Good morning and happy Friday.
To the scoreboard:
Dow: 22,203.48 +45.30 (+0.20%)
S&P 500: 2,495.62 -2.75 (-0.11%)
AUD/USD: 0.8003 -0.0001 (-0.01%)
ASX200 SPI futures (Sept contracts): 5,742 (+7)
Iron ore benchmark 62% fines: $US73.99/t (-3.4%)
1. Pound hits a one-year high: The UK pound was the big mover overnight, after the Bank of England kept rates on hold at 0.25% but was more bullish in its forecasts about tightening monetary policy. That strength in the pound partly weighed on the US dollar index, which gave back some of yesterday’s gains despite August inflation numbers coming in slightly above expectations.
2. Rollercoaster for the Aussie: After rising above US80 cents following yesterday’s strong employment figures, the Aussie dipped overnight as commodities and base metal prices — which have had a rough week — fell again. But after falling as low as 0.7955, the Aussie battled back and by the start of this morning’s session it had returned to just over US80 cents.
3. Crypto meltdown: Prices of Bitcoin and other major cryptocurrencies plunged overnight as reports indicated that Chinese authorities will go ahead with plans to ban cryptocurrency exchanges in China. Bitcoin lost a whopping $US500 in one session from its opening price of just under $US4,000. This table from investing.com shows the sea of red among the world’s biggest cryptos:
4. Iron ore falls sharply: Spot prices for benchmark 62% fines dipped by more than 3% overnight after futures markets tanked yesterday afternoon. That followed a range of Chinese data points which were slightly weaker than expected. According to Metal Bulletin, most Chinese steel mills have enough iron ore inventory to last 25 days, although traders still expect them to stock up ahead of a one-week national holiday at the start of October.
5. Bond markets chop and change: US bond yields were little-changed following the August CPI figures, although the CME’s Fedwatch tool now has the probability of a December rate hike back to around 50%. Conversely, the Bank of England’s bullish commentary saw the yield on UK 10-year bonds jump by 9 basis points to 1.23%. Australian government bond yields also moved higher across the curve, with the yield on Australian 10-years now at 2.77% — their highest level since late July.
6. Global stocks fluctuate: The S&P500 edged lower after the August inflation print increased the prospect that a December rate hike is back on the cards. A stronger pound weighed on London’s export-intensive FTSE index, which fell more than 1% while the pan-European STOXX600 index crept higher. Despite that, futures traders have marked the local index slightly higher to end the week, after the ASX200 finished flat yesterday.
Enjoy your weekend, I’m on Twitter @Mr_SamJacobs.