Global financial markets had another steady day yesterday with once again little in the way of fresh markets drivers. US markets gained for the fifth day in a row and the Australian market had its strongest day in over two years as financial stocks jumped well after the results of the yearlong Banking Royal Commission investigation were released. The dollar continued to grind higher with the Dxy now sitting above 96.00 as we enter the Asian session and sterling continued to fall on Brexit concerns and a weaker data print on Services PMI. Oil also took a tumble on expectations of rising US crude inventories and Gold held steady around 1315.00.
The State of the Union address from President Trump which is due out in the Asian session today will be a big focus for market analysts. With so many issues still hanging in the wind an indication one way or the other could send markets spiralling. Trade, and specifically trade with China will still probably be the number one issue that investors will focus on, but also the potential for another government shut down could have a drastic affect on US and global indices. With the theme ‘Choosing Greatness’ expect there to be a relatively upbeat tone, however whether this tone results in increased investor optimism and market moves remains to be seen.
Australian traders also have a speech from RBA Governor Lowe to digest just before we hear from Washington, after yesterdays RBA rate statement which remained relatively hawkish in spite of recent data and changes in the global financial climate the market will be expecting similar upbeat comments. Any contrary hints that the next move from the central bank is not a hike will be seen as dovish and should exert pressure on the Aussie after yesterday’s sharp post RBA rise.
Looking at the rest of the days trading and its thin on the ground again in terms of economic data releases, there’s nothing of note in the Asian session after those speeches and it’s a similar story in London. The Canadian Ivey PMI data is due out early in the New York session but expect investor focus to remain on sentiment, earnings data and continued fall out from that key speech in Washington.