To the scoreboard:
Dow: 20,805 +142 (+0.69%)
S&P 500: 2,382 +16 (+0.68%)
AUD/USD: 0.7450 -0.0011 (-0.15%)
ASX200 SPI futures (June contracts – 20 minute delay): 5,752 +26
Iron ore benchmark 62% fines: $US62.69 +$US1.09 (1.77%)
1. Finally some good news for Aussie stocks: ASX200 futures are pointing higher today after the index fell by 1.1% last week. After the Trump controversy riled markets in the middle of last week, “buy the dip” sentiment prevailed in the US and a bump in the oil price lifted stocks higher on Friday. In addition to the US lead, Aussie stocks stand to benefit from an increase in commodity prices on Friday.
2. US dollar weakness still a theme: The US dollar opened slightly higher against the major currencies but remains under pressure. It follow USD weakness last week with capital flows moving away from US assets into Europe. The pound and Euro now above $US1.30 and $US1.11 respectively. The Aussie dollar is lower this morning but had a good bounce on Friday back to around US74.5 cents. With a rise in commodity prices and no major risk-off sentiment, it should find some support in today’s session.
3. Australia at risk of “sub-prime” crisis: That’s according to institutional fund manager JCP Investment Partners, in a research report published by the Financial Review. They said around half of Australia’s mortgagees have household debt more than four times their gross income, with a large number of interest-only loans. If banks had to book a loss on riskier loans due to falling prices or higher interest rates, JCP estimated that it could wipe out between 20% and 50% of bank equity.
4. Iron ore finds a floor: Spot prices for benchmark 62% fines continue to find support above $US60 a tonne, as iron ore followed stronger steel prices higher on Friday. The price of $US62.69 was a two-week high, and futures trading on Friday evening suggests that spot prices could rise again tonight. Base metals are also showing strength, with copper above $US2.50 a pound and gold holding steady at around $US1,255 an ounce.
5. Oil price bounces back: Oil got a boost late last week after OPEC talked up more supply cuts, and West Texas Intermediate (WTI) crude rose back above $US50 a barrel. That continued yesterday when the Saudi energy minister confirmed that OPEC would look to extend its supply cuts for another nine months to March next year. The move will be confirmed at OPEC’s meeting on May 25 in Vienna. The battle between OPEC and US producers rages on, with the number of oil rigs in the US rising for the 18th straight week.
6. Let’s check in on bitcoin: Bitcoin is up more than 100% since late March. The recent rally seems to have been driven from Japan where regulators approved the currency as a legal payment method in April. Bitcoin/USD trade above $US2,000 over the weekend and this morning has settled right on the $US2,000 mark: