Good morning. Here’s what’s happening as Thursday begins.
First, the scoreboard (7:50am AEDT):
• Dow: 20057 -34 (-0.2%)
• S&P 500: 2291 +2.5 (+0.13%)
• SPI 200 Futures (March): 5,570 +10 (+0.2%)
• AUD/USD: 0.7634 +0.0007 (+0.13%)
And the news.
1. US equities recover: The S&P 500 Index recovered from an early selloff and was little changed with energy producers pushing higher after oil rose due to an unexpected slide in U.S. gasoline supplies. Treasuries rose for a fourth day and gold reached a three-month high as demand as investors assessed political risks in Europe and the U.S. Australian shares could tread water at open.
2. New Zealand rates unchanged: The Reserve Bank of New Zealand (RBNZ) provided no real surprises at its first monetary policy meeting of the year, leaving interest rates unchanged at 1.75%. And, while expressing caution, the RBNZ provided no hint as to what direction interest rates will likely move in the future. It said a lower currency was needed.
3. After the bell in Sydney, Rio Tinto profits posted a monster turnaround: The world’s second biggest miner posted its first net profit rise since 2013. Rio Tinto said net profit stood at of US$4.6 billion for full-year 2016 compared with a loss of US$866 million a year earlier. Underlying profit climbed 12% to US$5.1 billion, the company said as commodities prices surged.
4. Data today: Housing Institute of Australia releases new home sales. China has vehicle sales. Japan releases machinery orders. US has jobless claims and wholesale trade.
5. Central bank speakers: Philip Lowe, Reserve Bank of Australia Governor gives a speech at a business dinner event. St. Louis Federal Reserve Bank President James Bullard speaks about U.S. economy and monetary policy. Chicago Federal Reserve Bank President Charles Evans also speaks.
6. Company News: AGL, AMP, Suncorp and Henderson Group report earnings.
7. Iron ore up and up: Spot iron ore markets continued to push higher on Wednesday, coming within a whisker of hitting a fresh multi-year high following another unbelievable surge in futures. And, with futures up overnight, it could well hit a new high today. According to Metal Bulletin, the spot price for benchmark 62% fines rose by 0.29% to $83.53 a tonne, extending its gain in 2017 to 5.9%. It has now rallied 118% from the lows struck in mid-December 2015, and sits just 12 cents below the 2.5-year high of $83.65 a tonne level hit on January 16.
8. Aussie dollar: The Australian dollar endured a quiet session overnight, largely reflecting the muted moves seen in broader financial markets. The one big move came against the New Zealand dollar following the release of the Reserve Bank of New Zealand’s February monetary policy decision earlier this morning.
9. T Rowe Price’s move highlights stock risk: The US$200 billion investor for the first time since the early 2000s decided to slightly tactically underweight stocks versus bonds.
10. Bitcoin dropped sharply and suddenly on more news out of China: Bitcoin tumbled by more than 4% in a matter of 15 minutes on Wednesday after Bloomberg reported that the People’s Bank of China was meeting with several local bitcoin exchanges to discuss money-laundering concerns.
And some more – Morgan Stanley’s top auto analyst suggests GM could be broken up and hedge funds might be facing a rocky road ahead.A new report out from Boston Consulting Group plots three possible scenarios for hedge funds for the period until 2020. In the worst case scenario, BCG predicts industry-wide assets could shrink by as much as 30% and margins could fall by 20% as a result of fee reductions and increased capital expenditure.