S&P 500 At New Record High

US stock markets had a strong session, rising on the open and holding the gains for the rest of the session. The Dow Jones closed 0.7% higher at 23,590 and the S&P 500 was 0.65% higher, just one point shy of 2,600. This makes the year to date gain for the S&P 500 over 15% with very few significant drawdowns. Markets may have been spurred along on news that talks relating to the North American Free Trade Agreement are progressing well which could bring benefits to both Canada and Mexico as well as the United States.

The Aussie dollar had a small jump overnight, reaching US$0.758 despite the release of the minutes of the most recent monetary policy meeting showing that the RBA is still concerned about wages growth and when it will start adding to inflation. As a result, many economists don't see a case for a rate hike anytime soon. With US rates expected to continue increasing, the narrowing rate differential will continue to pressure the dollar.

Oil has started climbing again with WTI crude back above US$57 per barrel, still short of the $57.35 high reached earlier this month but nevertheless close to making new two-year highs. Energy stocks should benefit from oil strength while large consumers of oil (or its derivatives), like airlines, may suffer. Official oil inventory data out tomorrow should indicate whether OPEC cuts are continuing to cause drawdowns in inventories.

Early tomorrow morning, the minutes from the most recent FOMC meeting will be released. These are expected to confirm the view of traders that a rate hike is a near certainty at next months meeting.   

Data Releases:

–    US Durable Goods Orders 12:30am AEDT

–    US FOMC Meeting Minutes 6:00am 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.