Originally published by Rivkin Securities
The Dow Jones rose modestly overnight, gaining 0.4% while the S&P 500 was virtually flat. The energy sector was a strong performer as oil prices bounced following a couple weeks of declines while technology underperformed. This was reflected in the Nasdaq 100 which fell 0.8%. The ASX 200 has rallied back above 6,000 although futures are eight points lower this morning.
Australia’s trade balance data was released yesterday which came out as expected but a smaller surplus than the prior month. Exports fell by 2% (in value) as iron ore and coal volumes were both lower. This will provide a smaller boost to GDP for the second quarter than was the case for the first quarter as net exports are a positive contributor to GDP.
A week of mostly good economic data for Australia supported the dollar, allowing it to reach a one month high of US$0.767 although it has since faded back to US$0.7625. Despite the recent rises, the divergence of US and Australian monetary policy is likely to keep downward pressure on the Aussie dollar.
Oil prices rallied overnight although the discount of WTI (the US benchmark) relative to Brent (the international benchmark) is at a high point since 2015. This is occurring because of the rapid increase in production from US shale coupled with the tightening of supplies elsewhere through the actions of OPEC and Russia. Oil markets will be watching the June meeting of OPEC for clues as to its policy regarding the production cuts going forward.
Data Releases:
- China Trade Balance 12:30pm AEST (approx)