Good morning. To the scoreboard:
- Dow: 25,410.03 -299.24 (-1.16%)
- S&P 500: 2,743.92 -35.68 (-1.28%)
- AUD/USD: 0.7790 -0.0064 (-0.81%)
- ASX200 SPI futures (March contracts): 6,005 (-31)
1. Powell leans hawkish: New US Fed Chair Jerome Powell took an optimistic view of the US economy at his testimony before Congress overnight. He tempered it by repeating that the inflation target remains important and wouldn’t be drawn into predicting the number of 2018 rate hikes, but the overall tone was positive. So bond yields and the US dollar rose, and stocks fell.
2. The US dollar index is back over 90 and the greenback posted gains across the board, as benchmark US 10-year treasuries moved back over 2.9%. Among the major currencies, the euro had a sharp move lower while commodity bloc currencies — including the Aussie — struggled as US dollar strength weighed on commodity prices.
3. Oil dipped by more than 1% overnight, down from a three-week high above $US66 a barrel. In base metals, gold and copper are also down by more than 1%, while iron ore couldn’t break the $US80 a tonne mark in a mixed session ahead of key Chinese data later today.
4. US stocks fell by around 0.8% in the wake of Powell’s testimony, and the ASX200’s five-day winning streak looks in jeopardy — with futures traders betting the local index will open lower this morning. From yesterday’s closing level of 6,056, AxiTrader’s Greg McKenna says 5,993 is the key technical level to watch, and a break below that could prompt another wave of selling:
5. The day ahead: This morning there’s HIA new home sales and monthly data on private sector credit from the RBA. But the main data in Asian trade will be February manufacturing and services PMIs from the Chinese government. Key data in overnight markets will be led by the latest reading of US Q4 GDP figures.
6. Bitcoins and bubbles: The investment head of Private Wealth Management at Goldman Sachs told BI that Bitcoin’s current valuation doesn’t make sense to her (but Ethereum is even worse). And billionaire Bill Gates doesn’t like the fact that cryptos are anonymous. But for now, Bitcoin is holding comfortably above $US10,000 after a steady night of trade.
Have a great day.