S&P 500 closes a fraction shy of 3,000

Stock Markets

US stock markets had a directionless trading session overnight with the S&P 500 failing to break through 3,000 after a few close passes. The index bounced off this resistance level twice during the session but closed a fraction shy of it at 2,999.9. A sustained break through this level would be a new record high for the index. Hopes of a rate cut are helping fuel the stock market rally as Federal Reserve chairman Jerome Powell made dovish remarks at his testimony before the US House of Representatives Financial Services Committee. This same dovishness has helped push gold prices to a five-year high although the rally was tempered by a relatively strong CPI (inflation) number released last night. Core CPI increased 0.3% month on month, above the expectation of an 0.2% increase. US earnings season will begin next week and will likely be a driver of stock prices for the following several weeks. Australian earnings season usually hits full swing in August.  

Australian stocks also continue to rally and have just broken above the 2007 pre-GFC highs. The ASX 200 closed up 0.4% on Thursday although it looks set to fall today following on from the gains in the US stock market last night. ASX 200 futures are down 26 points this morning.

ASX 200 futures are currently down 26 points.

Today's data releases:   China Trade Balance, US PPI.

Commodities and Currencies

WTI oil prices have broken above US$60 per barrel for the first time since early May as declining rig counts in the US are expected to lead to lower production in the coming weeks. Furthermore, the beginning of the US driving season typically leads to increased gasoline demand and will therefore increase crude usage. The last three weeks have also seen substantial inventory declines in US oil stockpiles.

The spot price of iron ore is currently up 2.3% at US$118.33 a tonne.

The spot price of gold is currently down 1.0% at US$1404 an ounce.

The AUD is currently up 0.14% at US69.7¢.

This article was written by William O'Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3633.