China attempts to boost the market

Stock Markets

Australian shares are poised to open higher today as US stocks rose on Tuesday bolstered by signs that China is considering fresh measures to stimulate its stuttering growth, with the Dow Jones and S&P500 up 0.65% and 0.92% respectively. China has prioritised private sector cuts to combat the slowdown in the world’s second largest economy and has pledged to introduce policies to stimulate sales of automobiles and home appliances which fell sharply late last year. This sets a more optimistic and upbeat tone to the market after the recent glum Chinese trade data. ASX200 futures are currently up 4 points.   

In London, British MPs have meted out the expected devastating defeat to PM Theresa May’s Brexit plan, rejecting it by a margin of 230 votes. It seems that US markets were unfazed by the Brexit news, as investors seemed more focused on China’s attempts to boost the market.

Hard Currencies

The spot price of gold fell about 0.18% and is now hovering around US$1288.95. 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 the OPEC will manage to achieve production cuts and that trade tensions between the US and China will ease, and are currently up a staggering 2.3% to US$60.33 per barrel.

Fiat Currencies

AUD (against the USD) has extended its rally in the wake of the flash crash on 3 January which saw it drop to as low as 67.43¢ and is currently 72.03¢ (+0.1%), which is relatively low relative to historical levels.

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.