6 things Australian traders will be talking about this morning

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Good morning.

To the scoreboard:

Dow: 26,213.82 -0.78 (0.00%)
S&P 500: 2,839.38 +6.41 (+0.23%)
AUD/USD: 0.7998 -0.0018 (-0.22%)
ASX200 SPI futures (December contracts): 6,003 (+17)

1. Rough night for commodities: Copper fell by 2% to a one-month low as inventory figures revealed high levels of supply. And spot prices for benchmark iron ore dipped by 3% last night, after futures plunged yesterday in Asian trade. Oil remains at multi-year highs though, as crude prices climbed 1.4% and briefly eclipsed $US70 a barrel amid optimism on the global growth outlook.

2. The lower commodity prices drove some selling in the Aussie dollar in early trade last night. It reached a low of 0.7957 US cents but has rallied back towards the US80 cent mark this morning, amid the continued weakness in the US dollar which fell further against all the major pairs. Here’s the overnight move in the Aussie:

AUD/USD Hourly Chart

3. And while the selloff in copper and iron ore may weigh on the big miners, ASX futures traders are betting on a second straight rise for the local index today. It follows a steady lead from US stocks, which had a shaky start before climbing to new record highs — led by gains on the tech-focused NASDAQ after Netflix earnings smashed expectations.

4. Bond yields fall on steady demand: Benchmark US 10-year treasury yields fell by 4 basis points to 2.62% and shorter-term yields also fell in the wake of strong demand for a $US26 billion auction of US 2-year bonds.

5. Global risk appetite among investors just hit its highest level on record, according to Goldman Sachs’ gauge of risk sentiment which it started in 1991. But while that may be cause for some concern, Goldman said the solid global growth backdrop will underpin returns –at least over the next 12 months.

6. It’s not all bad for commodities: Despite a rough session overnight, some analysts are bullish on the long-term outlook for commodities. Karen Maley outlined why in the AFR this morning — noting that prices still look historically cheap based on the metric of commodity prices relative to the S&P500.

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