ASX poised to rise on renewed US/China trade optimism

Stock Markets

Australian shares are poised to rise today as shares in Europe and the US rallied overnight bolstered by renewed US/China trade optimism. Donald Trump sent a flurry of signals to investors as he told White House reporters that he is willing to allow next month’s looming tariff deadline to “slide for a little while” if he feels that a deal with China is close. Trump’s top negotiators are currently preparing for another two days of talks with Beijing starting on Friday AEDT. The two powerhouse economies are striving to strike a deal before 2 March, when Trump has scheduled a surge in tariffs on Chinese imports from 10% to 25%. 

American lawmakers reached a tentative deal to avoid another partial government shutdown, further adding to the optimistic market sentiment.

Wall Street’s main benchmarks closed well into positive territory following a shift in market sentiment regarding the US/China trade negotiations and signs of a compromise to avoid another U.S. government shutdown. The Dow Jones, S&P 500, and NASDAQ 100 were up overnight, with the indices gaining 372.65 (+1.49%), 37.37 (+1.38%) and 105.48 (+1.53%) points respectively.

NAB’s latest survey revealed that business conditions rose 4 points to 7 index points in January, but were weighed down by the retail sector which was the only industry that continues to record negative conditions. The results indicate that business conditions barely rebounded in January after December saw the biggest monthly fall since the global financial crisis.

ASX 200 futures are currently up 29.0 points. 

Today’s data releases: Euro zone industrial production December; UK January CPI; US January CPI

Commodities and Currencies

Brent crude prices are currently up 1.64% to $US62.63 a barrel.

Iron ore prices have retraced overnight falling by 3.2% to $US87.65 per tonne. Iron ore remains in its uptrend and is likely to test the resistance from 2017 top of $US95 per tonne in the short term.

The spot price of gold rose 0.18% and is now hovering around US$1314.01 as China adds to its gold reserves for a second month amid signs of slowing growth. This reinforced the outlook that central-bank buying will remain strong this year.

The AUD is currently up 0.5% at US70.95¢.

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.