ASX poised to open modestly higher

Stock Markets

Australian shares are poised to open modestly higher today as shares on Wall Street closed higher. Investor fears of the US government shutdown were largely offset by positive news from Goldman Sachs (+9.5%) as it topped its quarterly revenue estimates, and Bank of America (+7.2%) reporting a better than expected quarterly profit. The Dow Jones and S&P500 both ended in positive territory with the indices gaining 141.5 (+0.6%) and 4.61 (+0.22%) points respectively. Australian shares have been relatively unscathed from the Brexit vote drama and is expected to not have a significant impact on the ASX. ASX 200 futures are currently up 31 points.   

Hard Currencies

The spot price of gold rose about 0.4% and is now hovering around US$1293.55. From a technical perspective, the spot price of gold has been consolidating between US$1278.10 and US$1300.40. A breakout above US$1300.40 would signal the continuation of the uptrend in the spot price of gold.

Commodities

Brent crude prices have benefited from hopes that OPEC will manage to achieve production cuts and that trade tensions between the US and China will ease and are currently flat at US$60.32 per barrel.

Fiat Currencies

The USD has started 2019 weaker as the market has grown less confident that the US Federal Reserve can deliver interest-rate rises this year. Commonwealth Bank’s head of foreign exchange stated that “the Fed will be finished with raising interest rates by the second half of this year”. This is expected to be followed by an even faster depreciation of the US dollar in the second half of the year. A drop in the US dollar would lift other currencies.

AUD (against the USD) is currently near yesterdays’ lows and is at 71.68¢ (+0.03%).

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.