To the scoreboard:
- Dow: 25,313.14 -196.09 (-0.77%)
- S&P500: 2,833.28 -20.30 (-0.71%)
- AUD/USD: 0.7284 -0.0012 (-0.16%)
- ASX SPI futures (September contracts): 6,229 (+11)
1. Global markets had a wild session on Friday night, stemming from the collapse of the Turkish lira which closed the week more than 20% lower. Turkish leaders refused to back down over the weekend following the latest round of US sanctions, and the lira has slumped again in early Asian trade.
2. The lira’s collapse gave rise to contagion fears, particularly around the exposure of European banks to Turkish assets. The euro fell sharply and US stocks followed Europe lower, as Italy’s MIB index lost 2.5%. ASX futures markets closed higher but it remains to be seen whether that translates into a gain at the opening bell.
3. The recent strength in the US dollar was reinforced by Friday night’s US inflation print, as core CPI growth in July beat expectations. The AUD fell below US73 cents to end the week and has lost further ground in early morning trade.
4. The risk-off tone drove demand for safe haven assets, and the yield on benchmark US 10-year treasuries fell by 5 basis points to 2.87%. The Japanese yen is also slightly higher this morning.
5. The week ahead: Australia’s labour market will take centre stage this week, with all-important Q2 wage growth data on Wednesday followed by monthly jobs figures on Thursday. This week’s full economic calendar is here.
6. In commodities, gold remains stuck near 18-month lows while oil got a boost on Friday night as Iran sanctions continue to cloud the supply outlook. Bitcoin steadied over the weekend and is back above $US6,300 this morning.
Have a great week.
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