To the scoreboard:
- Dow: 25,013.29 +298.20 (+1.21%)
- S&P 500: 2,733.01 +20.04 (+0.74%)
- AUD/USD: 0.7585 +0.0004 (+0.05%)
- ASX200 SPI futures (June contracts): 6,080 (-13)
1. With the US-China trade war “on hold“, US stocks rallied overnight and the Dow pushed to a two-month high. Although the chief economist for ratings agency Moody’s called the tentative agreement “face-saving” overnight, with neither side likely to come to an agreement in the near-term.
2. But the cooling trade tensions were enough for traders to drive the commodity bloc currencies sharply higher, so the AUD had a strong session and is pushing towards US76 cents this morning.
3. Brent crude oil rose back above $79 a barrel after US Secretary of State Mike Pompeo hit Iran with a list of demands for sanctions relief. Markets are poised for further production declines in Venezuela, which could be exposed to fresh US sanctions after holding an election widely seen as illegitimate.
4. European markets edged higher but Italian stocks slumped by another 1.52%. With lingering concerns about the the policies of the new populist government, Italian 10-year bond yields shot up by another 20 basis points to their highest level since March 2017.
5. Iron ore got hammered again, amid reports Chinese steel producers may postpone purchases. While shares in US steel companies fell sharply after the Trump administration’s tariffs on the metal were suspended.
6. Benchmark US 10-year bonds held steady at 3.05%. With yields rising, attention is now turning to what that means for stocks. Bank of America Merril Lynch says the 3.6% mark for US 10-years will spark a reallocation from stocks to bonds, while historical research from Morgan Stanley suggests that three months after bond prices peak, stocks do the same.
Have a good day.
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