Originally published by Rivkin Securities
US markets fell overnight with the Dow Jones down 0.74% and the S&P 500 down 0.94%. Despite the falls, the Dow and S&P 500 are still close to their recent highs while the Nasdaq 100 has been falling for the last month and is now down almost 5% from its high on June 8. The decline in the Nasdaq 100 is largely lead by the so called ‘FANG’ stocks, Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX) and Google (NASDAQ:GOOGL), which are four of the largest capitalisation stocks in the index and are representative of the technology sector.
The official Department of Energy oil inventory data confirmed the large drawdowns in both crude and gasoline inventories last week although the rally in crude was short lived as rising production offset the bullish effect of the inventory data.
Australia’s trade balance data for May was released yesterday, showing a $2.47bn surplus, substantially higher than the $1bn surplus expected. Exports of coal were a large contributor as the industry rebounded from the effects of Cyclone Debbie which affected both mines and railways. The strong surplus is a good sign for the economy and indicates that the Australian dollar is at a level that is conducive to a positive balance of trade. Net exports are a contributor to GDP and therefore the strong trade balance should help GDP growth for the quarter. Also on the trade front, the EU and Japan have reached an agreement on a free trade deal which will create the world’s biggest open economic area and lies in contrast to the protectionist policies being touted by the current US government.
Tonight the US will release its employment data for the month of June. Investors are looking for a rebound from the prior month where the number of new jobs created was below expectations. Another weak month would make it harder for the Federal Reserve to ignore this data and may put pressure on it to slow down its rate hiking program.
Futures pricing indicates a lower open for the S&P/ASX 200 this morning, following leads from the US.
Data releases:
- US Employment Change 10:30pm AEST
- US Unemployment Rate 10:30pm AEST
- US Average Hourly Earnings 10:30pm AEST