To the scoreboard:
Dow: 20,943 -33 (-0.16%)
S&P 500: 2,399 +2 (+0.11%)
AUD/USD: 0.7354 -0.0011 (-0.15%)
ASX200 SPI futures (June contracts – 20 minute delay): 5,883 +12
Iron ore benchmark 62% fines: $US60.75 unchanged – spot markets closed
1. Oil price shoots up: Oil prices rose by over 3% as weekly oil inventories in the US fell by 5.25 million barrels against a 1.78 million forecast. The weekly stock report has proved difficult for analysts to predict, and the huge fall sent benchmark crude back above $US50 a barrel. Prices also benefited from comments by OPEC producers Algeria and Iraq that they favoured an extension to OPEC’s supply cuts beyond 2017.
2. Markets still subdued: It’s still all calm on global markets, with the CBOE Volatility Index remaining at record-low levels below 10. The oil price gave US stocks a bit of a boost, and the S&P500 edged higher to a new closing record. Gains were likely slowed by caution in the wake of Donald Trump’s unexpected firing of FBI director James Comey.
The US dollar index fell slightly on low volumes, although US two-year treasury yields continue to creep higher and the spread in short term yields should provide support for the US dollar in the near term.
3. New Zealand dollar trips and falls: The NZD Index fell by more than 1.5% this morning after New Zealand’s central bank kept interest rates on hold at 1.75%. Money had moved into the Kiwi in the hope that the central bank would offer a more bullish statement, but it chose to stay more accommodative and that saw capital flows move swiftly out of the currency. Here’s a chart of the Aussie dollar’s move against the NZD this morning:
4. Snap Inc gets hammered: Looks like the short-sellers were right. Shares in Snap Inc, the parent company on Snapchat, crashed by 20% in after-hours trading after the company’s first earnings report missed expectations. Snap Inc’s earnings per share and its daily user growth numbers both disappointed the market, while quarterly revenue was $US149.6 million against $US159 million.
5. Draghi manages expectations: European Central Bank president Mario Draghi said overnight the bank is still planning to carry out its bond-buying stimulus program in full to the end of this year. The Euro was slightly weaker after he said that while conditions were improving, it was too early to declare victory over low inflation. The UK’s monetary policy meeting is at 9pm AEST, with no change expected from the 0.5% rate but the accompanying statement and minutes will be closely scrutinised.
6. Chinese shares continue to struggle: Shares on the Chinese mainland have had a bad week as markets are uneasy about slowing growth and systemic credit risk as China’s authorities try to reign in excessive leverage. Consumer inflation in China yesterday rose back above 1%, while producer prices fell after the well-documented falls in commodity prices. This chart shows the declines on the Shanghai Composite Index, which has lost 3.8% over the past week: