To the scoreboard:
- Dow: 24,667.78 +306.33 (+1.26%)
- S&P 500: 2,724.01 +34.15 (+1.27%)
- AUD/USD: 0.7577 +0.0072 (+0.96%)
- ASX200 SPI futures (June contracts): 6,035 (+40)
1. Global stocks rose as Italian markets bounced back from the previous day’s turmoil. The FTSE MIB index in Milan climbed by 2.1% while 2-year bond yields dipped back below the 2% mark. Premier-designate Carlo Cottarelli said “new possibilities” for forming a government had emerged, lowering the prospect of a snap election in the coming months.
2. The positive news out of Italy and a strong inflation beat for Germany (2.2% rise against 1.8% forecast) combined to provide support for the euro. It rallied by more than 1% to close back above the $US1.16 mark.
3. And renewed risk-on sentiment gave the Aussie a strong boost, while the Canadian dollar rocketed higher. The Bank of Canada held its key rate unchanged, but signaled monetary policy could tighten in the coming months. The loonie rose as much as 2% versus the dollar following the announcement.
4. Oil prices resumed their climb, as markets assessed reports that OPEC may not be in such a rush to halt production cuts. Brent crude rose by more than 3% to close back above $US77 a barrel. Iron ore surged ahead, while gold remained steady at around $US1,300 an ounce.
5. US-China trade talks are at risk. Some analysts doubt negotiations can advance anytime soon, after the Trump administration announced plans to move forward with tariffs on $50 billion worth of goods less than two weeks after putting a trade war “on hold.” Stocks in Shanghai closed more than 2% lower last night.
6. And the US economy slowed more than initially thought in the first quarter. GDP growth was revised to an annualised rate of 2.2%, slightly lower than the original estimate. The US Fed’s Beige book also noted that wage pressure remain moderate in most districts, although the bank is still on track to raise rates in June.
Today’s data calendar:
- Australia has Q1 capex data (11:30am AEST) — a key input ahead GDP next week.
- China manufacturing PMIs.
- US PCE inflation (core PCE forecast at 1.8% in April, down from 1.9% in March).
- Eurozone inflation and and unemployment data.
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