It was a bullish day for US equity markets, with the S&P 500 at one point crossing above the 4100 mark (a record intra-day high) before closing at 4097, up 0.4% on the day. The gains were driven primarily by large-cap tech stocks, with the S&P 500’s largest component Apple gaining 1.9%. Tech stocks have been performing well amid an ongoing pullback in long-term US government borrowing costs (10-year yields dropped another 3bps on Thursday to 1.62%, down 13bps since the start of the month); the FANG+ index gained 1.4% for its ninth consecutive day of gains, helping the tech-heavy Nasdaq 100 index to a 1.0% gain.
But positivity was also being seen outside of tech; the Dow gained 0.2% and the Russell 2000 0.9%, while the CBOE volatility index dropped to fresh post-pandemic lows under 17.00.The only weak points were energy stocks, which dropped 1.4% despite slightly higher crude oil prices, and real estate, which dropped despite a fall in yields which would typically be associated with a fall in mortgage costs that ought to help the housing sector.
Commodities, Brent crude oil futures rose 0.2% to $63.30, copper fell 1.0%, iron ore rose 0.1% to $172.50, and gold rose 0.1%.
Overnight Currency Ranges
AUD/USD 0.7603 0.7660
EUR/USD 1.1861 1.1928
GBP/USD 1.3719 1.3781
USD/JPY 109.00 109.90
NZD/USD 0.7004 0.7060
USD/CAD 1.2565 1.2626
USD/CNH 6.5466 6.5625
AUD/JPY 83.31 83.78
AUD/NZD 1.0831 1.0861
AUD/USD continues to consolidate between 0.7600 and 0.7660ish parameters, which is not a surprise really, given that the big figure has offered decent support to the downside now for more than one week, while the 0.7660-0.7670 area, which contains the late-March/early-April highs and the 21-day moving average, is offering up decent resistance.
Fed Chair Jerome Powell delivered characteristically dovish remarks at an IMF panel; he noted strong recent data and optimism about the recovery, cautioned rising Covid-19 cases in the US and abroad remain a risk and reiterated that the US economy remains a long way from the Fed's goals and the Fed wants to see actual progress towards these goals before tightening. Other Fed speakers sang from the same hymn sheet. Needless to say, the above dovish reassurance did seem to hurt the dollar, help equity markets and thus help the likes of AUD/USD. Markets will be on the lookout for the release of the US March Producer Price Inflation report on Friday, which may give some indications ahead of next week's more important March Consumer Price Inflation report.
Demand is expected to materialize if we drift toward 0.7560 while offering interest remains staggered from 0.7700-.7770.
Event Risk Data Today
New Zealand: RBNZ Chief Economist Ha will speak virtually on the economic and policy outlook in New Zealand to an event at 9:30am NZT.
Australia: The March AiG PSI has recently been on an uptrend, as services expand on the reopening. The RBA will publish the half-yearly update of the Financial Stability Review.
China: The March PPI (market f/c: 3.6%yr) and CPI (market f/c: 0.3%yr) are both expected to lift higher on base effects. March new loans should be strong given the optimism over the outlook (market f/c: CNY 2300bn). Meanwhile, March M2 money supply will remain elevated (market f/c: 9.5%yr).
US: The March PPI is due; upstream price pressures will build but remain modest.