By Greg Peel

The Dow closed down 3 points while the S&P closed flat at 2047 and the Nasdaq rose 0.5%.

Will They, Won’t They?

While the Australian market is presently not dutifully following Wall Street around, given a widening disparity between the industries that primarily drive each market, US central bank policy is very much a factor Australian investors need to pay heed to. Interest rates connect the world.

On Monday night the Dow fell close to 200 points following stronger than expected US inflation data and Fedspeak reaffirming that the June Fed meeting is “live” and that a rate hike cannot be ruled out. However the US bond market shrugged off the possibility and remained unmoved, as did the US dollar and gold. Last night was a very different story, but we’ll get to that in a minute.

Yesterday the ASX200 plunged 48 points on the open, came back to almost square at lunchtime. It was a battle, it would seem, between those believing a Fed rate hike is possible and those who don’t. Or perhaps between those who think a Fed rate hike is a problem for the Australian market and those who see any dip as a buying opportunity. Or both.

But to further complicate the matter, the morning saw the release of the Australian March quarter wage index data. At 2.1% annualised, the quarter saw the weakest growth on record for the series. This suggests both low inflation and less consumer spending power. And reinforces the potential for another RBA rate cut.

But if the Fed hikes in June, would the RBA hold off? How will it all balance out?

As confusion reigned, the ASX200 fell again in the afternoon, closing down 39. Sector moves suggested yesterday was all about interest rates, and their flow-on effects.

The resource sectors stood aside, balanced by stronger commodity prices. A stronger US dollar weighs on commodity prices but a weaker Aussie dollar improves earnings, so there is some trade-off either way.

Consumer staples fell 1.2% and discretionary 1.5%. Low wages are not promising for retailers, and a Fed hike might prevent another RBA cut.

The banks fell 0.8%. Low wages are not promising for mortgage demand and if the RBA does not cut, demand will not be boosted. Bank yields are less attractive if US rates rise and/or Australian rates don’t fall.

The telcos fell 0.9% and utilities 0.7%. The yield story is the same here.

Healthcare only fell 0.1%. The sector derives a lot of income from offshore, and thus benefits from a weaker Aussie. Industrials fell 1.1%. This sector offers a mixed bag of winners and losers.

The Aussie has fallen over a cent over 24 hours to US$0.7227. Yesterday’s local wage data encouraged further weakness in the currency, albeit it has already fallen quite a way from its recent highs, but last night’s Fed minutes stuck the knife in.

Backflip

When the FOMC released its policy statement following its meeting in April, the tone was dovish. Wall Street reduced expectations of a June rate cut to near zero. This was reinforced by the April US jobs numbers, which were to the low side.

Last night the minutes of that meeting were released, and suggested the FOMC statement on the day was somewhat misleading. This might explain why Fedheads have recently been out and about talking up the possibility of a June rate hike. The Fed is worried markets are not prepared.

The minutes suggested the FOMC is no longer concerned about the global volatility factor, as markets have now recovered from their panic earlier in the year and settled down again. That just leaves US data. While recent data have not been all that strong, the question is whether they are weak enough to justify near-zero interest rates. On a trend basis, the US labour market remains positive, If the CPI data are anything to go by, inflation is heading the right direction.

These are the Fed’s two mandated policy drivers.

The bottom line is, the minutes basically suggested the Fed is not waiting to be given a reason to hike in June, it is waiting for any reason not to hike. Not only is June very much “live”, Wall Street now sees a June hike as very much a possibility.

Having fallen 180 points on Monday night on this very possibility, last night the Dow had rallied back a hundred points ahead of the 2pm release of the minutes. A two hundred point fall ensued on the release, followed by a one hundred point recovery.

Wall Street finished square. Arguably, June rate hike potential has been priced in the night before. But the night before, the US bond market, currency and gold markets had shrugged off the possibility.

Last night the US ten-year yield jumped 12 basis points to 1.88%. The US dollar index jumped 0.7% to 95.20. Gold fell US$20.80 to US$1258.00/oz. Now all the markets are aligned.

The only possible barrier to a June rate hike, assuming no US economic shocks occur between now and June 15, is the Brexit vote. It doesn’t occur until June 23, and some believe the Fed is more likely to hold off until the July meeting in case a Yes vote sparks fresh global turmoil. Recent polls suggest the No vote appears to be gaining traction, nonetheless.

