Good morning and happy Friday.
To the scoreboard.
Dow: 24,263.75 +323.07 (+1.35%)
S&P 500: 2,647.08 +21.01 (+0.80%)
AUD/USD: 0.7566 -0.0005 (-0.07%)
ASX200 SPI futures (December contracts): 6,000 (+14)
1. Tax bill ignites US stocks: Proposed tax reform laws in the US cleared another major hurdle overnight as John McCain approved the bill in the Senate, and the Dow climbed above 24,000 for the first time. With a positive US lead, the ASX is set to open higher after another selloff on Asian markets yesterday as concerns linger around deleveraging in China’s financial system.
2. Bond yields rise: Momentum from the tax legislation saw US bond yields climb on the longer end of the curve, with US 10-year yields holding above 2.4% this morning for the first time in two weeks. Monthly core PCE inflation data — the preferred measures of the US Fed — came in as forecast at 0.2%, leaving the annual rise at 1.4%.
3. USD gets no love: Despite bullish sentiment stemming from the tax bill, the US dollar is trading near recent lows as traders re-position at month-end and currency markets monitor the possible replacement of US Secretary of State Rex Tillerson. The UK pound was again the best performer overnight after a breakthrough Brexit negotiations earlier this week, while the Aussie had a wild session to end the month but is still under downside pressure.
4. Iron ore at a 10-week high: Benchmark 62% fines are just shy of $US70 a ton as steel prices remain elevated and Chinese manufacturing data beat expectations yesterday. Oil markets were little-changed in the wake of last nights OPEC meeting, where it was tentatively agreed that supply cuts will be extended to the end of 2018, with a review in June.
5. The day ahead: Australia has AiGroup manufacturing PMIs this at 9:30am AEDT followed by Corelogic’s monthly house price index for November. Regionally, there’s South Korean Q3 GDP and Japanese inflation for October. Later tonight, Canada has Q3 GDP and employment figures and data in the US will be led by ISM manufacturing PMIs for November.
6. Crypto landscape: Bitcoin briefly dipped below $US9,000 overnight before rallying this morning. Global accounting firm PWC announced it has accepted its first payment in Bitcoin. But UBS chief economist says all cryptocurrencies have a “fatal” flaw that means they can never be real currencies. As for Goldman Sachs CEO Lloyd Blankfein, he says it’s too early for the firm to have a Bitcoin strategy.
Enjoy your weekend, I’m on Twitter @Mr_SamJacobs.