To the scoreboard:
- Dow: 24,527.27 +157.03 (+0.64%)
- S&P 500: 2,650.78 +14.00 (+0.53%)
- AUD/USD: 0.7210 +0.0005 (+0.07%)
- ASX200 SPI futures (December contracts): 5,604 (+12)
1. The UK pound rallied strongly during a big day of politics in London. The currency jumped higher after markets assessed that Prime Minister Theresa May was likely to fend off a vote of no confidence in her leadership. That result was confirmed that morning, although the pound is still off from its overnight highs.
2. US stocks had a positive session amid more optimism on US-China trade, although markets trimmed gains into the close. According to reports, China has begun drafting plans to ease restrictions on foreign investment, while President Trump said he would intervene on the Huawei arrest if it helped trade
3. Also helping US stocks was a flat print for November inflation data, in line with economists’ forecasts. Core inflation rose by 0.2% in November, leaving the annual increase at 2.2% — still at the lower end of the US Fed’s 2-3% target range.
4. European stocks also rose strongly, as Deutsche Bank surged while the FTSE MIB index in Milan gained 1.7%. That followed a promise by Italy’s government to lower its budget deficit target so as to avoid sanctions from the European Union. The index which tracks Italian bank stocks rose by 3%.
5. In line with the more positive risk sentiment overnight, 10-year US bond yields climbed back above 2.9% while the US-China trade development helped the Aussie dollar grind higher against the greenback as the US dollar lost ground against all the major pairs.
6. In commodities, oil prices pared earlier gains after weekly oil inventory data in the US showed crude stocks fell by less than expected. Iron ore snapped a four-day losing streak, while Bitcoin is holding steady at around $US3,400.
Today’s economic calendar:
- European Central Bank policy meeting.
- Inflation data for Germany and France.
- Trade prices and jobless claims in the US.
Have a great day.