Good morning! Here’s the scoreboard (8am AEDT):
Dow: 20,924 -30 (-0.15%)
S&P 500: 2,368 -8 (-0.32%)
SPI 200 Futures – March (20 minute delay): 5,735 -19 (-0.33%)
AUDUSD: 0.7591 +0.0011 (+0.15%)
1. Key data: China reports its balance of trade for February (1pm AEDT). Japan posts finaliszed GDP growth for the December quarter (10:50am AEDT). New Zealand has yearly manufacturing production data. Overnight the US will report ADP payroll data for February, which will provide guidance ahead of key non-farm payrolls on Friday. Healthy growth of around 180,000 is expected, following a big gain in January of 246,000.
2. Market Wrap: Stocks stayed in neutral in overnight markets, and finished slightly down. The Dow Jones and S&P 500 posted their first back-to-back losses in more than a month, and some analysts think that’s a good thing. Europe’s STOXX Index and Japan’s Nikkei also slipped marginally. Healthcare stocks dragged on the US market as Republicans unveiled their plan to repeal Obamacare. Yields on US 10-year bonds rose two basis points to 2.516%. The US dollar increased slightly against a basket of currencies, but the Aussie dollar also increased slightly and remains just under US76 cents.
3. Commodities: Iron ore prices were choppy in the overnight session, with higher grades outperforming lower grades. Benchmark 62% fines rose slightly to $89.80 per tonne, but the lower grade 58% lost another 2% to close at $61.38 per tonne. A higher US dollar weighed on commodities across the board, as gold hit a 4-week low and zinc and copper fell by more than 1%.
4. China’s currency: Data released overnight by the People’s Bank of China showed that the country’s FX reserves rose by $US6.92 billion to $US3.005 trillion during February. The figure was above analysts’ expectations and marked the first monthly increase since June 2016. It may provide ammunition for the Trump administration’s view of China as a currency manipulator, as the figures suggest the People’s Bank of China intervened to buy foreign exchange for the first time since October 2015.
5. Hedge funds show caution: In light of the Dow’s recent rally past 21,000, some hedge funds are no longer so bullish. Data compiled by Credit Suisse shows that hedge funds have increased their gold positions and sold off bank shares. The changes represent a significant shift in positioning since December, when hedge fund exposure to financial stocks was near all time highs.
6. US trade data: The US trade deficit increased by 9.6% in January to $48.5 billion. Although the figure was in line with analyst’s expectations, the deficit reached its highest level since March 2012. The increase was mainly driven by rising oil prices, as well as imported cars and cell phones.