To the scoreboard:
Dow: 21,409.07 +0.55 (+0.001%)
S&P 500: 2,425.53 -1.90 (-0.08%)
AUD/USD: 0.7640 +0.0002 (+0.03%)
ASX200 SPI futures (Sept contracts): 5,647 (-5)
Iron ore benchmark 62% fines: $US65.40 (2.1%)
1. Nothing to see here: Global markets remain calm on lower trading volumes ahead of key developments later tonight, with US Fed Chair Janet Yellen’s testimony to Congress and the Bank of Canada interest rate announcement. US stocks took a tumble on political turmoil, after Donald Trump’s son disclosed emails which indicated that Russia was involved in the Trump election campaign. But the S&P500 battled back to finish the day flat, while stocks in Europe fell by 0.7%.
2. Political turmoil weighs on USD: The US dollar index fell by 0.3% in the wake of the Trump email controversy. That pushed the euro toward $US1.15 and the pound also strengthened. USD/CAD rose above $US1.29 with traders cautious ahead of the BoC rates decision tonight, but the dollar is still near a 10-month low against the loonie. The AUD rose back towards US76.5 cents and performed strongly against most G10 currencies.
3. Bond markets peaceful: Major bond markets were quiet overnight, although Australian 10-year government bonds pushed briefly above 2.8% before closing a little lower. Aussie 10-years rose by 10 basis points at the end of last week after the government announced a new issue of longer term bonds with a maturity date of June 2039. US 10-year treasuries fell slightly to 2.36%.
4. But the risks remain: JP Morgan chief Jamie Dimon reiterated overnight that the unwinding of record stimulus measures by global central banks poses an unprecedented risk. He said the sheer scale of withdrawal means no one can really predict how it will play out. Despite the risks, in testimony later tonight Janet Yellen is likely to maintain the US Fed’s stance of cautious optimism, similar to the approach adopted by NSW fans ahead of tonight’s Origin decider.
5. A good night for commodities: Benchmark crude climbed by 2.8% to $US48.20, after a preliminary report indicated that weekly US oil inventories, released later tonight, are likely to show another stock draw. That was after spot prices for iron ore rose for the fourth straight session, as high operating margins at Chinese mills help to maintain demand for steel.
6. Bitcoin chart looks “scary”: That’s the view of Richard Turmill, the chief investment officer for global asset manager Blackrock. Turmill said that price speculation in cryptocurrency markets may have been driven in part by the era of ultra-easy monetary policy since 2009. It follows heavy selling in the market yesterday as prices for Bitcoin and Ethereum both crashed.