Good morning, and welcome back to those who enjoyed a long weekend.
To the scoreboard:
Dow: 22,557.60 +152.51 (+0.68%)
S&P 500: 2,529.12 +9.76 (+0.39%)
AUD/USD: 0.7826 -0.0007 (-0.09%)
ASX200 SPI futures (December contracts): 5,7631 (+19)
Iron ore benchmark 62% fines: $US62.05/t (Flat)
1. Las Vegas. Although it will have little impact on today’s trading session, it’s hard to avoid the shocking headlines from the United States overnight. At least 58 people were killed, and over 500 were injured, at the hands of a lone gunman. Shares in Casino operators were down heavily while those for gun manufacturers rallied. Nothing like an atrocity to bring forward demand on the potential for tighter gun controls.
2. The global economy is looking good. Manufacturing PMI data from the US and Europe for September breezed passed expectations, offering further evidence that global economic conditions continued to improve. The JP Morgan-IHS Markit global manufacturing PMI held at a 75-month high of 53.2 last month. Base metals and global stocks rallied on the news.
3. Political concerns in Europe remain elevated following Sunday’s Catalonian independence vote. Although deemed illegal by policymakers in Madrid, there is some speculation that the Catalan government may still declare independence from Spain. The violent scenes witnessed during the vote weighed on both the euro and Spanish bonds on Monday.
4. And that, along with strong US economic data, acted to support the US dollar. The narrow US dollar index is now trading at 93.637 and is threatening to break out of the downtrend that began in early 2017. Citibank’s US economic surprise index is now back in positive territory for the first time since April this year, and short-term speculative positioning in the USD remains short.
5. Crude oil had a rough start to the quarter. US WTI futures fell by more than 2% on expectations of higher supplies. US oil rigs rose by six last week while Iraq announced that export levels rose slightly in September. Brent crude futures rallied more than 20% in the September quarter, its largest percentage gain since the start of 2016.
6. It’s RBA day. No one expects that the RBA will move rates from 1.5% today, meaning all interest will be on the tone of the accompanying monetary policy statement. This 10-second guide has more information on what to look out for when the statement is released at 2.30pm AEDT. Australian job ads and building approvals figures will also be released during the session.