Commodities

For commodities, it was all about the jump in the US dollar that a Fed rate hike implies. Gold’s move has been noted.

West Texas crude is down US71c at US$47.88/bbl and Brent is down US94c at US$48.54/bbl.

The LME was shutting its doors just as the minutes were released so there may yet be a more pronounced reaction tonight, but all metals closed slightly lower bar aluminium, which rose 0.8%.

Iron ore never pays much attention to outside influences. It’s up US20c at US$55.90.

Today

The SPI Overnight closed down 4 points. While this reflects the flat close on Wall Street, we might also suggest, a la Wall Street, that the local market adjusted yesterday to heightened Fed rate hike possibility.

With regard the Aussie, it might be a whole new ball game this morning when the Australian jobs numbers are released for April. Presumably the market has now become quite short.

Apologies to readers who have been stuffed around by the FNArena calendar suggesting James Hardie ((JHX)) was to report on Tuesday, or on Wednesday. Short of contacting a few hundred companies over the course of a year, we rely on broker calendars, which often clash.

Note also that companies are not legally obliged to advise on a reporting date, or even stick to it if they have.

James Hardie reports today.

Rudi will make his weekly guest appearance on Sky Business today, 12.30-2.30pm and then return for an interview on Switzer TV between 7-8pm.
 

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By Greg Peel

The Dow closed down 180 points or 1.0% while the S&P fell 0.9% to 2047 and the Nasdaq lost 1.3%.

Up to the Minute

“Members discussed the merits of adjusting policy at this meeting or awaiting further information before acting. On balance, members were persuaded that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting.”

This conclusion contained in the minutes of the RBA’s May meeting, released yesterday, caused the Aussie to shoot up from under 73 to around 73.6 in a blink. While economists have been climbing over themselves since the release of the May monthly statement and quarterly SOMP to forecast more and more rate cuts, this paragraph from the minutes suggests May’s cut was not actually a lay-down misere.

Members were persuaded.

They had to be persuaded because “developments over recent months had not led to a material change in the outlook for economic activity or the unemployment rate”. It was just an issue of low inflation. There may have been some lingering concern over further fuelling the housing bubble with a rate cut, but thanks to new restrictions, “potential risks of lowering interest rates therefore were less than they had been a year earlier”.

To sum up, the RBA cut in May because it could, not because it should. It was not an absolute call based on domestic drivers. It was a relative call based on global drivers. Low inflation is being imported. Whether or not we do get another cut in August, and continue down to 1.00% as some economists are now forecasting, will depend, I suggest, entirely on the Fed.

For if the Fed raises in June, or at least some time this year, the ECB, the BoJ, and other central banks around the globe including the RBA, will be handed a rate cut by default. A rate cut that does not require increased debt or a further foray into the parallel universe of negative rates.

The local stock market stumbled slightly late morning yesterday when the RBA minutes first hit the wires, but only briefly, before the index closed on its highs. But there was a very, very scary development in the afternoon. An RBA board member fronted the press and spoke.

Please, please Australia, do not let us go down the much derided Fedspeak path! That way be dragons.

The Aussie has since come back to US$0.7326, up 0.5% over 24 hours. The board member hinted there was room for another cut.

Between the minutes and the RBA-head, we’ve really learned nothing more than we knew from the May statement and SOMP. Thus the ASX200 was able to achieve what it started out to achieve yesterday, posting a rally entirely driven by the oil price. The energy sector closed up 3%.

We then drop down to materials with a 1.9% rally, given BHP crosses sectors, before otherwise noting counter-rallies in the defensives of consumer staples and telcos, each up 1.1%. No other sector much moved, although we should note the banks were strong by default given two major ex-divs.

The ASX200 didn’t quite make it to 5400, and if the SPI Overnight’s 27 point drop is anything to go by, won’t make it there today.

Speaking of Fed rate hikes…

Today we go down

The WTI price kicked on another 1.5% last night, but energy was the only sector on Wall Street to finish in the green.

The US April CPI numbers showed a 0.4% rise at the headline, up from 0.1% in March and representing the biggest jump since January 2013. On that note, the Dow fell 200 points.

June is back on the table.

The potential for a June rate hike was enhanced by, you guessed it, Fedspeak. The Atlanta and San Francisco Fed presidents last night both said the decision hinges on the data. Lockhart of Atlanta went one step further and suggested June “certainly could be a meeting at which action could be taken”.

