Originally published by Rivkin Securities
The Dow Jones had a weak session overnight, falling 1.6% with financials leading the decline. All of the large bank stocks in the US are now down for the year to date. The falls may have been triggered by fears of financial crisis in Italy as political uncertainty weighs on financial markets. Italian bond yields have surged from around 1.8% to over 3.0% in the past couple of weeks.
The second estimate of US first quarter GDP will be released tonight although the figure is expected to remain unchanged from the first estimate at 2.3%. In comparison, the Atlanta Fed GDPNow tracker is currently predicting a 4.0% increase for the second quarter which, if realised, would be the strongest quarter since 2014.
Oil prices have been plunging over the past week as the prospect of increased output from OPEC weighs on the market. WTI oil has declined from a three-year high of US$72 per barrel to the current price of US$66.80. Global inventories are now back in line with five-year averages as a result of OPEC’s efforts to reduce the glut that had persisted since 2015 and therefore OPEC is ready to begin ratcheting production back up. Initially, any OPEC production increases would just offset the unplanned declines in Venezuelan output as a result of economic turmoil in that country.
The ASX 200 found support at around the 6,000 level earlier this week although this will likely be tested today following the weak leads from overseas markets. ASX 200 futures are currently down 45 points.
Data Releases:
- US Prelim GDP 1Q 10:30pm AEST