Good morning and happy Friday.
To the scoreboard:
Dow: 23,469.00 -94.36 (-0.40%)
S&P 500: 2,585.28 -9.10 (-0.35%)
AUD/USD: 0.7681 +0.0001 (+0.01%)
ASX200 SPI futures (December contracts, 20 minute delay): 6,016 (-27)
1. A hint of volatility: The ripple from yesterday’s surprising session in Asian trade — with an intra-day swing of almost 4% in Japanese stocks — was felt across global markets overnight. The pan-European STOXX600 index dipped by 1.1% — it’s worst day in four months — and the selling extended to US stocks, which were also weighed down by talk of delays in the Republican tax plan.
2. Greenback down: The US dollar index fell 0.4% amid the worries that tax-cut reform in the US Senate might be delayed. That weakness in the USD is the only thing supporting the Aussie dollar this morning ahead of the Reserve Bank’s quarterly Statement on Monetary Policy (SoMP) at 11:30am AEST. It’s holding at 0.7680 US cents but is lower against the other major currencies.
3. The Commission speaks: The European Commission (EC) raised its growth forecast for the European economy, but expects inflation to remain flat. The positive outlook didn’t extend to the UK though — the EC expects Britain’s economy to grow slower than every major European country this year. European bond yields rose, led by an 8 basis point rise in Italian 10-year notes.
4. Markets in a “dreamland”: Paul Singer — billionaire founder of hedge fund Elliot Management (which is currently pushing for a radical shakeup of the mining giant BHP) — has sounded another warning on the global economy, suggesting in a note to clients that complacency is still the order of the day and markets remain at risk of a sharp correction.
5. The day ahead: The RBA is set to outline its latest growth and inflation projections in this morning’s SoMP. A big surprise is unlikely after the bank indicated that growth forecasts will remain little-changed at its November interest rate announcement on Tuesday. There’s also a scheduled update on China’s debt pile, with Chinese aggregate financing data set to be released later today.
6. Oil holds gains: Benchmark crude oil prices rose by 0.7% last night and remain at multi-year highs around $US64 a barrel, as further unexpected cuts to supply may be flying under the radar. Amid a mild risk-off tone in markets overnight, gold rose again and is up by around 1.3% for the week, while iron ore markets were quiet.
Enjoy your weekend, I’m on Twitter @Mr_SamJacobs.