The Australian share market has risen after stocks on Wall Street climbed to fresh record highs on a US move to remove China from its list of currency manipulators, overcoming a major obstacle to a trade pact between the two nations.
ASX at 1:30pm (AEDT):
- The ASX 200 and the All Ordinaries index are around 0.7 per cent higher
- Telecommunications is the only sector losing ground
- The Australian dollar is buying around 68.9 US cents
By 1:30pm (AEDT), the ASX 200 was up by 0.7 per cent to 6,950 points, with broad-based gains across most sectors.
Technology stocks have risen, following their US counterparts. Buy now, pay later firms Afterpay (+3pc) and Zip Co (+1.2pc) have added to a strong performance yesterday.
The improved investor sentiment comes ahead of the expected signing of the first phase of a long awaited trade deal between Washington and Beijing on Wednesday by US President Donald Trump and Chinese Vice-Premier Liu He.
The news the US would remove China from its list of currency manipulators comes after the Treasury Department formally labelled it as such in August last year, accusing it of lowering its currency to get a trade advantage.
The designation further escalated the trade dispute, after China’s central bank allowed the Chinese currency, the yuan, to fall in response to new US tariffs.
Bloomberg reported that the currency manipulator designation prompted Beijing to increase transparency around the pricing of the yuan.
However, the International Monetary Fund said in September that the yuan was fairly valued and there was no evidence of manipulation.
In other US news, the nation’s federal budget deficit rose above $US1 trillion last year for the first time since 2012, according to the Treasury Department.
The budget shortfall reached $US1.02 trillion for 2019, up by 17.1 per cent from 2018 despite a rise in revenue from company tax.
Rising corporate tax revenue helped lower the pace of increase in the spending gap.
US national debt now stands at $US23.2 trillion, despite Mr Trump’s vows to cut debt.
Tech stocks lead US gains
On the markets, the improving trade situation saw technology companies boost the S&P 500 and Nasdaq to fresh record highs, ahead of the start of earnings season this week.
Apple, Tesla and Microsoft drove the broader market gains.
Markets at 9:00am (AEDT):
- ASX SPI futures +0.5pc at 6,873, ASX 200 (Monday’s close) flat at 6,904
- AUD: 69.03 US cents, 53.13 British pence, 61.99 Euro cents, 75.88 Japanese yen, $NZ1.041
- US: Dow Jones +0.3pc at 28,907, S&P 500 +0.7pc at 3,288, Nasdaq +1pc at 9,274
- Europe: FTSE 100 +0.4pc at 7,618, DAX -0.2pc at 13,452, CAC 0.0pc at 6,036, Euro Stoxx 50 -0.3pc at 3,780
- Commodities: Brent crude -0.2pc at $US64.23/barrel, spot gold 0.0pc at $US1,548/ounce
The S&P 500 index rose 0.7 per cent to 3,288 and the blue chip Dow Jones index increased 0.3 per cent to 28,907.
In London, the FTSE 100 put on 0.4 per cent to 7,618 despite a fall in manufacturing production in November.
Spot gold fell on the trade optimism to about $US1,548 an ounce.
Brent crude oil lost 1.2 per cent to $64.19 as Middle East tensions eased.
The Australian dollar has come off its highs against the greenback to around $US0.69.