To the scoreboard:
Dow: 21,753.31 -234.25 (-1.07%)
S&P 500: 2,457.85 -18.70 (-0.76%)
AUD/USD: 0.7995 +0.0051 (+0.64%)
ASX200 SPI futures (Sept contracts): 5,662 (-30)
Iron ore benchmark 62% fines: $US78.39/t (+0.7%)
1. Australian dollar hits US80 cents: The USD came under more pressure as factory orders for new stock fell the most in three years. The Aussie continued its momentum from yesterday and hit a high of 0.8021 against the greenback before retreating. It may have pushed higher if not for the tensions with North Korea, which drove safe-haven demand for the Japanese yen and Swiss franc.
2. It’s GDP day: The ABS will release GDP results for the June quarter at 11.30am AEST. David Scutt’s 10-second guide is here. Analysts have revised up their forecasts after a series of solid input data this week leading up to today’s release.
3. Stocks swoon: ASX200 futures are pointing lower, after US markets came back from Monday’s holiday and hit the sell button. The North Korea situation weighed on sentiment, and banks stocks led falls with the S&P500 financials index dropping by 1.85%, after US Fed committee member Lael Brainard said she was cautious about raising interest rates given inflation remains low.
4. And bonds rally: Yields on benchmark US 10-year bonds are at 2.06% this morning, the lowest level since last November. Bond demand was driven by safe-haven capital flows and the US Fed’s cautious outlook on interest rates. The CME’s Fedwatch tool now has the probability of another rate increase by the end of the year at 36.2%. While longer-dated bond yields push lower, the yield on short-term US debt remains elevated amid concerns of a government shutdown if Congress can’t extend the US government’s debt ceiling by the end of the month.
5. Crypto volatility remains: Bitcoin hit a low of $US4,234 before rallying back to above $US4,400 in early trade. While the recent volatility has seemingly been driven by China’s crackdown on cryptocurrencies, Nobel prize-winner Robert Shiller has added his name to the list of those calling Bitcoin a bubble. And if you haven’t seen it yet, this popular chart compares the price action of Bitcoin to other notable bubbles:
6. Gold rush continues: With continued demand for safe-haven assets amid mounting geo-political tensions, gold pushed higher again and a short time ago was trading at its highest point since before the US election. Oil markets also rallied overnight, with benchmark crude climbing by as much as 2% to its highest level since May before settling at $US53.38.
Have a great day, I’m on Twitter @Mr_SamJacobs.