Originally published by Rivkin Securities
US stock markets lifted higher last night, with both the S&P 500 and Dow Jones trending up in the early part of the session before then flattening off into the close. The S&P 500 outperformed slightly, closing up 0.88% compared to the Dow’s 0.68% gain. Tech stocks, such as Netflix (NASDAQ:NFLX) rebounded overnight making up some of the losses from the prior day. The ASX had a strong day yesterday with the S&P/ASX 200 closing up 0.8% after opening unchanged. The rally continued for most of the day with the index only tapering gains in the last hour of trading.
The Aussie dollar continued to strengthen against the US dollar, resuming an uptrend that has been in place since early June. The Aussie dollar is currently trading at 0.764 which is an almost three-month high with the strength coming despite the June interest rate hike and the expectation of further hikes in the US currency exchange rates will normally strengthen for the country with higher interest rates as money flows from the low interest rate country to the high interest rate country.
Canada’s central bank governor spoke last night and signalled that the Bank of Canada may start hiking rates in the near future, as soon as next month. Canada’s economy has many similarities to Australia’s including a strong property market as well as a resources heavy economy. The BoC governor stated that the oil shock is behind them and that it is time to start moving rates back up. At the same time, the Bank of England governor has also mentioned that the UK may now be ready for the gradual removal of monetary stimulus despite the Brexit negotiations still creating uncertainty for some UK businesses. In the minutes from its most recent meeting, the Reserve Bank of Australia projected a more hawkish tone than at prior meetings and indicated that the next interest rate move is likely to be up rather than down.
ASX futures are looking strong, currently up 40 points or 0.7%.
Data releases:
- Japan Retail Sales 9:50am AEST
- US Final GDP Q1 10:30pm AEST