Originally published by Rivkin Securities
Although it was trading in negative territory for most of the session, the Dow Jones staged a late rally that gave it a positive close. It was the same for the S&P 500 which closed up 0.3%. From a sector perspective, the energy sector was the weakest although oil prices held near recent highs. The technology sector was the strongest as companies like Netflix (NASDAQ:NFLX) outperformed. The ASX 200 struggled along yesterday, giving up early gains to eventually close down 0.3%. Despite this, the broader uptrend that started in early April appears to still be in place.
The Australian dollar declined steadily overnight as expectations for a rate hike by the Reserve Bank of Australia get pushed out further into the future. A strong US dollar also contributed to the weakness which saw the Australian dollar reach a 1.5 year low against the US dollar. The Australian dollar is currently trading around US$0.733. The strong US dollar is also weighing on precious metals with gold prices falling a further US$9 overnight. Gold is now back at a six-month low when priced in US dollar although in Australian dollar it is still positive for the year to date.
Today the Reserve Bank of Australia makes its interest rate decision for the month. No change in rates is expected and the market will be parsing the statement for clues as to when (and which direction) the next rate change will be. Until recently, it was widely expected that the next move would be up although this has become less certain in recent weeks. Increasing short term interest rates (independent of any official rate changes) are doing the work of a rate hike to some degree with bank bill swap rates currently at multi-year highs.
Data Releases:
- Australia RBA Interest Rate Decision 2:30pm AEST