Global markets rebound on renewed US/China trade optimism

Stock Markets

Australian shares are poised to open flat today after stocks in Europe and the US rebounded modestly on Friday after US President Donald Trump renewed US/China trade optimism. Trump predicted a swift end to a damaging trade war with China and added that Huawei could be included as “some part” of a trade arrangement with China. China’s ambassador to the US said in an interview that Beijing is committed to striking a deal with the US but is also ready to respond with more countermeasures. UK Prime Minister Theresa May stated that she intends to step down as head of the country’s ruling Conservative Party but will continue her role of Prime Minister for another few weeks until a new leader is chosen. European markets appear to be unfazed by Theresa May’s resignation as Conservative Part leader with investors more focused on the US/China trade developments.  Australian markets are expected to have a quieter than usual start to the week as markets are closed on Monday for holidays in the UK and the US. Local investors await first-quarter capital expenditure data on Thursday, which will help with refining March quarter GDP forecasts; the GDP report is due June 5.

Wall Street’s major indexes closed with modest gains on Friday, with the indexes bolstered by renewed US/China trade optimism. The Dow Jones, S&P 500 and Nasdaq rose by 95.22 (+0.37%), 3.82 (+0.14%) and 8.725 (+0.11%) points respectively.

The benchmark S&P/ASX200 index closed 35.8 (-0.55%) points lower on Friday. The index was dragged lower by the energy sector which continued to suffer from a drop in oil prices after an unexpected rise in US crude inventories amid escalating US/China trade tensions. The majority of GICS sectors closed in negative territory on Friday, with none of the sectors that closed in the green posting significant gains.

ASX 200 futures are currently down 2 points.

Today’s data releases:  China industrial profits April; Holidays in the UK and the US

Commodities & Currencies

Oil prices rose Friday ahead of long US and UK holiday weekends, but posted their biggest weekly drop of the year, pressured by rising inventories and concern over an economic slowdown. WTI and Brent crude are currently sitting at US$58.83 (+0.34%) and US$69.23 (+0.79%) per barrel respectively.

Iron ore prices are currently up 1.5% at US$105.732 a tonne.

The spot price of gold is currently up 0.11% at US$1284.92 an ounce.

The AUD is currently up 0.1% at US69.34¢.

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.