ASX poised to open higher ahead of RBA speech and GDP data

Stock Markets

Australian shares are poised to open higher today ahead of a speech by RBA governor Philip Lowe and fourth quarter GDP data. All eyes will be set towards RBA governor Philip Lowe’s speech today at 9:10am AEDT, where he will give specific statements on the housing market and the economy. Tuesday figures released by the ABS showed that softer net exports figures would slice 0.2 percentage points off the fourth quarter GDP, which is worse than the market expectation of a 0.1% decline. Conversely, government spending figures released on Tuesday showed a very strong 1.3% increase and is expected to contribute 0.4 percentage points to growth in the quarter.

Asian markets had a muted close on Tuesday, with the Hang Seng index closing flat. Chinese Premier Li Keqiang’s statement that China aims to boost lending to small companies by large banks by more than 30% acted to counter China’s economic growth target for 2019 being lowered from 6.5% to 6.0%.

Wall Street’s main indexes closed marginally lower overnight as a lack of fresh news on US/China trade curbed investor optimism amid upbeat profit forecasts from retailers. The Dow Jones, S&P 500 and the NASDAQ 100 closed in negative territory overnight, with the indexes losing 13.02 (-0.05%), 3.16 (-0.11%) and 1.21 (-0.02%) points respectively.

The benchmark S&P/ASX200 index closed down 18.1 (-0.29%) points on Tuesday as investors pondered about the chances of an end to the US/China trade war by 27 March. The consumer staples (+0.91%) sector saw the highest percentage gains, bolstered by strong daily moves by Woolworths (+1.64%) and Metcash (+4.87%).

ASX 200 futures are currently up 18.0 points. 

Today’s data releases: RBA governor Philip Lowe speaks at 9.10am AEDT, Fourth quarter GDP at 11.30am AEDT, US ADP employment report February, Trade balance December, Federal Reserve’s Beige Book

Commodities and Currencies

Oil prices closed marginally lower on Tuesday as OPEC-led efforts to tighten supply were offset by the restart of Libya’s biggest oilfield and the prospect of weaker demand. Brent and WTI crude are both down overnight and are sitting at US$65.62 (-0.05%) and US$56.26 (-0.33%) respectively.

Iron ore prices are down 0.8% to US$87.03 per tonne.

The spot price of gold is currently flat at US$1287.96.

The AUD is currently marginally down 0.01% at US70.83¢. 

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633.