Good morning. To the scoreboard:
Dow: 25,027.96 -382.07 (-1.50%)
S&P 500: 2,713.22 -31.06 (-1.13%)
AUD/USD: 0.7768 -0.0021 (-0.27%)
ASX200 SPI futures (March contracts): 5,972 (-29)
1. The overnight tone in global markets was slightly risk-off. Stocks fell — and along with more strength in the US dollar, the safe-haven Japanese yen also found a strong bid. US bonds rallied across the curve, with benchmark US 10-year bond yields holding at 2.87% this morning as the second reading of US Q4 GDP was revised lower.
2. US stocks got sold off into the close — which has become a consistent theme in recent sessions — and the ASX200 looks set to extend yesterday’s falls. Despite a choppy month in February, a Reuters poll of Wall Street money managers showed they believe the S&P500 will end the year at 2,900 — a gain of around 6.5% from current levels.
3 Pound is down: The UK pound hit a three-week low against the greenback overnight as tensions rise around Brexit negotiations. And the Euro is back below $US1.22 after preliminary Eurozone inflation data for February missed expectations. Broader US dollar strength also weighed on the AUD overnight ahead of a busy day of data in Australia today.
4. The day ahead: Key data domestically will be led by capital expenditure figures for Q4 2017 (ABS, 11:30am AEDT). David Scutt’s 10-second guide is here. Also this morning there’s CoreLogic’s monthly house price index for February, and AiGroup manufacturing data. Globally there’s a wave of manufacturing PMIs to start the month, then the main focus tonight will be on PCE inflation data in the US.
5. It was another rough night for commodities, which may also weigh on local stocks this morning. Iron ore prices fell again on a reduced outlook for Chinese steel demand, following disappointing manufacturing numbers yesterday. And oil is back below $US65 a barrel after another sharp fall. In base metals, copper is 1.3% lower while gold is holding steady at around $US1,317 an ounce.
6. We’ll finish with a quick recap of the Reddit Q&A held by Microsoft’s Bill Gates. Unfortunately, Gates said another 2008-style financial crisis is “a certainty” — although when it occurs is impossible to predict. But he’s broadly optimistic about the economy overall and notes that by most measures, the world is getting better.
Have a great day.
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