Dow: 26,123.26 -316.22 (-1.20%)
S&P 500: 2,826.58 -26.95 (-0.94%)
AUD/USD: 0.8082 -0.0011 (-0.14%)
ASX200 SPI futures (March contracts): 5,944 (-16)
1. It’s inflation day: Q4 inflation data is due for release from the ABS at 11:30am AEDT. It’s one of the most important releases on the data calendar, given its strong connection to the outlook for interest rates. Quarterly headline inflation is forecast to rise by 0.6%, leaving annual growth at 2%. David Scutt’s 10-second guide is here.
2. Bond yields still rising: Ahead of the US Federal Reserve’s interest rate announcement tonight, yields on benchmark US 10-year treasuries are holding at 2.73% — the highest level since April 2014. The yield spread between 2-year and 10-year US treasuries — which reached a 10-year low in December — continued to widen as shorter-term 2-year bond yields traded flat.
3. Stock jitters continue: The S&P500 declined sharply for the second straight session overnight, as markets weigh up a strong earnings outlook against record-high valuations and rising bond yields. Falls were led by the health sector after Amazon, Warren Buffett’s Berkshire Hathaway and JP Morgan announced plans to create a new healthcare company. UK and European markets also fell by around 1%.
4. Aussie dollar still resilient: The AUD fell across the board but is still holding just shy of US81 cents despite a slightly more risk-off tone in global markets and more commodities selling overnight. Bearish sentiment remains on the US dollar, which pushed slightly higher before falling back later in the session of the European inflation data missed expectations.
5. Cryptocurrencies got sold off across the board overnight as Bitcoin briefly fell below $US10,000 for the second time in two weeks. The latest falls come amid news that cryptocurrency exchange Bitfinex has been issued with a subpoena by US authorities, while the US Securities & Exchange Commission announced that it had shut down a $US600 million initial coin offering in Texas.
6. Oil slide continues: After falling back below $US70 a barrel, brent crude fell by another 0.7% overnight with heavier falls in US WTI oil. Gold also edged lower, with prices now around 1.6% off from last week’s 18-month high of $US1,366 an ounce. And benchmark iron ore prices are now at their lowest level since December 28 after a 1.8% fall overnight.