To the scoreboard:
Dow: 23,560.28 +21.09 (+0.09%)
S&P 500: 2,592.52 +4.68 (+0.18%)
AUD/USD: 0.7687 +0.0036 (+0.47%)
ASX200 SPI futures (December contracts, 20 minute delay): 5,958 (+25)
1. It’s RBA day: The Reserve Bank will make its November interest rate announcement at 2:30pm AEST, a half hour before the starter’s gun for the Melbourne Cup. While the bank is almost certain to keep rates on hold at 1.5%, weak reports for inflation, retail sales and house prices over the last month add an extra layer of intrigue ahead of today’s announcement. David Scutt’s 10-second guide has everything you need to know.
2. Oil surges again: Benchmark crude oil climbed by another 3% overnight to $64.23 a barrel, as markets traded around news of the corruption arrests in Saudi Arabia. Oil prices have now rallied by 40% since June, amid continued discussions that OPEC supply cuts will be extended while US producers have scaled back new production with a renewed focus on profits margins.
3. Still risk-on: The oil rally meant energy stocks gave US markets a boost, with the Dow, S&P500 and NASDAQ all hitting new record highs. In deal news, semiconductor giant Broadcom has proposed a $US130 billion takeover offer for rival Qualcomm — which would make it the largest deal in tech history — while Rupert Murdoch’s 21st Century Fox has been in sale discussions with Disney.
4. Iron ore rockets higher: Benchmark 62% fines logged their biggest gain in three months, surging by 5.8% to $US63.36 which immediately returned prices to their higest level since late September. The moves were likely assisted by a squeeze on short positions, after iron ore futures finally found support last week after months of falls.
5. The US dollar again fails to break higher: There were sharper falls for the greenback against the pound and AUD, while the Japanese yen gained back ground after slipping to a multi-month low yesterday. The Aussie is higher ahead of today’s rates decision, helped by risk-on sentiment overnight along with the gains in iron ore while base metals — copper, zinc and nickel — also climbed.
6. Bond buying continues: One factor holding back the US dollar rally is that longer-term US bond yields remain compressed. US 10-year bonds fell by another 2 basis points overnight to 2.32%, which takes the spread between 2-year and 10-year bonds to its lowest level in over a decade. US 10-years have now fallen by around 15 basis points from recent highs, after a sell-off saw yields climb at the end of October.
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