To the scoreboard:
Dow: 26,616.71 +223.92 (+0.85%)
S&P 500: 2,872.87 +33.62 (+1.18%)
AUD/USD: 0.8110 +0.0082 (+1.02%)
ASX200 SPI futures (March contracts): 6,015 (+30)
1. The US dollar is still weak: The USD index finished lower again in an unusual session to end the week, as members of the Trump administration backtracked on comments from Treasury Secretary Steven Mnuchin that a weaker dollar benefited the US economy. The AUD briefly eclipsed its 2017 high on Friday night and will start the week above US81 cents.
2. More money pours into stocks: Amid a solid earnings backdrop, the weakness in the greenback gave US stocks an added boost and the S&P500 hit yet another record high in a storming session to end the week. But stronger currencies weighed on stocks in the UK and Europe. ASX futures traders are confident that the strong US lead will support demand on the local index today.
3. Bond yields creep higher: Stocks continue to shrug off the steady increase in bond yields, as benchmark US 10-year government bond yields will start the week back at a three-year high of 2.66%. That’s despite a small miss on the first reading of US Q4 GDP on Friday, although the result was attributed to one-off factors and there was a steady contribution from domestic consumption.
4. Key economic data this week will provide markets with an update on the outlook for global growth and inflation. Wednesday Q4 inflation data is the main event locally, and there’s also inflation readings for the US and Europe along with a wave of global PMI data to start the new month. It’s all here in the weekly diary.
5. Continued weakness in the US dollar gave commodity prices another boost to end the week, with crude oil closing at a three-year high above $US70 a barrel. In base metals, gold is holding just off its recent multi-year high at $1,350 an ounce, and copper also rose. But iron ore fell to end the week amid choppy demand for steel during the Chinese winter months.
6. Optimism on wages: The AFR reports that leading Australian economists Chris Richardson and Saul Eslake say the pre-conditions are in place for a long-awaited pickup in domestic wage growth. They cited the combination strong employment numbers, higher company profits and increased demand for skilled workers as evidence that wages may rise in 2018.
Have a great week.