Originally published by Rivkin Securities
After strong leads from Europe (FTSE 100 +1.1%, Dax +0.9%), US markets also climbed early on in the session. The Dow was up over 250 points shortly after the open but subsequently gave back all those gains and ultimately finished the session 0.7% lower. It was much the same story for the S&P 500 which closed down 0.9%. The energy sector again outperformed as oil prices spiked higher on a huge drawdown in inventories and a stalling of the production increases from US shale. Energy and utilities were the only sectors to close positive overnight.
The Reserve Bank of New Zealand met this morning and kept rates on hold at 1.75%. The bank seems comfortable with the current level although the statement suggests that there is as much chance of a cut for the next move as for a hike. Economic growth in NZ for the first quarter was weaker than expected and inflation is below the target.
Short term lending rates between Australian banks have been rising recently with the three-month bank bill swap rate currently at 2.11%, 61 basis points above the official cash rate and about 40 basis points above levels from a few months ago. If these rates remain elevated banks may be forced to hike borrowing rates independently from any change in the official cash rate.
The final estimate of US first quarter GDP is expected tonight although it is expected to remain unchanged from the prior estimate at 2.2%.
Data Releases:
- US Final GDP 10:30pm AEST