Let’s look at some realities: (1) The core CPI rose only 0.2%, having risen 0.1% in March; the headline jump was all about the oil price rebound; (2) the Fed prefers the PCE measure of inflation to the CPI; (3) the Fed has been banging the “data dependent” drum for months and months; and (4) Fedheads have to suggest a meeting is “live”, otherwise what’s the point of holding one?

On that last point, we note the Bank of England is seriously considering cutting its meetings back to every two months, rather than every month.

We might also note that despite the supposed enhanced risk of a June rate hike, the US ten-year yield hasn’t moved, nor has the US dollar index, and gold is actually stronger.

The minutes of the Fed’s April meeting are out tonight, so look forward to some further volatility. The last three Wall Street sessions have seen the Dow down 200 (or thereabouts), up 200 and down 200 again.

Commodities

West Texas crude is up US70c at US$48.59/bbl. Brent is up US34c at US$49.48/bbl.

It was a mixed and relatively inconsequential session on the LME, with aluminium down 0.5% and lead down 1.5%, while nickel and tin rose 0.5%.

The US dollar index is flat at 94.55 despite the CPI scare, which would have helped keep a lid on things.

Iron ore jumped US$1.90 to US$55.70/t.

Gold is up US$4.80 at US$1278.80/oz.

Today

The SPI Overnight closed down 29 points or 0.5%.

The local market is not following Wall Street at present. Oil is up again and iron ore is up 3.5%. If we are down 29 points today, it would more likely be as a result of technical consolidation near this 5400 level. Unless Fed rate hike fear sends yield stocks down the gurgler.

As noted, the Fed minutes are out tonight.

Before that, the local March quarter wage price index releases kicks off the countdown to Australia’s GDP result.

A few AGMs will be held today, including those of Coca-Cola Amatil ((CCL)) and Iluka Resources ((ILU)). ResMed ((RMD)) goes ex.

Rudi will be hosting Your Money, Your Call Equities on Sky Business tonight, 8-9.30pm.
 

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All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

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By Greg Peel

The Dow closed up 17 points or 1.0% while the S&P gained 1.0% to 2066 and the Nasdaq rose 1.2%.

Healthy

The futures had suggested down 15 points yesterday morning but it didn’t take the ASX200 long to ignore this call and head higher. Much was made of disappointing Chinese data before trading commenced but on a disappointment scale, they weren’t really up there.

The local market is becoming increasingly inured to big moves on Wall Street, particularly since ups and downs of 200 Dow points have become de rigeur. Unless the moves relate specifically to something that impacts on the Australian market, such as oil prices, or it’s all part of general global macro fear/exhilaration, there’s not enough correlation between Bridge Street and Wall Street on any given day to suggest one must always be determined by the other.

The big story on the local market yesterday was the government’s agreement to do something about above-market rents being paid by pathology collection centres, as a trade-off against last year’s cuts to bulk billing incentive payments. Health Cares Primary ((PRY)) and Sonic ((SHL)) both jumped 5% yesterday as a result, sending the healthcare sector up a market-leading 2.0%.

Next best was materials with a 0.8% gain, in the face of the Chinese data, and a 0.6% rise in the banks would have had the biggest index clout. Elsewhere, some renewed support for supermarkets and more buying in telcos offset a fall in energy.

The ASX200 is sitting right in the middle of that 5300-400 range and it has to be said, still gives the impression of wanting to go up. While we’ve had a couple of stumbles on the way, it’s been a while since we’ve had one of those big one percent plus wash-out sessions that were quite frequent earlier in the year.

Hope I’m not speaking too soon, albeit the futures closed up 47 points overnight so we may yet have another shot at 5400 today, assuming the profit-takers don’t get toey.

Tonight’s mass media headlines will suggest there was a rally in stocks “despite selling in the banks”. That’s because both NAB and Macquarie go ex today, so be warned.

Nine Reasons to buy Apple

Celebrated iThing maker Apple is one of those stocks that’s simply too big for its own good. I’m assuming after last night’s 3.7% share price gain Apple is back to being the biggest company in America by market cap, having briefly seceded to the artist formerly known as Google. When you’re that big your every little move shifts market cap weightings exponentially and forces index trackers to react, exacerbating ups and downs. The herd follows blindly.

