Good morning and welcome back.
To the scoreboard:
Dow: 21,235.67 -36.30 (0.17%)
S&P 500: 2,429.39 -2.38 (-0.10%)
AUD/USD: 0.7540 -0.0001 (-0.07%)
ASX200 SPI futures (June contracts): 5,618 (+5)
Iron ore benchmark 62% fines: $US54.87/t (+0.85%)
1. Stocks weakness: The tech-heavy Nasdaq slipped for a second day, adding to a decline of nearly 2% per cent on Friday. The fall highlighted the fragility of a tech rally driven largely by a handful of high-flying mega-cap stocks that are more heavily owned by managers of large funds than at any other point in the eight-year bull market. The S&P 500 and Dow also declined, albeit in more muted fashion, as weakness in tech and raw-materials shares was partially offset by gains in telecom and energy companies.
2. Iron ore rebounds: Iron ore spot markets rebounded modestly on Monday, recouping some of the losses recorded on Friday when prices tumbled to a fresh 11-month low. According to Metal Bulletin, the spot price for benchmark 62% fines rose by 0.85% to $54.87 a tonne, snapping a three-day losing streak in the process. On Friday it tumbled 1.7% to $54.41 a tonne, extending its losses from February 21 to 42.6%. That was also the lowest level since July 1, 2016. Metal Bulletin said that the rebound in iron ore prices coincided with renewed strength in Chinese steel markets.
3. Australia today: Futures point to a weaker open for Australian stocks, which resume trading after a three day break. While global stock weakness and rising concerns from the unstable nature of the UK government to problems plaguing the Trump administration will weigh on sentiment, the modest rebound in iron ore prices could lend some support. Iron ore is Australia’s largest mining export. The Australian dollar was steady at 75.41 US cents. We have NAB business confidence survey while later in the day traders will parse US Federal Budget Balance, UK CPI and US PPI to gauge the strength of the global economy.
4. Pound in retreat: The pound fell to a fresh low of $US1.264 on Monday. Focus has turned to the unstable nature of the new government and the precarious position of prime minister Theresa May, an unfriendly backdrop for spending and investment. With open speculation of a second election this year, one opinion poll published on Monday puts Labour ahead of the Conservatives. There has also been no indication as yet from 10 Downing Street that a change of tack on the government’s Brexit position is imminent.
5. Not all gloom globally: French president Emmanuel Macron expanded his control of French politics as voters put his party on track to a sweeping majority in the National Assembly in the first round of legislative elections, ousting establishment stalwarts in the process. The new president’s year-old party, Republic on the Move, won 32.3% of the vote alongside its centrist ally MoDem, more than 13 percentage points ahead of the Republicans’ group, according to the Interior Ministry’s final vote count. At this stage, this is reflecting in a fall in French government bond yields rather than a firmer Euro. Elsewhere, the Canadian loonie and the nation’s bond yields are soaring after the Bank of Canada offered its strongest signal yet that it’s ready to raise interest rates as the economy gathers steam.
6. Another hedge fund returns money: Viking Global Investors, one of the world’s largest hedge funds, is returning about a quarter of its capital to investors as its chief investment officer steps down, according to a letter the firm sent to investors Monday morning. The $US32 billion hedge fund said in its letter it would be returning $US8 billion beginning in August as part of a plan to let its traders hold smaller, more liquid positions. It also informed investors that Daniel Sundheim, the firm’s chief investment officer, would be leaving to work on his own business ventures after 15 years at the firm.
BONUS ITEM: Bitcoin nearly hit $US3,000 before plunging. The cryptocurrency climbed to an all-time high of $US2,999.97 a coin in overnight action, only to see the price drop to around $US2,666 a coin.
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