ASX set to open higher on strong US Jobs data

Stock Markets

Australian shares are poised to open higher today on a positive US Jobs Report for January. The report signaled a surge in US job growth in January with employers hiring the most workers in 11 months, which points to underlying strength in the economy despite looming fears of global economic slowdown. The unemployment rate rose to 4%, however this is likely due to the partial government shutdown and is not indicative of the economy's health.  Australian investors are eagerly awaiting to process the Royal Commission's final report on the financial sector which is expected to be released today. If the content of the report is unfavorable, this could see continued short selling pressure in the Australian banking sector an create sector wide price weakness. Investors will be hesitant ahead of a busy week of RBA activity with a policy meeting tomorrow, a Wednesday speech by the governor and Friday's updated forecasts in the Bank's Statement on Monetary Policy.

The Dow Jones gained 64.22 (+0.26%) points on Friday, whilst the S&P 500 and NASDAQ 100 were marginally down 0.12 (<-0.1%) and 31.32 (-0.45%) points respectively.

Australian miners are expected to benefit from base metal prices rallying last week and the continuation of the rally in iron ore. ASX200 futures are currently up 20.0 points. 

Commodities and Currencies

Brent crude prices have extended its rally in the past few days on as Venezuela's oil production is likely to fall by 18% due to pressure from US sanctions and lack of materials for workers. Brent crude has continued its rally by rising 3.1% and is currently sitting at $US62.75 a barrel.

Iron ore prices continued their rally following another unfortunate tailings dam disaster at a Vale-owned mine in Brazil. Iron ore is currently up 0.2% to $US85.53 per tonne.

The spot price of gold is marginally down 0.3% and is now hovering around US$1317.98.

The AUD is currently slightly down 0.3% to US72.50¢. The currency has been strengthened by the Federal Reserve's signal that it could extend its interest rate-hike pause further through the year.

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.