ASX poised to open higher ahead of US/China trade updates

Stock Markets

Australian shares are set to open higher today after shares on Wall Street rallied on Friday ahead of expected updates regarding the US/China trade negotiations. The benchmark S&P/ASX200 index closed higher on Friday, finishing up 28.1 (0.46%) points despite a drag from the energy sector which was weakened by news of restrictions in Australian coal exports to China.  

On Friday, RBA governor Philip Lowe declared that falling housing prices will not “derail” the economy while conceding the drop may be hurting some households. The governor stated that the larger risk facing the economy was soft household consumption which was driven by a sharp drop in income growth. Economists are increasingly expecting the RBA to cut interest rates in the face of a slowdown in the economy.

Wall Street’s main indices edged higher on Friday, posting a ninth week of increases driven by US/China trade optimism and dovish signals from the US Federal Reserve. The Dow Jones, S&P 500, and NASDAQ 100 all closed in positive territory, with the indices gaining 181.18 (+0.70%), 17.79 (+0.64%), and 55.46 (+0.79%) points respectively.

ASX 200 futures are currently down 1.0 point. 

Today’s data releases: NZ retail sales volumes fourth quarter

Commodities and Currencies

Brent and WTI crude rose 3.0% and 4.8% respectively over the past week as prices were lifted by hopes that the US and China could resolve their trade disputes and OPEC supply cuts. Brent and WTI crude prices hit more than three-month highs on Friday and are currently at US$67.12 and US$57.26 per barrel respectively. Surging US crude oil production and record crude exports are offsetting the bullish factors and will limit future gains in oil prices.

Iron ore prices are up 0.54% to US$85.21 per tonne.

The spot price of gold is currently up 0.31% and is now hovering around US$1327.80.

The AUD is currently up 0.68% at US71.40¢.

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.