US24, up about 41% from the IPO price of $US17 apiece. At the opening price, Snap had a valuation of about $US33 billion. Snap said its biggest revenue opportunity is the growing budget for worldwide mobile advertising, which could reach $US196 billion by 2020 from $US66 billion now. The company’s success will be dependent on its ability to drive user engagement among its younger consumer base.
10. Cobalt prices are up: The price for Cobalt has surged to $US50,750 a tonne. Look:
The commodity is a key component in batteries, but there are some looming supply questions that my squeeze its availability. More here.
Here’s the end of week bonus:
NASA released incredible new animations of a star that exploded with the energy of 100 million suns