Originally published by Rivkin Securities
The major US indices made new highs again overnight as the steady upward momentum continues, even as President Trump’s tax plan becomes less certain to pass. The S&P/ASX 200, on the other hand, was flat yesterday although it has rallied 1.3% since Friday last week. This brings it up off the support level that has formed around the 5,650-5,660 region and back into the middle of the four-month trading range.
A big contributor to the weakness in the ASX 200 is the Telstra (AX:TLS) share price, which has been trending down throughout 2017. As one of the largest stocks in the ASX, TLS performance has a significant effect on the index. The TLS share price may continue to remain weak until the effects of switching customers onto the NBN on profit margins become clearer. This is one of the major reasons the market is concerned about TLS at the moment.
As the largest stock in the index, the Commonwealth Bank Of Australia (AX:CBA) share price is also negative for the year which is affecting the overall index. The declines for CBA that occurred through August and early September have now stabilised indicating that the stock may have found a base.
Oil prices were higher overnight with WTI oil surging back above $50 per barrel to close up 2.7% at $50.92. US inventories have resumed their decline after a brief period of builds following hurricane Harvey. OPEC still appear to be concerned, however, as OPEC Secretary General implied that US shale producers should look at some kind of production restraint to help rebalance the market in a speech given last night.
Early tomorrow morning the US Federal Reserve will release the minutes from the most recent FOMC meeting. This should give an indication of how the Fed currently views the economy and give more clarity on the path for interest rates. The CME FedWatch tool currently calculates a 92% chance of a rate hike in December.
Data Releases:
- US FOMC Meeting Minutes 5:00am AEDT