ASX poised to rise following a surge in oil prices

Stock Markets

Australian shares are poised to open higher today after oil prices surged on Monday on news that the Trump administration will be cracking down on Iran exports. The Trump administration announced that it will no longer grant sanction waivers to any country that is importing Iranian oil after 1 May. The move threatens to wipe roughly 1 million barrels of oil per day off the market, thus causing oil prices to surge 2.7% to levels near six-month highs.  Today it was announced that Robert Lighthizer, the US trade representative, will be leaving the Trump administration at a delicate moment in the US/China trade negotiations as the talks near finish. In Australia, better than expected jobs numbers were released on Thursday indicating that employment rose for the eighth straight month in March, with 25,700 extra jobs and a revised 10,800 increase in February jobs, which was previously reported as a 4,600 increase.

Wall Street’s major indexes closed in mixed overnight amid a surge in oil prices with the Dow Jones being dragged lower by a 1.3% dip in Boeing following the release a report by the New York Times focused on production and oversight. The Dow Jones closed in negative territory overnight with the index losing 48.49 (-0.18%) points. Conversely the S&P 500 and NASDAQ 100 closed up 2.94 (+0.10%) and 17.205 (+0.22%) points respectively. The S&P energy index jumped 2.2%, the most among the major S&P sectors, as oil prices surged on the Trump administration’s move to further crackdown on Iranian oil exports. US investors will be cautious ahead of a flurry of company earnings releases, including reports from major technology firms. Investors will also be focused on the US economy, with US first-quarter gross domestic product data due Friday.

The benchmark S&P/ASX200 index closed higher on Thursday with the index rising 3.4 (+0.05%) points, bolstered by better than expected jobs numbers.

ASX 200 futures are currently up 26 points.

Today’s data releases:  New Zealand credit card spending March; Euro zone Markit Services PMI; Japan Nikkei PMI manufacturing April; US FHFA house prices February; US Richmond Fed index April; US new home sales March.

Commodities and Currencies

Oil prices rose overnight, supported by renewed supply concerns stemming from the Trump administration’s move to bring Iran’s oil exports to zero in an attempt to deny the regime its principle source of revenue. Brent and WTI crude prices are currently sitting at US$74.04 (+2.88%) and US$65.80 (+0.25%).

Iron ore prices are up 2.5% at US$94.48 per tonne.

The spot price of gold is currently down 0.02% at US$1275.19.

The AUD is currently marginally up 0.06% at US71.38¢.

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.