Apple is a stock everyone though they must own, until it was declared ex-growth, and everyone bailed out again. Never mind the barrow-loads of cash the company continues to generate every day. In the recent sell-off, Apple’s PE ratio fell to a low of nine times. That makes the company look more like an iron miner than what has arguably become more of a consumer staple. This wasn’t lost on Warren Buffet, who last night revealed he’d bought over a billion dollars’ worth of Apple shares.

So there’s the bulk of your 175 point Dow rally overnight. Apple, of course, bears no relevance to the Australian market so we’d need something else to justify a 47 point jump in the SPI overnight.

Enter Goldman Sachs. The investment bank was obviously feeling the pain on its short oil position – Goldman has been bearish oil – so decided to square up and try the long side instead. Last night Goldman issued a note suggesting that on a balance of strong demand and sharp declines in production, the oil market had shifted from “nearing saturation to being in deficit much earlier than we expected”.

Goldman now expects WTI to average US$45 in the June quarter and US$50 in the second half of 2016, up from US$35 and US$45 respectively. WTI subsequently jumped 3.3% last night.

Meanwhile the Empire State activity index dropped to minus 9.0 from plus 9.6 last month, completely confounding forecasts of plus 5.8. While this might be good for those not wanting a Fed rate hike, I seem to recall April rebounding very sharply from a weak March. In other words, activity in the New York Fed region either surges one month and collapses the next in a cycle, or this series is increasingly misleading.

Commodities

West Texas crude is up US$1.51 or 3.3% at US$47.89/bbl. Brent is up US$1.34 or 2.8% at US$49.14/bbl.

LME traders had their first opportunity to respond to the “disappointing” Chinese data last night, and subsequently sold down base metals from the bell. But the selling didn’t last long, and helped by a benign greenback, which is flat over 24 hours, and the jump in oil prices, base metal prices recovered to post a positive session.

Copper and nickel rose 0.5%, aluminium and tin 1%, and lead 2%.

Iron ore rose US30c to US$53.80/t.

With the dollar index steady at 94.58, gold is steady at US$1274.00/oz.

With commodity prices stronger, the Aussie is up 0.3% at US$0.7290.

Today

The SPI Overnight closed up 47 points or 0.9%.

The US will see inflation, housing and industrial production data tonight.

Before that, the RBA will release the minutes of its May meeting and forex cowboys will have their fingers on the trigger in case there’s any hint of a back to back cut.

DuluxGroup ((DLX)) and Ozforex ((OFX)) will release interim earnings today and James Hardie ((JHX)) will release quarterly earnings either today or tomorrow, depending on which broker you believe.

As noted, National Bank ((NAB)) and Macquarie Group ((MQG)) will go ex-dividend today which will appear to take a sizeable chunk out of both the financial sector and the index on the session.

Rudi will Skype-link with Sky Business around 11.15am to discuss broker calls and later tonight he'll participate in a webinar organised by VFSGroup: https://vfsgroup.com.au/seminars/

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All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

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By Greg Peel

The Dow closed up 9 points while the S&P was flat at 2064 and the Nasdaq fell 0.5%.

By Greg Peel

Mixed Bag

I thought thirty points down in the SPI ahead of yesterday’s open on the local market looked a bit pessimistic but we got there early on, only to stumble back by the close. The 13 point drop in the index for the session represents no more than Westpac going ex.

That’s also why the financials sector was down 0.9% yesterday but elsewhere we closed with very mixed results, suggesting the market is trying to sort out its allocations as we flirt with the highest index levels of 2016 to date.

Myer ((MYR)) posted a less worse than expected result and shot up 7%, dragging consumer discretionary up 0.9%. Myer is nevertheless the second most shorted stock on the market – 14% according to ASIC’s most recent data – and thus short-covering was a primary driver.

Energy jumped 3% on the rise in oil, as this sector just refuses to settle down. A tick up in iron ore saw materials up 0.7%. Thereafter, funny things were going on in the defensives with telcos up 0.8% and utilities down 1.7%.

The ASX200 is sitting between 5300 and 5400, right in the middle of what has been a technical target range for the past couple of months. Following on from central bank domination in April the macro story has gone a bit quiet, leaving the current swathe of micro-story corporate earnings results, quarterly trading updates and AGMs to provide impetus in individual sectors, but not in clear index direction.

