Originally published by Rivkin
US stocks opened the session higher last night and traded up for much of the day however a weak final hour of trading saw the major indices give back most of the day’s gains. The S&P 500 closed up 0.3% but had been up as much as 1% earlier in the day. It was a similar story for the Dow Jones which closed flat. US bond yields have fallen substantially over the last month, possibly due to markets now pricing in fewer rate hikes in the short to medium term than had been expected. Many investors believe the Federal Reserve will be reluctant to continue hiking rates if the stock market remains weak and volatile. Notwithstanding this, a December hike is still considered a near certainty.
After a precipitous decline over the past month, WTI oil prices bounced overnight but still remain near one-year lows. Market optimism increased when the American Petroleum Institute reported lower crude inventories for the week although this was reversed when the official Department of Energy data showed that the inventories actually rose. While there is talk that OPEC + Russia may again agree to a production cut, the concern is that not all relevant parties will be able to come to an agreement. Saudi Arabia has hinted at a unilateral cut but it will want to be careful about annoying the US given that president Trump has been vocal about his desire for lower oil prices.
ASX 200 futures are up 18 points which would represent a partial recovery of yesterday’s losses if the cash market follows suit.