Morning traders. Thanks loungers. Shout out to @Ravgnome who didn't post his scans last night for the first time I can recall. Hope everything is okay?
Outlook for the day: Highly positive after the prospect of up to three US interest rate cuts next year helps power the Dow to a record close.
ASX futures: up 79 points or 1.09%
Overnight themes:
US stocks surge to fresh 2023 highs after the Federal Reserve flags more rate cuts next year than the market expected. The Dow closes above 37,000 for the first time. This morning's record finish at 37,090 is the the blue-chip average's first since January 2022.
At its final meeting of the year the Fed leaves benchmark rates on hold, as widely expected, and forecasts three rate cuts next year. The US central bank also cuts its inflation outlook for next year from 2.6% to 2.4%.
The median projection among the the bank's 19 officials shows they expect benchmark rates to be three-quarters of a percentage point lower by the end of next year than the current target range of 5.25% - 5.5%. None of the 19 officials expect rates to be higher at the end of 2024 than they are now.
Fed Chair Jerome Powell says the central bank is uncertain whether rates are high enough, but the bank is "not likely" to hike further. Nonetheless, the bank does not take the possibility of additional hikes off the table.
Data earlier in the session indicates inflationary pressures are easing. Wholesale prices are steady last month. Annual growth in wholesale prices declines to 0.9% in November from 1.2% in October.
The odds on a US rate cut before March rise to 60%. The odds on a cut by May reach 90%.
US treasury yields plunge to their lowest in months.The two-year yield dives 29 basis points to a level last seen in June. The US 10-year yield declines 13 basis points to 4.07%. The 10-year yield was above 5% as recently as October.
“I’d say we’ve seen a pivot as they acknowledged inflation is falling. It appears that the Fed is moving in the markets direction, rather than the market moving towards the Fed. The Santa Claus rally may continue” - Gina Bolvin, president of Bolvin Wealth Management Group (per CNBC).
Rate-sensitive sectors spearhead the rally. Real estate and utilities both gain more than 3.5%. All 11 sectors advance. Gains range from 0.65% (communication services) to 3.72% (utilities).
Small caps outperform. The Russell 2000 index of small caps jumps 3.33%.
The Australian dollar jumps 1.6% as traders dump the greenback. The US dollar index, which tracks the greenback against a basket of other currencies, slumps 0.94%.
Gold surges back above US$2,000 an ounce as the US dollar and treasury yields slides. Gold for February delivery is lately ahead 2.16% at US$2,036.20 after earlier settling US$4.10 higher at US$1,997.30 an ounce before the Fed released its forward guidance. An index of US gold miners flies up more than 6%.
Iron ore prices ease after China again dashes hopes for major stimulus measures. Chinese leaders end an economic agenda-setting meeting with a vow to step up efforts to boost domestic demand, but do not flag any significant initiatives. Dalian ore prices drop 1.35%. Singapore ore prices shed 2.06%.
"China's leaders disappointed the market without any calls for large stimulus measures" - analysts at ANZ bank.
Oil rebounds from Tuesday's near six-month low. Brent crude gains 1.39%.
Key events today:
November jobs report - 11.30 am AEDT (expected: +10,600 jobs; jobless rate +0.1% to 3.8%)
US November retail sales - tonight
European Central Bank rates decision - tonight
S&P 500: up 63 points or 1.37%
Dow: up 512 points or 1.4%
Nasdaq: up 201 points or 1.38%
Dollar: up 1.62% to 66.71 US cents
Iron ore (Dalian): down 1.35% to US$131.94
Brent crude: up US$1.02 or 1.39% to US$74.26
Gold: up US$4.10 or 0.2% to US$1,997.30
NYSE Arca Gold Bugs: up 6.15%
Bitcoin: up 4.2% to US$42,781
Copper (LME): down 0.19% to US$8,339
Nickel (LME): down 0.46% to US$16,400
Uranium: up 2.97% to US$87
Lithium carbonate (China spot): down 2.68% to US$15,173
