ASX poised to open higher on dovish testimony from Fed Chairman

Stock Markets

Australian shares are set to open higher today following a flat close on Wall Street. In yesterday's testimony to the US Senate on the state of monetary policy, Federal Reserve Chairman Jerome Powell reaffirmed last months' policy shift by reiterating the central bank's "patient approach" to future interest rate changes. Powell told the hearing committee that the economy is "healthy" and cautioned about "crosscurrents and conflicting signals" which have weakened the case for future interest rate increases until inflation accelerates.

Wall Street's main indices closed with marginal losses overnight, as gains in the technology sector were offset by losses in the consumer discretionary sector. The Dow Jones, S&P 500, and NASDAQ 100 all closed in negative territory, with the indices losing 33.97 (-0.13%), 2.21 (-0.08%), and 5.16 (-0.07%) points respectively.

The benchmark S&P/ASX200 index closed lower on Tuesday, shedding 57.93 (-0.94%) points as the index was dragged lower by poor performance in technology stocks which saw the sector drop 2.83%.

ASX 200 futures are currently up 14.0 points. 

Today's data releases: Fed Chair Powell Testifies, ANZ Business Confidence, Private Capital Expenditure q/q

Commodities and Currencies

Oil prices recovered overnight following the recent sharp price drop as OPEC stated that it would stick to its agreement to tighten crude supplied regardless of pressure from US President Donald Trump to soften its price-boosting output cuts. Brent and WTI crude steadied and is currently at US$65.24 (+0.7%) and US$55.62 (+0.3%) per barrel respectively. OPEC production cuts and US sanctions on Iran and Venezuela are expected to continue to support oil prices in the short term.

Iron ore prices are down 1.3% to US$83.75 per tonne.

The spot price of gold is currently up 0.05% and is now hovering around US$1328.88.

The AUD is currently up 0.83% at US71.88¢.

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.