Overnight markets seem to be reverting back to the mean following a few days of uncertainty around Theresa May's hard Brexit speech while the wait for the Donald Trump White House is almost over.
Trump-driven markets
1. UK: With the UK putting a time window on fixing trade negotiations with the world. Considering a history of drawn out trade negotiations in the past, this could be unlikely, you may remember it took 10 years to agree on the Pacific trade deal, the one Donald Trump as indicated he will undo on his first day in office. UK negotiators may find themselves on the receiving end of negotiations rather than being the price makers as Theresa May is indicating.
More BusinessDay Videos
- Video duration
- 03:38
Australia set to join global reflation
Australia set to join global reflation
With inflation increasing in Europe, the UK, US and China, we address whether Australia will join this growing list and what could it mean for the RBA. (This video was produced in commercial partnership between Fairfax Media and IG Markets)
Up Next
NAB admits security breach
- Video duration
- 00:41
- Video duration
- 00:41
NAB admits security breach
NAB admits security breach
The bank says human error was to blame when it sent details of 65,000 customers to the wrong email address in December.
Up Next
Netflix's decade of streaming
- Video duration
- 01:50
- Video duration
- 01:50
Netflix's decade of streaming
Netflix's decade of streaming
It's now been 10 years since Netflix made its most important strategic shift away from mail-in DVDs and into Internet streaming.
Up Next
Unemployment rate rises
- Video duration
- 00:26
- Video duration
- 00:26
Unemployment rate rises
Unemployment rate rises
In a surprise to economists, the unemployment rate in December rose to 5.8 per cent, from 5.7 per cent in November. Vision courtesy ABC News 24.
Up Next
China's first ballpoint pen
- Video duration
- 01:01
- Video duration
- 01:01
China's first ballpoint pen
China's first ballpoint pen
China produces about 38 billion ballpoint pens a year, but the country has never, until now, been able to produce its complicated tip.
Up Next
Gillard and Obama butt heads over Vegemite
- Video duration
- 00:57
- Video duration
- 00:57
Gillard and Obama butt heads over Vegemite
Gillard and Obama butt heads over Vegemite
Back in 2011, former prime minister Julia Gillard was asked about Vegemite while visiting a US high school.
Up Next
Supermarket results: Woolworths could win sales race
- Video duration
- 01:59
- Video duration
- 01:59
Supermarket results: Woolworths could win ...
Supermarket results: Woolworths could win sales race
Fairfax's Catie Low explains predictions that Woolworths will shake off its 29-quarter losing streak to win the second quarter sales race.
Australia set to join global reflation
With inflation increasing in Europe, the UK, US and China, we address whether Australia will join this growing list and what could it mean for the RBA. (This video was produced in commercial partnership between Fairfax Media and IG Markets)
2. FTSE: Evidence of this is now showing up in the FTSE 100 down another 1.1 per cent overnight with the FTSE 250 also coming sharply off the highs of last week.
3. Trump wait nearly over: The Markets and the world are now weighing up the US republicans ability to match President-Elect's campaign statements with real world outcomes. Set your alarm clocks for 2am Saturday morning if you want to watch the ceremony. Commentary around Trumps success or failure is coming from some of the more experienced with George Soros speaking at Davos and suggesting Trump will fail based on his ideas being contradictory.
With US 10-year bond yields at 2.46 per cent, putting in a new high for 2017, it would seem the market is more looking forward to controlled inflation and a renewed economy.
4. Wall Street: It should be noted the US Volatility indicator rose 5 per cent overnight, the VIX is still at complacent levels any further moves higher would see some risk off taking place. With the US Indices failing to take out recent highs, namely the DOW a full 350 points away after failing to take out the 20,000 point level, further consolidation seems likely.
5. ASX: For Australia today we are expecting a follow through from the weakness in global markets overnight the BHP ADR pricing in at $26.40, The Australian 200 is expected to find further weakness in the real estate sector currently the worst performing sector both here and in the US, strong falls in real estate stock provided the drag on US indices over night. The CBA ADR down $1.60 at $81.00 suggest the financials will do it tough today.
Our markets really have a tug of war going on with commodities regaining the bid and louder noises coming from real estate investors not seeing further value in a market that made extraordinary gains over the past 4 years putting a cloud over the financials mortgage risk in a potential rising rate environment.
The index level of 5700 to 5725 is now the key resistance level on any further gains.
6. Commodities: Iron ore prices retreated, sliding $US1.06 or 1.3 per cent to $US80.99 a tonne, amid weakening demand, with the international derivatives market also experiencing thin trading since no one is willing to make big bets just before the Chinese New Year.
7. China: We will be watching China data today at around 1pm with YOY GDP expected to come in at 6.7 per cent anything less will see the AUDUSD sellers enter the market. Included in the release will be YOY industrial production numbers.
Next Monday we enter the new world where Trumps twitter account splits into the presidential account POTUS, and his personal account, with the market evaluating statements in a real world outcome, we will look forward to some market volatility as facts are sorted from the tweets.
8. Market watch:
SPI futures down 14 points or 0.2 per cent at 5623
AUD +0.5 per cent to 75.39 US cents
On Wall St, Dow -0.5 per cent; S&P; 500 -0.5 per cent, Nasdaq -0.3 per cent
In New York, BHP -0.8 per cent, Rio -1.3 per cent
In Europe, Stoxx 50 -0.1 per cent, FTSE +0.3 per cent, CAC +0.6 per cent, DAX flat
Spot gold flat at $US1204.40 an ounce
Brent crude +0.6 per cent to $US54.23 a barrel
Iron ore -1.3 per cent to $US80.99 a tonne
LME aluminium -0.5 per cent to $US1826 a tonne
LME copper -0.5 per cent to $US5739 a tonne
10-year bond yield: US 2.46 per cent; Germany 0.38 per cent; UK 1.40 per cent; Australia 2.76 per cent
This column was produced in commercial partnership
between Fairfax Media and IG