To the scoreboard:
- Dow: 24,947.67 -79.40 (-0.32%)
- S&P 500: 2,695.50 -4.56 (-0.17%)
- AUD/USD: 0.7234 -0.0036 (-0.50%)
- ASX200 SPI futures (December contracts): 5,654 (-3)
1. The Dow slumped by 500 points overnight, before US stocks rallied sharply into the close to almost finish flat. It was the largest intra-day turnaround for US stocks since 2010. The arrest of Huawai’s CFO, Meng Wanzhou, in Canada appeared to be the catalyst for the volatility, stoking fears of increased US-China trade tensions. China has since demanded her release.
2. It was uglier in Europe, as the Euro Stoxx 600 index dropped 3.3% with similar falls on London’s FTSE index. It marked the worst one-day drop on European markets since the Brexit vote in 2016.
3. Traders continued to pile back into US treasuries, as the yield on US 10-year bond yields hit a low of 2.84% before climbing back. Analysts also pointed to recent falls in the market pricing for further Fed rate hikes next year.
4. Oil prices slumped by more than 4% ahead of the OPEC meeting in Vienna, as Saudi’s energy minister outlined plans to cut production by around 1 million barrels per day — below market expectations of 1.3-1.4 million. Iron ore prices fell sharply, while Bitcoin and other cryptos continued to slide lower.
5. Trade fears and lower commodity prices weighed on the Aussie dollar, as money moved back into the safe-haven Japanese yen. “Expect more downside in AUD (particularly AUD/JPY) today,” CBA’s Joseph Capurso said.
6. RBA deputy governor Guy Debelle gave a speech last night where he noted the central bank has policy tools at its disposal in the event of a sharper downturn, including rate cuts and quantitative easing. Debelle reiterated that the RBA thinks the next move in interest rates is still more likely to be up.
Today’s economic calendar:
- The main event is US jobs data for November (+205,000 expected, u/e rate 3.7%).
- Australia PCI (construction index).
- Canada unemployment rate.
Have a great weekend.