OVERNIGHT MARKET SNAPSHOT (as at 7am AEST)
- SPI200 (Dec) overnight futures up 6 pts to 6693
- SP500 up 1.03 pts to 3006.73
- NASDAQ down 8.62 pts to 8177.39
- Dow Jones up 36.28 pts to 27,147.08
- FTSE100 down 6.35 pts to 7314.05
- DAX30 up 17.01 pts to 12,389.62
- GOLD futures US Session (December) down $12.50 to $1500.90 an ounce
- COPPER futures US Session (Comex Dec) down $0.0150 to $2.6120 a pound
- OIL futures US Session (Nymex Oct) down $1.09 to $58.25 a barrel
- CRB Index down 1.16 pts to 177.63
- AUDUSD trading at 0.6829
- EURUSD trading at 1.1029
- GBPUSD trading at 1.2474
- USDJPY trading at 108.4200
- USD Index (ICE Sept) trading at 98.127 down 0.308
US Indexes ended the session with minor gains thanks to a sharp spike into the close. The Fed cut rates and saw little change to policymakers projections for the economy going forward seeing GDP growth being slightly higher, unemployment to remain low and inflation to lift into 2020. The Fed Reserve has done its job to support the US and global economy so now it seems that it is up to Trump to sort out the Trade War headwinds. Traders reacted to the news in two stages it seems, the first move and spike lower from traders who think that the Fed has not done enough, the second move and bounce back from traders who bought the dip as they believe the Fed did exactly as needed. The DOW closed up 0.13% and the broader SP500 was up 0.03% while the Nasdaq ended down 0.11%. In Europe, major Indexes ended the session flat ahead of the US Feds rate statement as traders went into a holding pattern.
The US Fed Reserve lowered rates by 25 basis points as expected and left the door open to further rate cuts if necessary giving a few mixed signals to the market. Powell said that the Fed will be adjusting its view month by month and will be very ‘data driven’ meaning that they are not on a ‘pre-set’ course of rate cuts. Powell noted that the US labour market is strong and expects inflation was likely to return to the 2% annual goal. Trump was not happy with the outcome and took to twitter to blast the Fed chair saying ‘no guts, no sense, no vision’ and ‘a terrible communicator’ (even prior to Powell starting the news conference). Forecasts from all 17 policymakers released at the end of the meeting showed broad disagreement as 7 expected a third cut by years end, 5 seeing the current rate cut as the last and 5 who were against the current rate cut.
The USD bounced back to rally and put pressure on other major crosses after the Fed signals potentially no more cuts for 2019. Projections were of a buoyant economy under stresses of Trumps trade war and expectations for further cuts this year, which have been baked into price, have eased to send the dollar up. The EURO fell over as the USD spiked and traders now look to target 1.0990 lows. The GBP saw some volatility after the Fed release as price initially spiked lower and then suddenly changed direction to rally and take out highs prior to the release around 1.2493. The AUD continued its move lower and now more than ever is linked to trade war news. The USDJPY spiked up through highs around 108.300 as the bounce in the USD dragged the pair higher.
Gold saw sellers jump into the action on the Fed statement as safe haven buyers had to re-assess their view for the economy and volatility. The economy is doing okay so Gold bulls hopes now hinge on the US and China trade war. Oil continued to fall after Saudi Arabia said it would quickly restore full production following last week’s attack on its facilities and US inventories unexpectedly increased. Copper continued the move lower as price searches for some support around 2.5990.
Cryptocurrencies were mixed overnight with Bitcoin seeing a lack of its traditional volatility while Ripple had a run higher. Bitcoin is currently trading at $10206.5 down 0.45% while Ethereum is at $211.55 down 0.52% and Ripple is trading at $0.31189 up 6.55%.
The ASX200 opened stronger yesterday to follow the lead from the US, but could not hold onto the gains into the close. In the end the Index ended down 13.7 points to 6681.6 as buyers took the session off ahead of the US interest rate news. Gold was the best performing sector while energy came under pressure after the fall in Oil. Falling stocks outnumbered advancing ones by 607 to 587 and 366 ended unchanged.
The ASX200 is expected to open up 15/20 points after the SPI200 managed to lift off its lows with a sharp rally into the close.
ECONOMIC DATA OUT TODAY (AEST)
AUD Employment Change and Unemployment Rate 11:30am
AUD RBA Bulletin 11:30am
JPY Monetary Policy Statement and BOJ Policy Rate Tentative
CHF SNB Monetary Policy Assessment 5:30pm
EUR Current Account and Unemployment Claims 10:30pm
USD Existing Home Sales 12am
SPI200 INTRADAY LEVELS TO WATCH