To the scoreboard:
Dow: 23,341.35 -100.41 (-0.43%)
S&P 500: 2,558.71 -10.42 (-0.41%)
AUD/USD: 0.7703 -0.0073 (-0.94%)
ASX200 SPI futures (December contracts): 5,878 (-11)
1. Bond sell-off continues: Bond yields rose across major markets overnight as the focus returned to a coordinated tightening of policy by global central banks. Benchmark 10-year treasury yields rose as high as 2.47% before settling 3 basis points higher at 2.44%. UK 10-years also rose by 5 basis points after stronger than expected GDP figures. Meanwhile, Goldman Sachs alumnus Gary Cohn appears to be out of the running to be the next chair of the US Fed.
2. Bank of Canada holds: The BoC kept rates on hold at 1% as expected, citing concerns around the NAFTA negotiations and the recent strength of the Canadian dollar. The CAD promptly fell by around 1% against the greenback, as the US got solid data prints overnight for durable goods orders and new homes sales.
3. Global currencies mixed: The US dollar strength wasn’t seen across the board though as the Euro climbed back above $US1.18 as business sentiment in Germany hit an all-time high. The UK pound also benefited from stronger GDP, while the Aussie dollar fell below US77 cents overnight and is sitting on key support following yesterday’s soft inflation data:
4. Data today: During Asian trade, the ABS has the international trade price index at 11:30am AEST and there’s also South Korean Q3 GDP figures. RBA deputy governor Guy Debelle will make a speech titled “Uncertainty” this evening. Later tonight the main event will be the ECB’s policy announcement on the taper of its bond purchasing program, followed by a press conference.
5. Stocks wobble: The rally in US stocks paused overnight amid some disappointing earnings, rising bond yields and infighting among Republicans on tax reform. With UK and European markets lower, it points to a negative open for the ASX200. AxiTrader’s Greg McKenna has outlined 5,864 as the key technical support level if the ASX is to consolidate the gains from its recent rally.
6. Short-seller windfall: Fast-food chain Chipotle missed earnings guidance this morning and its shares promptly crashed by 15%, which led to a $260 million payday for traders who had loaded up on short bets in October. At the same time, traders are confident the US tech giants will crush earnings season, with minimal short-selling activity in the sector. Amazon, Google and Microsoft are set to report earnings tonight.