Australia’s share market has jumped to its highest level ever — exceeding the 7,000-point milestone for the first time.
Markets at 8:10am (AEDT):
- ASX SPI futures +0.5pc at 6,995, ASX 200 (Wednesday’s close) +0.5pc at 6,995
- AUD: 69.02 US cents, 52.97 British pence, 61.9 Euro cents, 75.86 Japanese yen, $NZ1.04
- US: Dow Jones +0.3pc at 29,031, S&P 500 +0.2pc at 3,289, Nasdaq +0.1pc at 9,259
- Europe: FTSE 100 +0.3pc at 7,643, DAX -0.2pc at 13,432, CAC +0.1pc at 6,033, Euro Stoxx 50 -0.3pc at 3,766
- Commodities: Brent crude -0.4pc at $US64.23/barrel, spot gold +0.6pc at $US1,554.81/ounce, iron ore -0.6pc at $US96.44/tonne
That was despite a lukewarm lead from Wall Street after the United States and China signed their long-awaited “phase one” trade agreement.
The ASX 200 had lifted by 0.6 per cent to 7,034 points within the first 15 minutes of trade.
It did not take much for the benchmark index to pass the milestone, given it was just just five points below the 7,000-point threshold at Wednesday’s close.
Meanwhile, the broader All Ordinaries index was up by a similar level to 7,153, also a record high.
At 10:10am (AEDT), the Australian dollar was steady at 69.03 US cents.
But oil prices slid on doubts the much-hyped trade pact will spur world economic growth and boost demand for crude.
However, gold prices rose as details of the US-China deal failed to soothe investors’ concerns about future trade conflicts — particularly since the Trump administration has not completely removed its tariffs on Chinese goods.
“Since this deal is only a truce, without cutting import tariffs materially, the impact is limited,” said ANZ economist Hayden Dimes.
“As phase two negotiations will track the progress of phase one, uncertainty remains.
“We think the tension will re-escalate later this year.”
Fading levels of excitement
Wall Street briefly hit record highs after the preliminary trade deal was signed by US President Donald Trump and China’s Vice-Premier Liu He on Wednesday morning (local time).
But the major indices pulled back since then as investors got over their initial excitement.
The S&P 500 and Nasdaq briefly fell into the red in afternoon trade, but managed to recover by the closing bell — posting a 0.2 and 0.1 per cent gain respectively.
The Dow Jones index closed 0.3 per cent higher at 29,031 points.
“We had a historic signing but there is nothing in there that was fresh, so I think the theme is going to be [corporate] earnings,” said Andre Bakhos, managing director at New Vines Capital.
The centrepiece of this preliminary trade deal is a pledge by China to buy an extra $US200 billion worth of US farm products, and other goods and services, over two years.
Although the US agreed to roll back some of its punitive tariffs, the vast majority (on $US250 billion worth of Chinese goods) will remain, as Mr Trump wants to use that as leverage when negotiating a more substantial “phase two” deal with Beijing, later this year.
US markets were also dragged down by financial heavyweights Bank of America (-1.8pc) and Goldman Sachs (-0.1pc) after they announced disappointing quarterly results.
Bank of America Corp reported a better-than-expected quarterly profit, but warned of weak net interest income in the first half of this year.
Goldman Sachs reported a bigger-than-expected slide in profit as it set aside another $US1.1 billion money to cover legal costs related to the 1MDB Malaysian corruption scandal.