3. Oil prices plunge; calls mount for OPEC intervention: In the wider commodity markets, oil prices continue to fall, on the assumed impact the coronavirus will have on global energy demand. WTI Crude plunged by roughly 3 per cent last night, to briefly trade below the $US50 per barrel mark, and at nearly 2-year lows.
The move has added to speculation that OPEC+ may need to soon intervene in the oil market to staunch the sell-off, and commit to even greater production and supply cuts.
4. US and European shares stage rebound: Having navigated through Chinese markets’ re-open, a semblance of relief emerged in European and US stocks markets. Key equity gauges across both regions rebounded last night, in what’s perhaps a small vote of confidence in China’s policymakers’ actions.
The DAX and FTSE traded 0.49 per cent and 0.55 per cent higher, respectively. While the benchmark S&P500 climbed over 0.7 per cent in Wall Street trade, lead, once again, by strong buying activity in US tech stocks.
5. Global PMIs deliver some good news: Sentiment was buoyed overnight in global markets by a spate of solid manufacturing PMI surveys. Manufacturing activity was revealed to have improved in China, Europe and the US last month, adding some evidence to the claim that the global economy is beginning to rebound.
US ISM Manufacturing PMI provided the biggest shot in the arm to the market. It surprised the market with an “expansionary” reading of 50.9, to suggest manufacturing grew in the US economy for the first time since August.
6. US Dollar climbs, Pounds falls: The better than expected US manufacturing data boosted confidence in the outlook for US economic growth, and drove broad based US Dollar strength in overnight trade.
The US Dollar Index added around 0.3 per cent, as market participants pared bets of US interest rate cuts this year. The Dollar also found itself supported by a drop in the Pound. It shed over 1.5 per cent overnight, as fears re-emerge about potential acrimony between the EU and UK heading into trade-talks.
7. ASX to open flat on RBA day: SPI Futures are indicating a practically flat open, after yesterday’s 1.34 per cent sell-off. The day ahead for local markets will generally be focused on the RBA’s first policy meeting for 2020.
On balance, the market thinks that the RBA will keep interest rates on hold today, with only a 20 per cent chance of a cut implied in market pricing. The primary focus will likely be on the RBA’s commentary about its updated economic forecasts, ahead of its quarterly monetary policy statement on Friday.
8. Market watch:
ASX futures flat at 6859 near 7.45am AEDT
- AUD -0.1% to 66.86 US cents
- On Wall St near 12.45pm: Dow +0.6% S&P 500 +0.8% Nasdaq +1.3%
- In New York: BHP -0.7% Rio -0.5% Atlassian -0.2% Telsa +13.4%
- In Europe: Stoxx 50 +0.6% FTSE +0.6% CAC +0.5% DAX +0.5%
- Nikkei 225 futures flat Hang Seng futures +0.3%
- Spot gold -0.8% to $US1576.87 /oz at 12.36pm New York
- Brent crude -3.1% to $US54.88 a barrel
- US oil -2.2% to $US50.41 a barrel
- Iron ore -5.4% to $US80.38 a tonne
- Dalian iron ore -8% to 606.5 yuan
- LME aluminium -2.1% to $US1686.50 a tonne
- LME copper -0.8% to $US5523 a tonne
- 2-year yield: US 1.35% Australia 0.62%
- 5-year yield: US 1.35% Australia 0.62%
- 10-year yield: US 1.53% Australia 0.92% Germany -0.44%
- 10-year US/Australia yield gap: 61 basis points
This column was produced in commercial partnership between The Sydney Morning Herald, The Age and IG
Information is of a general nature only.