To the scoreboard:
Dow: 21,865.37 +56.97 (+0.26%)
S&P 500: 2,446.30 +2.06 (+0.08%)
AUD/USD: 0.7949 -0.0003 (-0.04%)
ASX200 SPI futures (Sept contracts): 5,661 (+29)
Iron ore benchmark 62% fines $US76.36/t (-1%)
1. Calm down, nothing to see here: Global markets shut up shop and opened in risk-off mode overnight following the North Korean missile launch. US 10-year bond yields hit their lowest level since November, gold caught another bid and the US dollar got hammered again. But there was a notable shift in sentiment after the Trump administration released a measured statement on the conflict with North Korea.
2. The main reversals were on currency markets: After falling below 92 for the first time since January 2015, the US dollar index climbed against most major currencies. The euro fell after briefly climbing above $US1.20, and money moved back out of the yen and Swiss franc. The AUD benefited from the collective exhale in currency markets, climbing from 0.7910 to an overnight high of 0.7983.
3. Stocks were mixed: US stocks managed to edge higher after starting in the red. Across the pond, stocks moved off their lows but weren’t able to reverse course from the morning sell-off. Germany’s DAX index led falls in Europe, closing 1.46% lower. In light of the afternoon recovery, futures traders are positive about the ASX200 this morning after a rough session yesterday which took the local index into negative territory for 2017.
4. The day ahead: This morning at 11.30am AEST the ABS has building approvals for July, the first key indicator for the week ahead of next Wednesday’s GDP data. Later tonight Germany will release monthly inflation data and there’s the updated reading for US Q2 GDP, with growth forecast to increase to 2.8% from the initial 2.6%.
5. Surprise, surprise: Bitcoin just hit another record high, briefly climbing above $US4,700 before easing back slightly. While demand rose for Bitcoin, it’s offshoot Bitcoin Cash continues to fall in value. Ethereum prices also rose steadily overnight, with some analysts suggesting that the major cryptocurrencies are performing like safe haven assets amid the geo-political tensions with North Korea.
6. Commodities wrap: Iron ore hit the skids while prices for base metals copper, zinc and nickel remain elevated at recent highs. West Texas Intermediate (WTI) slipped as demand from US refineries has dried up in the wake of Hurricane Harvey. Gold moved off its overnight high of around $US1,330, but is holding steady above $US1,300 for the first time since November last year.