To the scoreboard:
Dow: 22,349.59 -9.64 (-0.04%)
S&P 500: 2,502.22 +1.62 (+0.06%)
AUD/USD: 0.7956 +0.0002 (+0.03%)
ASX200 SPI futures (December contracts): 5,679 (+7)
Iron ore benchmark 62% fines: $US63.56/t (-3.8%)
1. Politics drives early action in currencies: German chancellor Angela Merkel won a fourth term in government overnight but with a smaller majority than her last win in 2013. New Zealand’s ruling National party fell just short of a majority victory on Saturday, and will need to form a coalition with the nationalist New Zealand First Party. That’s sent the euro and kiwi dollar down by around 0.5% in early trade this morning.
2. Markets cautious: Global markets were little-changed in a relatively quiet session on Friday night, with an underlying tone of caution amid more inflammatory rhetoric from Donald Trump and North Korea’s Kim Jong Un. Most asset classes held their ground, with the UK’s export-heavey FTSE stock index moving higher as the pound dropped following Theresa May’s brexit speech.
3. Data this week: The Aussie dollar has kicked off the week at US79.5 cents and will likely be driven by sentiment and the global risk outlook because it’s a quiet week on the domestic data front with no headline releases. Internationally, there’s a wave of speakers from major central banks, with inflation data for the US and Europe out on Friday. Weekly calendar is here.
4. Iron ore goes bearish: And the AUD continues to hold its ground despite another slump in iron ore prices on Friday. Benchmark 62% fines slumped again, and are back below $US65 a tonne for the first time since early July as the outlook for Chinese steel demand continues to weaken. Friday’s falls mark a 20% decline from the recent top reached on August 21.
5. ASX200 stays in range: Futures traders have marked the local index up slightly today, despite little in the way of leads from global markets. That follows a 27 point gain on Friday as the index continues to find support for now within its recent range from 5,650 to 5,800.
6. US stocks overvalued? Robert Shiller — of CAPE-Shiller fame — waded back into the endless debate about whether a correction is due for US stocks, which are trading near record highs. Shiller said that the current dynamics on the S&P500 of low volatility and a cyclically adjusted price earnings (CAPE) ratio above 20 are reasons to be wary, but added that the next correction “may still be a long way off”.