Late drop puts major indices in the red at end of session

Share Markets: 

It was a quiet night for data, which was reflected in lacklustre session in equity markets.

The Dow and S&P500 traded mostly in the black overnight, but a late drop saw both indices end in the red.

The Dow closed 0.1% lower and the S&P500 dropped 0.2%. 

Interest Rates: 

Yields on most US treasuries fell.

The 10-year treasury yield slipped 2 basis points to 1.91%.

Expectations of a slower path of US Fed rate increases over the next few years are continuing to feed through to bond markets.

Discussions between Greece and its creditors were also cited as providing support to bonds.

Yields on Australian bond futures were largely unchanged.

The 10-year was unchanged at 2.39% and the 3-year edged 1 basis point higher to 1.74%.

Foreign Exchange:

The US dollar continued its retreat after the Federal Reserve meeting last week suggested a slower path of rising interest rates.

The euro may have gained some support after Draghi gave some optimistic comments overnight.

GBP weakened on growing doubts that the BoE will raise interest rates soon. The Australian dollar strengthened, helped by the weaker US dollar, to just below 79 US cents. 

Commodities:

Prices of most commodities rose, as the US dollar weakened. Oil prices rose around 1%, although strong increases in supply will continue to weigh on prices. 

Australia: 

No domestic data to report.

Europe:

European Central Bank President Mario Draghi spoke at European Parliament overnight, and was mildly upbeat about the progress of the QE program.

Draghi suggested that there wouldn't be any shift in its policy until there is a sustained move in inflation. 

Draghi said that he expected consumer prices to rise gradually, even if it remained low or negative in the near-term.

New Zealand:

Westpac McDermott Miller consumer confidence rose to 117.4 in Q1, from 114.8 in Q4 last year.

Both the present conditions and the expectations components lifted. 

The lift in confidence was biggest in rural regions and smaller centres.

Lower petrol prices and fixed mortgage rates and rising household wealth with stockmarket gains and higher house prices supported confidence.

United States:

US existing home sales rose 1.2% in February, slightly below the median estimate for a 1.7% rise.

The modest bounce was likely weather affected, leaving 2015 so far looking tepid.

The Chicago Fed's national activity index fell below zero to -0.11, disappointing expectations of 0.10.

This is the weakest reading since August. The index measures overall economic activity based on 85 various indicators.

Fed Vice Chair Fischer reiterated that the Federal Reserve could begin raising rates this year, which could be "June or September or some later date or some date in between". 

On successive rate rises, Fischer said that a smooth series of future rate rises "will almost certainly not be realized because, inevitably, the economy will encounter shocks".

Much like Yellen last week, Fischer's language is providing the Fed flexibility in monetary policy decisions.



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