To the scoreboard:
- Dow: 25,826.43 +287.97 (+1.13%)
- S&P 500: 2,790.62 +30.63 (+1.11%)
- AUD/USD: 0.7353 +0.0047 (+0.64%)
- ASX200 SPI futures (December contracts): 5,750 (-21)
1. Positive sentiment from the US-China trade negotiations extended to Wall Street overnight, with gains led by tech stocks and chipmakers. ASX futures are pointing lower after the local index posted its biggest one-day gain in two years yesterday.
2. The Aussie dollar pushed almost all the way to US74 cents in London trade before easing back in the US session. The offshore traded Chinese yuan gained around 1% against the greenback as the US dollar drifted broadly lower against most of the major pairs.
3. US 10-year bond yields fell back below 3%, while 2-year yields edged higher leaving the 2-10 yield curve at less than 16 basis points — the lowest level since 2007. Italian bond yields fell as budget negotiations continue between Rome and Brussels.
4. In commodities, the positive news on trade helped copper rise to a two-month high, while oil consolidated yesterday’s rise back above $US60 and iron ore also got swept up in the “everything rally“. Bitcoin is still under pressure below the $US4,000 mark this morning.
5. While optimism around trade has given markets a boost to start the week, many analysts are more cautious about the longer term outlook. Economists have pointed to a “bumpy ride ahead“, with some expressing doubt that a revised deal will be reached over the next 90 days.
6. It’s RBA day: Interest rates are set to stay on hold at 1.5% at today’s meeting, but markets will be watching for any changes in the RBA’s commentary — particularly around housing, domestic consumption and the inflation outlook. David Scutt’s full guide is here.
The main events on today’s economic calendar:
- Australian balance of payments data (11:30am AEDT) — the final input ahead of tomorrow’s GDP report.
- RBA monthly interest rate announcement.
- Bank of England governor Mark Carney speaks at UK parliament.
Have a great day.
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