To the scoreboard:
Dow: 22,118.42 +25.61 (+0.12%)
S&P 500: 2,480.91 +4.08 (+0.16%)
AUD/USD: 0.7913 -0.0013 (-0.19%)
ASX200 SPI futures (Sept contracts): 5,718 (+12)
Iron ore benchmark 62% fines: $US76.17 (+2.8%)
1. Don’t get too excited: The main theme overnight was (once again) low volatility. US stocks edged higher again as the Dow hit a record high close for the 10th straight day. The VIX volatility index is back below 10, and last night marked the 13th straight session that stocks closed with 0.3% of their opening levels — the first time that’s happened since 1966. Domestically, ASX200 futures traders are betting that the local index will stay buoyant, with a move back over 5,800 on the cards if the buyers step in early.
2. Currencies jockey for position: There were no big moves in the US dollar after Friday night’s gains following the payrolls report. The euro edged higher while the commodity bloc currencies — CAD, AUD and the Kiwi — all faced mild selling pressure. Citi’s US economic surprise index is now back over -40 for the first time since June. With the US Federal Reserve focused on the inflation outlook in setting interest rates, the PPI and CPI data (released on Thursday and Friday this week) look to be of central importance.
3. Iron ore surges, oil bounces back: Despite a softer session for the AUD, iron ore roared ahead once again last night. Benchmark 62% fines followed steel prices higher, as demand for steel remains high at the same time as Chinese authorities have ordered local steel mills to reduce production. Oil had a wild night as OPEC producers met in Abu Dhabi to discuss compliance with production cuts, with bench mark crude falling as low as $US51.37 a barrel before recovering to close at $52.37, down just 0.1% for the day.
4. The day ahead: In Australia this morning there’s the ANZ consumer confidence index (9:30am AEST) which has been steadily improving in recent weeks. Then at 11:30am AEST there’s the NAB monthly business survey, regarded as a key indicator for Australia’s economic outlook. It’s coming off a robust result in July when business sentiment hit a 10-year high. China’s trade data could also move markets, then later tonight there’s German trade data and the US NFIB survey.
5. All aboard the Bitcoin train: Bitcoin climbed again overnight (which by the way is good news for stocks — the two appear to be somewhat correlated), and a short time ago was trading at a new record high of $US3,358. If that’s got you excited, a Harvard academic that Business Insider spoke to predicts that Bitcoin prices could reach $US100,000. Following last week’s fork in the currency, Bitcoin’s alt-version Bitcoin Cash also had a big night – it shot up by as much as 50% and a short time ago was trading at $US340.15.
6. US dollar weakness here to stay?: As the world’s reserve currency, global markets have felt the ripple effects of the sustained weakness in the US dollar this year. It’s helped to benefit US stocks and emerging markets, while the opposing strength in the euro and yen typically weighs on European and Japanese stocks. With the US inflation outlook shaping as a key indicator for the direction of the greenback, this post from the Wall Street Journal analyses whether bearish sentiment towards the USD is becoming more firmly entrenched.