We have Chinese monthly data out over the weekend and the eurozone GDP result tonight, which may or may not spark some movement. We have Japan’s GDP next week. But it is likely we will need to wait to June for some more macro action, when the Fed meets and the Poms hold their referendum.

The King is Dead

Having not released any ground-breaking new iThings for a while, Apple has been on the slide. Last night manufacturers who make components for iThings reported weaker than usual demand in the second quarter, and Apple shares fell further. The result is that the most recent company to be included in the Dow, on the basis of it being the biggest company in America, is as of last night no longer the biggest company in America.

Long live the artist formerly known as Google. Alphabet is now the biggest company in America – a title that for so long belonged to Exxon but not, for obvious reasons, in recent times. Alphabet is not in the Dow.

Nor are any of America’s big department store and apparel chains in the Dow, which is probably just as well. Following on from Macy’s 14% plunge on Wednesday night, Kohls fell 9% last night on an earnings miss and after the bell, Nordstrom is down 17% for the same reason. JC Penney reports tonight.

While consumer discretionary alone is not enough to send Wall Street hurtling southward, ongoing concern over just why these chain store results are so bad is weighing on investor sentiment, and on hopes for the US economy. Is it structural? Because that’s okay. That’s just a changing of the guard. Is it because of a warm winter? Because that’s just seasonal. Or is it because the US consumer is simply not spending? Because that’s a worry.

It’s probably a conflagration of all three, but with the US savings rate running at 5%, the latter remains an issue in the June quarter. Americans are buying cars, and spending on home renovation, but they’re just not buying clothes and accessories – what women would call “staples” and men would call expensive and unjustifiable indulgences (as they queue up at Home Depot). Gucci belts, it would seem, have been tightened.

Also weighing on Wall Street last night was the weekly new jobless claims number. I usually don’t follow this weekly number too closely given its volatility but last night’s sudden jump to a 14-month high of 294,000 new claims, coming off the back of the weak April non-farm payrolls result, has Wall Street wondering whether the solid run for the US labour market these past few years has now reached a peak.

Of course the balance is yet another reason not to expect the Fed to raise in June. So having been up over 80 points early and down over 80 points mid-session, the Dow closed flat, as did the S&P. The Nasdaq’s drop was all about Apple.

Commodities

You can’t keep a good oil price down at the moment which is rather disconcerting. The higher it rises…

West Texas is up US40c at US$46.39/bbl and Brent is up US62c at US$47.92/bbl.

Base metal traders in London did not like the US jobless claims number at all, nor the fact that the US dollar index rose 0.4% to 94.15 when such a result would suggest the opposite. Aluminium fell 1%, copper and zinc fell 1.5%, nickel fell 2% and lead and tin fell 3%.

After a one-session bounce, iron ore is down US$1.00 at US$54.40/t.

Gold is down US$13.50 at US$1263.20/oz.

The Aussie is down 0.8% at US$0.7322.

Today

The SPI Overnight closed down 11 points or 0.2%.

The US retail sales result for April is out tonight, just to add further fuel to the consumer fire. The eurozone will release its March quarter GDP result tonight and tomorrow, Beijing will release April retail sales, industrial production and fixed asset investment numbers.

Before that, Oil Search ((OSH)) and Santos ((STO)) will both hold AGMs today.

Rudi will Skype-link with Sky Business at around 11.05am to discuss broker calls and then re-appear as guest on Your Money, Your Call Fixed Interest, 7-8pm.
 

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(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author's and not by association FNArena's - see disclaimer on the website)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

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By Greg Peel

The Dow closed down 217 points or 1.2% while the S&P fell 1.0% to 2064 and the Nasdaq lost 1.0%.

Technical Madness

It was another case of the computers going nuts from the opening bell on Bridge Street yesterday, this time to the upside, sending the ASX200 up 83 points in a blink. By midday the index was only up 27 points – basically where it ended the session – suggesting that’s about what where we should have been from the start.

Yes, it had been the biggest day on Wall Street in two months and oil prices were higher, likely triggering the algorithms as the rest of the market stood aside. It is becoming increasing dangerous to play the opening rotation – something ASIC should be having a chat to the ASX about. But Wall Street’s rally was largely technical, and itself computer-driven, and lo and behold the ASX200 breached a longstanding upside technical target of 5400 from the open before the buying simply disappeared.

