To the scoreboard:
Dow: 21,808.40 -5.27 (-0.02%)
S&P 500: 2,444.24 +1.19 (+0.05%)
AUD/USD: 0.7933 -0.0001 (-0.01%)
ASX200 SPI futures (Sept contracts): 5,679 (+1)
Iron ore benchmark 62% fines $US77.15/t (+2.1%)
1. AUD gets its wings clipped: The Aussie dollar pushed higher against the greenback overnight as part of broad US dollar weakness. Then it dipped sharply this morning as currency markets went risk-off on news that a North Korean missile had passed over Japan.
2. USD weakness remains: The euro is now pushing towards $1.20 and the pound and yen also rose, although volumes were lighter due to the banking holiday in the UK. The increasingly bearish tone for the USD has been driven in part by Hurricane Harvey (with more rain still to come) and continued political risk in Washington as President Trump’s decision-making remains erratic.
3. And markets are cautious: Yields on benchmark US 10-year treasuries moved in again to 2.15%, with the inflation outlook for the US economy uncertain ahead of PCE inflation data this Thursday. Gold also broke out of its recent range, and a short time ago it was up 1.4% to $1,315. That was partly due to more weakness in the US dollar, but also because of political uncertainty with doubts lingering about Congress’s ability to extend the debt ceiling.
4. Global stocks mixed: US stocks were little-changed despite the impact of Hurricane Harvey. European stocks moved lower, and Germany’s export-heavy DAX index is now down by around 6% from its late June highs as the stronger euro weighs on sentiment. While Asian markets climbed yesterday, the APRA investigation into Commonwealth Bank weighed on sentiment on the ASX. Futures traders have the local index little changed today.
5. And while we’re on stocks…: Keep an eye on this trend — money has been moving out of US equity funds for 10 straight weeks (the longest streak in 13 years). More here from Business Insider’s Joe Ciolli.
6. Oil falls in the wake of the storm: West Texas Intermediate (WTI) crude prices fell by 2.6% while benchmark crude was off by 0.9%. Although the damage from Hurricane Harvey is expected to impact shale oil production for several months, traders also expect demand to fall from local oil refineries. Iron ore is drifting along to start the week, with no key driver to move benchmark 62% fines from their current prices in the high-$US70/t range.
Enjoy your day, I’m on Twitter @Mr_SamJacobs.