Good morning and happy Friday.
To the scoreboard:
Dow: 23,163.04 +5.44 (+0.02%)
S&P 500: 2,562.10 +0.84 (+0.03%)
AUD/USD: 0.7879 +0.0033 (+0.42%)
ASX200 SPI futures (December contracts): 5,798 (-25)
1. Kiwi takes a dive: New Zealand’s labour party secured an unexpected election victory last night through a deal with the NZ First party. This report from JP Morgan outlines what that means for markets. The surprise result saw the Kiwi dollar plummet — it fell by more than 2% against the Aussie dollar:
2. US dollar loses ground: The greenback fell against the euro overnight despite some solid US data, as jobless claims hit a 44-year low. It gained against the pound as UK retail sales missed badly, but even with the current probability of a December rate hike at more than 90%, markets are hesitant to drive a broad-based pick up in the US dollar index.
3. China worries: There was a mild risk-off tone to markets overnight after the Governor of China’s central bank issued a warning on the collapse of asset prices stemming from excessive debt. The comments drove a late sell-off in Hong Kong stocks, with the Hang Seng index finishing down almost 2%:
4. Stevens warns on inflation: Former Reserve Bank Governor Glenn Stevens said he was surprised at “how little compensation” investors were accepting for the risk of higher inflation, the AFR reports. With the next RBA rate hike currently priced for the second half of next year, Stevens said markets don’t appear to be prepared for an unexpected pickup in inflation.
5. Stocks shaky: US stocks rallied to finish flat, after falling at the open as Apple shares slumped on news it has cut orders for the iPhone 8 amid slow sales. European stocks fell as political instability in Spain remains a factor, amid a slightly more risk-off environment as major bond markets saw some demand. Following the lead from Hong Kong and overnight markets, ASX futures traders expect a pull-back in the local index’s recent rally this morning.
6. Iron ore tumbles: Spot prices dipped almost 3% last night to a one-week low, following the release of solid Chinese GDP figures yesterday. Copper fell for a third straight day, while gold snapped its own three-day losing streak as bond yields fell, climbing by $7 to close at $1,287. Benchmark crude oil closed 1.4% lower at $US57.35.
Enjoy your weekend, I’m on Twitter @Mr_SamJacobs.