Originally published by Rivkin Securities
US stock indices fell for the second day in a row with the Dow Jones Industrial Average falling 362 points (1.37%) while the S&P 500 fared a little better with a 1.1% drop. Healthcare stocks were some of the worst performers with UnitedHealth Group (NYSE:UNH) falling 4.3%. The Australian stock market had a weak session yesterday with the S&P/ASX 200 falling 0.85%.
(Bitcoin) was weaker last night after a report that US regulators are investigating one of the world’s largest bitcoin exchanges, Bitfinex. The price briefly dipped below US$10,000 but it is currently holding just above this level at US$10,095.
Bond yields continued to climb with the US 10-year yield now at 2.72% and the 30-year yield is just below 3.0%. Despite the climbing yields in the US, Australian bond yields are holding their ground. The spread between the Australian and US 10-year yields is now just 14 basis points, not far off the lows since early 2000. Part of the reason for the bond sell-off appears to be the weakness in the US dollar which declined further overnight. US Dollar Index is currently trading at 89.20, nearing four-year lows.
Although gold prices rallied during the European trading session they subsequently fell back to their starting levels, currently trading at US$1,338 per ounce. Iron ore prices have retreated from their highs but are still at US$72.60 per tonne.
The Federal Reserve will meet early tomorrow morning (AEDT) to decide interest rates although given that it is Janet Yellen’s last meeting, markets do not expect any change in policy or in the wording of the statement. According to the CME FedWatch tool, markets are pricing a >70% chance of a rate hike in March.
Data Releases:
- Australia CPI 11:30 am AEDT