Originally published by Rivkin Securities
US stock markets opened higher overnight but weren’t able to hold onto the gains as stocks retreated throughout the session. The S&P 500 closed 17 points lower (0.6%) while the Nasdaq 100 was the hardest hit, declining 1.2%. The Google (NASDAQ:GOOGL) share price was one of the hardest hit of the big tech companies having declined 2.3%. The decline may have been triggered by President Trump's firing of Secretary of State Rex Tillerson.
US bond yields fell (prices rose) with the 10-year yield back down to 2.84%. The rally in yields has been firmly halted and yields are now consolidating around this level. The release of CPI data overnight was closely watched but came out as expected with an 0.2% increase month on month. Higher inflation (as measured by the CPI) would be a reason for bond yields to rise as long maturity bonds bear significant inflation risk.
The US Dollar Index closed lower this morning having failed to hold above 90. This has helped support the Australian dollar, which is currently trading at US$0.785, although it did break above US$0.79 overnight. The weakness in the US dollar provided a tailwind for precious metals with gold climbing US$7.00 to US$1,327 per ounce.
Tonight, US retail sales and PPI data will be released. The PPI (producer price index) is often a leading indicator of changes in inflation that will eventually be reflected in the CPI (consumer price index). Analysts are looking for an 0.3% increase in retail sales for the month of February after a flat January.
Data Releases:
- US PPI 11:30pm AEDT
- US Retail Sales 11:30pm AEDT