6 things Australian traders will be talking about this morning

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Good morning.

To the scoreboard:

  • Dow: 20,958 +8 (+0.04%)
  • S&P 500: 2,388 -3 (-0.03%)
  • AUD/USD: 0.7425 -0.0064 -0.85%
  • ASX200 SPI futures (June contracts – 20 minute delay): 5,871 -6
  • Iron ore benchmark 62% fines: $US68.68 -$US0.04 (0.05%)

1. The Fed held, one eye on June: The US Federal Reserve held the benchmark interest rate at 1.0% as expected. It described slow growth in the first quarter as “transitory” (i.e. – temporary) and predicted that inflation would stabilise around its stated goal of 2% in the longer term. US markets got some good news on jobs overnight as private payrolls exceeded forecasts. The Chicago Mercantile Exchange (CME) Fedwatch indicator is predicting the likelihood of a June rate hike at 71.4%. You can read the full Fed statement here.

2. The Aussie dollar got thumped: After feeling the effects from heavy selling on the ASX yesterday and dropping below US75c, the AUD got belted overnight. It lost another 70 points against its US counterpart after the Fed’s announcement, to fall into the US74.2 cent range. The US dollar index was higher, with the greenback showing strength against both G10 and emerging market currencies. Greg McKenna from AxiTrader says to keep an eye on the USD against the Singapore dollar as an indicator of US dollar strength more broadly. Here’s the AUD’s fall overnight from investing.com:

3. Data today: In Australia today there’s the HIA monthly new homes sales report, the ABS has international trade figures for March, and RBA Governor Philip Lowe gives a speech at 1pm AEST in Brisbane called “Household Debt, Housing Prices and Resilience.”

4. Scott Morrison has moved against a US hedge fund’s plan to restructure BHP : Treasurer Scott Morrison has stepped out in defence of BHP, as executives from activist shareholder Elliot Management visit the country this week to press their case for a break-up of the company’s operations. Elliot’s plan includes removing the company’s dual-listed structure in favour of a UK listing. In a strongly worded statement, Morrison said that removing BHP’s Australian listing would be unlawful and he would block the move. He even suggested that if company directors preceded with such plans they could face legal action. You can read the full statement here:

5. In commodities: Copper got smashed overnight, losing 4.5% to $2.52 an ounce as traders turned the attention to risks about weak demand and over-supply in China. Spot prices for iron ore benchmark 62% fines rose remained stable in the high-$60 range. Pressure remains on crude oil prices as US inventory draw-downs were lower than expected. Gold lost another 1.4% as the US dollar strengthened following the Fed’s relatively positive outlook, falling below $US1,240 an ounce.

6. Citi warns on house prices: Citi analysts have predicted in a research note that house prices could fall by up to 7% over the next 18 months, the Sydney Morning Herald reports. Citi highlighted increasing supply as a drag on prices as apartment construction is completed. It’s pricing model also suggested that recent price rises were driven by increased leverage, which could drive prices lower if APRA’s recent measures to curb interest-only lending are effective.

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