Back on earth, we saw the rotation trade of Tuesday – selling resources and buying yield through the banks and telcos – partly reverse. Interestingly, it was materials that fully reversed, rising 2.7% despite another fall in the iron ore price, while energy managed only a 0.3% recovery despite a higher oil price. The banks only fell back 0.1% and the telcos actually rose again, up 0.5%.

Put it down to chatter from CEOs yesterday but clearly the “value” players have been out in force since the bottom of the market earlier this year, buying up beaten-down large caps because they lack the imagination to see that often the world actually changes. Thus stocks like BHP Billiton ((BHP)) and Woolworths ((WOW)) had another good run yesterday and have had very good runs all the way from the bottom. Money has certainly been made in the short term, but what of long term trajectories?

One problem is the “growth” stories of 2015 have to a large extent run too far away in 2016, leaving investors disinclined to play at stretched PEs. This has been reflected in the past couple of weeks in the number of ratings downgrades implemented by major broking houses for no other reason than over-valuation. Yet by the same token, short-side traders are also abandoning the market. The shorters have been increasingly burnt, it appears, and for the time being have crawled back into their holes.

The ASX200 has now hit 5400 which on a technical basis, should open up the door to 5700 and ultimately 6000 if the tea leaves are accurate. But what will get us there? Ongoing buying-back of overproducing miners and yesterday’s-model supermarkets? Pushing milk powder and Big Data names ever higher still? A Turnbull victory? Another RBA rate cut?

I’d suggest that if we’re going to see 6000 again we would have to see the economies of China and the US both pick up.

Australian consumers are brimming with confidence nevertheless. Westpac’s confidence index jumped 8.5% this month to its highest level in two years. Mind you, one might see it as “upside-down” confidence. The RBA cut its cash rate, which it wouldn’t do if the Australian economy was strong, and the federal budget produced no howlers, albeit pre-election budgets never do.

Speaking of the RBA, there would have been some head-scratching going on in Martin Place yesterday after March housing loan data showed a resurgence in loans to investors and a drop in loans to owner-occupiers. The central bank was able to cut the cash rate because the opposite has been true in prior months, supposedly taking some heat out of the housing bubble.

Structural or Cyclical?

Iconic US department store Macy’s posted its seventh quarter of declining sales growth last night and missed broker forecasts, sending Macy’s shares down 14% and dragging the whole US bricks & mortar consumer sector down with it, including America’s Bunnings (Home Depot) and America’s Woolies (Wal-Mart), both Dow names.

The question on everyone’s mind was: Does ongoing decline represent the slow death of bricks & mortar retail as online rises, or does it reflect a presently weak US consumer? Commentary tended to favour the latter, although the elephant in the room must be Amazon’s forecast-smashing result posted last month.

If it is the latter, then the US economy is not going to be picking up pace anytime soon.

Meanwhile Disney (Dow) posted a rare earnings miss with its result, and subsequently fell 4%. The combination of Disney and retail turned Tuesday night’s rally on Wall Street, which seemed no more than technical, into a full reversal, this time on reality, despite another strong jump in oil prices.

Commodities

Last night’s weekly US oil data showed a bigger than expected drop in inventories and another reduction in production. As a result, West Texas crude is up US$1.44 or 3.2% to US$45.99/bbl and Brent is up US$1.83 or 4% at US$47.30/bbl.

Just when it looked like oil might head south again, the opposite is true.

And iron ore has also bounced, up US$1.20 to US$55.40/t.

There has been a bit of assistance from the US dollar which, having risen back steadily for several session, last night fell 0.5% on its index to 93.81. This assisted all commodity prices. Base metals were mostly 0.5-1% stronger, although zinc jumped 3%.

Gold is up US$11.40 at US$1276.70/oz.

Despite the drop in the greenback, the Aussie is holding its ground at US$0.7377.

Today

The SPI Overnight closed down 33 points or 0.6%. Not sure what Macy’s and Disney has to do with Australian banks and resources.

The Bank of England will hold a policy meeting tonight but despite some surprisingly weak data of late, is not expected to budge ahead of the increasingly worrying Brexit vote.

Before that we will see AusNet Services ((AST)) post earnings today and Myer ((MYR)) provide a quarterly update. AMP ((AMP)) and Westfield Corp ((WFD)) will hold AGMs.

Westpac ((WBC)) will go ex today which will distort the financials sector performance.

Rudi will make his weekly guest appearance on Sky Business, 12.30-2.30pm.
 

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