Good morning and happy Friday.
To the scoreboard:
Dow: 25,200.37 +306.88 (+1.23%)
S&P 500: 2,731.48 +32.85 (+1.22%)
AUD/USD: 0.7939 +0.0012 (+0.15%)
ASX200 SPI futures (March 2018 contracts): 5,883 (+21)
1. The US dollar remains weak, with further downside pressure overnight driven by strength in the Japanese yen which is at a 15-month high against the greenback. At just over 88.5, the US dollar index is holding just above its three-year low. The Aussie dollar slipped against most major currencies but is still holding comfortably above US79 cents.
2. Risk-on appetite remained in global markets, as US stocks continued to rebound from last week’s jitters to post their fifth straight day of gains. It points to another solid session for the ASX200 after the local index rose by more than 1% yesterday for the first time since November.
3. US 10-year bond yields edged lower to 2.89% overnight. CBA currency strategist Elias Haddad said this morning that continued weakness in the USD is partly because markets remain unconvinced the Fed will quicken the pace for interest rate hikes this year, even though January inflation data beat forecasts on Wednesday night.
4. Bitcoin climbed back above the $US10,000 mark overnight, and has now risen by around 70% from last week’s low of less than $US6,000. Prices found a floor after US regulators said on February 6 they would take a “do no harm” approach to monitoring the sector, while demand for cryptocurrencies also appears to have tracked the gains in stocks in recent days.
5. Oil had a choppy session, as brent crude prices continued to steady after falling more than 11% from recent highs while US WTI crude pushed 1.6% higher. In base metals, gold and copper continued to push higher after posting strong gains this week amid the weakness in the US dollar. And here’s David Scutt on the iron ore outlook next week while China goes on holidays for Lunar New Year.
6. Citi analysts have added to the happy Friday vibes with their latest piece of equities research, arguing that last week’s price falls provide a good opportunity to get in and buy the dip. Although concerns linger in markets about the impact of higher inflation and rising interest rates, Citi’s “Bear Market Checklist” suggests the stock rally won’t run out of steam just yet.
Have a great weekend.