Originally published by Rivkin Securities
US stocks fell overnight with the Dow Jones leading the way with a 0.68% decline. The Nasdaq 100 opened substantially lower but rallied throughout the morning and held the gains to eventually close 0.23% higher. Within the S&P 500, the energy sector was the strongest performer as the oil price rose above US$72 per barrel. The oil market is increasingly concerned about tightening supplies as the Iranian sanctions take effect and declines in Venezuela output continue. Saudi Arabia is the only OPEC country with significant spare capacity and even that is reaching its limits. US oil inventories have reached new three-year lows over the past week although refinery maintenance season is expected to cause a build in inventories.
US bond yields edged higher overnight despite the falls in the stock market. The 10-year yield is now at 3.09%, slightly below the 3.11% that would mark a new seven year high. The Australian 10-year yield, on the other hand, is substantially lower than this at 2.73% which from a historical perspective is a fairly unusual situation (where US yields are above Australian yields). The US Federal Reserve board will meet early Thursday morning (AEST) at which time it is expected to raise interest rates by 25 basis points to a range of 2-2.25%.
ASX 200 futures are slightly down this morning.
Data Releases:
- No Significant Data