Dow Jones Makes New High

The S&P 500 was up just 0.16% overnight while the Dow Jones significantly outperformed with a 0.7% gain, implying that the blue chip stocks outperformed the broader market. GE shares continued their slide, falling another 2%, and now down 8.1% since the release of its financial results.

Crude oil has continued its run higher as the American Petroleum Institute (API) reported large draws in gasoline and distillates stockpiles. Despite a small build in crude inventories, the oil price rallied on the news and WTI oil is now trading at $52.47 per barrel, a one month high. Until recently, risks in oil supply were more to the upside as countries like Nigeria and Iran ramped up production following from disruptions caused by war and sanctions respectively. These countries have now substantially increased production which is already baked into the oil price. The balance of risks, therefore, is shifting more to the downside, and with stockpiles moving back towards the long terms averages, there is potential to see a higher oil price from here.

The bitcoin price has fallen back to US$5,400 after reaching almost to US$6,000 per coin. This kind of volatility (a 7.2% fall in one day) is perfectly normal for bitcoin and represents one of the biggest risks to 'investing' in it. For now the trend is down but whether we have seen the ultimate highs yet still remains to be seen.

The gold price had a relatively weak session, possibly because of the new highs in the stock market. As a 'risk off' asset, gold tends to do well when other asset classes are performing poorly. The new all-time highs in the Dow Jones indicate that investors are piling into the stock market and don't currently have a pressing desire to own gold.

Today Australia releases CPI data for the third quarter. Expectations are for an 0.5% increase (trimmed mean CPI) which would be in line with the prior quarter. As one of the measures of inflation, a higher than expected reading would put pressure on the RBA to raise rates while a lower reading will provide it with headroom to keep rates low for longer.

Data Releases:

–    Australia CPI 11:30am AEDT

–    US Durable Goods Orders 11:30pm AEDT

–    Canada Rate Decision 1:00am AEDT

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This article was written by William O'Loughlin – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.