Originally published by Rivkin Securities
It was another flat session for large cap stocks while Nasdaq stocks climbed. The Dow Jones was down 0.15% while the Nasdaq 100 closed 0.7% higher. The ASX outperformed substantially yesterday with the All Ordinaries climbing 1.0%. There is no obvious catalyst for this outperformance other than the weaker Australian dollar, which is now at a one-year low at US$0.737. This has been particularly beneficial for ASX listed companies with international operations as the foreign sales translate into a larger amount of Australian dollars.
US oil production stalled at a record high last week after months of rapid growth. This puts production at just below 11 mbbl/d making it the second largest oil producer behind Russia but ahead of Saudi Arabia in third place although this is partly because Saudi Arabia is currently curtailing production as part of the production cut agreement with the rest of OPEC. OPEC is set to meet this week to discuss the future of the production cuts. Oil inventories had a very large decline last week indicating that the market could handle increased OPEC supply.
The US yield curve continues to flatten as short-term rates rise while long terms rates remain put. The US 10-year bond is still trading below a 3% yield at 2.94% while 2-year yields are 2.57%. Over the past year, the spread between these two bonds has narrowed by 44 basis points. A flat yield curve is normally indicative of the market being concerned about long term growth prospects.
Data Releases:
- UK Interest Rate Decision 9:00pm AEST