To the scoreboard:
Dow: 21,993.71 +135.39 (+0.62%)
S&P 500: 2,465.84 +24.52 (+1.00%)
AUD/USD: 0.7852 -0.0049 (-0.66%)
ASX200 SPI futures (Sept contracts): 5,694 (+21)
Iron ore benchmark 62% fines $US74.71/t (-0.64%)
1. Exhale (for now): Global markets took a breather to start the week, as escalating tensions between the US and North Korea appear to have subsided for the time being. Capital moved back out of safe-haven currencies, bonds and gold while stocks in the US, UK and Europe all rose. Italy’s MIB index led major European markets higher with a 1.72% gain. The US dollar found buyers and gained ground against the safe-haven yen and other major currencies.
2. AUD under pressure: Some extra demand for the USD saw the Aussie fall against the greenback, but it also fell against most major currencies overnight. As Business Insider’s David Scutt noted yesterday, the net long positioning of traders in the Aussie is at its highest level since 2013. If market forces push the Aussie lower, the unwinding of those positions could exacerbate the fall.
3. RBA (minutes) day: It means traders will be focused on the release of the RBA minutes from its August 1 meeting today (11:30am AEST), particularly to see if the bank gave any airtime to the view that a stronger currency would create headwinds for the domestic economy. Also on the data front is the ANZ’s weekly consumer confidence index (9:30am AEST) and later this evening, German GDP headlines the international data, with annual growth to June forecast at 2.1%.
4. The Bitcoin juggernaut: After clearing $US4,000 on the weekend, the world’s biggest cryptocurrency continued on its merry way and a short time ago was sitting pretty at $US4,280 — up a casual $US200 for the session. But if you’re on the Bitcoin stream train and enjoying the ride, Goldman Sachs says don’t get off yet – the bank’s latest technical analysis forecasts that Bitcoin’s current rally will peak above $US4,800.
5. “50 cent” just hit pay-dirt: You may recall the mysterious trader who took big bets (using US50c contracts) earlier this year on an increase in market volatility (“50 cent” was subsequently revealed to be Ruffer LLP, a $US20 billion London hedge fund). Well, last week Ruffer scored $US21 million as geo-political strife caused the VIX volatility index to spike on Thursday (note; it still needs a lot more volatility to recoup other losses incurred this year when markets stayed perfectly calm).
6. Crude collapses: Benchmark crude oil fell by 2.6% overnight to $US50.72 a barrel. A lower demand outlook from Chinese refineries was the catalyst for traders to hit the sell button after the technical setup to start the week was also pointing to the downside. Gold dipped slightly but was little changed despite the move out of safe-haven assets, while iron ore fell after the disappointing industrial production out of China yesterday.
Bonus item: With huge US conglomerate General Electric transitioning to a new CEO, Warren Buffett is moving on. He’s dumped his entire $US315 million stake in the company.
Enjoy your Tuesday. I’m on Twitter @Mr_SamJacobs.