To the scoreboard:
Dow: 21,080 (market closed)
S&P 500: 2,416 (market closed)
AUD/USD: 0.7440 +0.0001 (+0.01%)
ASX200 SPI futures (June contracts): 5,709 (-4)
Iron ore benchmark 62% fines: $US58.50 +$US0.59 (+1%)
1. Italian banks tank: The main news overnight was out of Italy, where stocks fell more than 2% as concerns linger over the recapitalisation of the country’s banks. Also in Italy, the major parties came to an agreement on proportional electorate laws, which means an early election will probably be called. In that scenario, a hung parliament is the most likely outcome, which will create more political uncertainty.
2. Quiet night for currencies: With US and UK markets closed, currency trading volumes were thin and G10 currencies traded within a narrow range. ECB president Mario Draghi again stated the the bank has no plans to adjust its current stance on monetary policy until there’s more evidence of consistent inflation. The British pound steadied as polls showed that Theresa May’s conservative party looks like it will win the election.
3. Aussie stocks in the wars: The ASX200 is unlikely to gain much traction today with no lead from overnight markets. Futures traders have marked the index slightly lower. Greg McKenna from AxiTrader said this morning that traders will be looking for the index to hold in the 5,680 to 5,700 range or stocks could see more significant falls. The Aussie dollar is treading water, but whether that continues is dependent on key data today.
4. Data today: Australia has building approvals data from the ABS. It’s worth watching because of projected headwinds to employment from a slowdown in construction. There’s also ANZ’s weekly consumer confidence data. Meanwhile Japan has employment and retail sales. Overnight, France has GDP data and Germany has CPI figures, and the US releases the personal consumption expenditure index for April (an important measure of inflation).
5. Armageddon in Australia?: Fund manager Philip Parker, who runs Altair Asset Management, has shut up shop in anticipation of an impending crisis. Parker said that Australia is in the midst of a serious property bubble, and that mortgage fraud is endemic. He also said Aussie stocks are way overvalued. In response, he’s closed his fund (and the fees that come with it) and returned the cash to investors.
6. Commodities wrap: Oil continued to edge higher after its fall last week following the OPEC meeting, with West Texas Intermediate (WTI) crude back to $US50 a tonne. Iron ore crept higher on low trading volumes, and that’s likely to continue tomorrow with China on holidays until Wednesday. Gold continues to find support in the $US1,260 an ounce range, closing at $US1,267.11.