Good morning and happy Friday.
To the scoreboard:
Dow: 21,844.01 -204.69 (-0.93%)
S&P 500: 2,438.21 -35.81 (-1.45%)
AUD/USD: 0.7889 -0.0001 (-0.01%)
ASX200 SPI futures (Sept contracts): 5,631 (-68)
Iron ore benchmark 62% fines $US76.68/t (+1.6%)
1. Volatility! It’s looking like a rough open to this morning’s session on the ASX, as escalating tensions between the US and North Korea continued to spook global stocks overnight. The S&P500 broke its 15-day streak without a move of more than 0.3% from the previous day’s close. Stocks in the UK and Europe were also down by more than 1%, and check out the VIX volatility index for US stocks (yes it’s only a lagging indicator, but still) — it spiked by over 40%.
2. Currency flows move back into the Japanese yen: The traditional safe-haven saw increased demand in place of the Swiss franc, gaining by 0.75% against the greenback and 0.94% against the AUD. Although something of a safe haven itself, the US dollar was a little weaker given its direct involvement with North Korea. The Aussie held up relatively well against its US counterpart, and also moved higher against other commodity-bloc currencies the CAD and the Kiwi dollar. Not surprisingly, the South Korean won is under pressure and a short time ago was down by 0.8% against the USD.
3. Demand for bonds strengthens: There was strong demand for traditional safe-haven assets across bonds, currencies and commodities overnight. The yield on benchmark 10-year US treasuries (which move inversely to their price) fell by 5 basis points and dipped below 2.2% for the first time since June.
4. Data today: This morning RBA governor Philip Lowe will makes his twice-annual appearance before the House of Representatives’ Standing Committee on Economics. Lowe’s speech from the presentation will be released at 9:30am. Later tonight markets will be focused on CPI data from the US, with annual core inflation growth for July forecast at 1.8%
5. Gold’s up again: And a short time ago was trading at $1,292 an ounce — pushing towards $US1,300 an ounce for the first time since last November. Speaking of gold, hedge fund billionaire Ray Dalio thinks you should buy it, while “bond king” Jeff Gundlach tweeted earlier that gold’s technical price chart has “one of the most bullish” patterns in the market.
6. Meanwhile… Amid the market jitters from escalating geo-political tensions, Bitcoin held its value overnight and a short time ago was still trading above $US3,400. But the alternative Bitcoin Cash didn’t fare so well. The world’s second-biggest cryptocurrency, Ethereum, also had little volatility overnight and remains above $US300.