It’s setting up the ASX200 for its own positive start this morning. SPI Futures are pointing to an approximately 40-point rally for index at today’s open.
3. ASX set for positive open: The ASX200 took the fall that market participants were expecting yesterday. The benchmark index finished the day’s trade 1.4 per cent lower, to close at 6994, led by losses in cyclical stocks. The materials space was the heaviest laggard, chopping-off 14 points from the ASX200, with Fortescue Metals Group shedding a noteworthy 7.3 per cent.
Energy stocks were also hammered, as concerns about the impacts of the coronavirus on global energy keep downward pressure on oil prices.
4. US data generally positive: There was a handful of key US economic data releases overnight, that generally supported US Dollar strength. Consumer Confidence data was published, and roundly beat expectations, printing at a 131.6 reading, versus a 128.2 forecast. And Durable Goods Orders also exceeded market forecasts – although Core Durable Goods numbers did undershoot.
The data seemed to aid the US Dollar’s recent short term run higher, nevertheless. The US Dollar Index climbed around 0.2 per cent overnight, to climb back above the 98-level.
5. Australian business confidence still weak: Local economic data cast a pall over trading yesterday. NAB Business Confidence survey was released, and revealed that business confidence fell to -2 last month, and business conditions dropped to +3.
The survey adds to worries, slightly, about the strength of domestic fundamentals, and the efficacy of recent efforts by policymakers to stimulate economic activity. One highlight of the survey, however: the employment index showed a solid +4 reading, suggesting business still intends to expand its hiring.
6. Attention turns to CPI numbers: The data docket locally will be highlighted by last quarter’s CPI numbers this morning. Economist consensus estimates suggest that headline price growth in the Australian economy expanded by 0.6 per cent for the quarter, taking annual inflation to 1.8 per cent.
Though a trifle below the RBA’s 2-3 per cent target band, market pricing suggests that sluggish inflation won’t bring the RBA to cut interest rates next week. The odds of an RBA cut at that meeting is a modest 10 per cent.
7. A-Dollar hits 3 month low: Pressure remains on the Australian Dollar, nevertheless, off the back fears about global growth, and expectations of future RBA rate cuts. Weighed down by falling commodity prices, volatility in broader financial markets, concerns about Chinese economic health, as well as the many stubborn issues plaguing domestic growth, the AUD/USD fell to fresh multi-month lows yesterday.
It’s trading at roughly 0.6750 this morning – its lowest point since October, and over 4 per cent off of its December highs.
8. Market watch:
ASX futures up 40 points or 0.6% to 6979 near 7am AEDT
- AUD -0.1% to 67.52 US cents (Overnight low 67.37)
- On Wall St near 3pm: Dow +0.9% S&P 500 +1.3% Nasdaq +1.6%
- In New York: BHP +0.8% Rio +0.9% Atlassian +2.9%
- In Europe, Stoxx 50 +1.1%, FTSE +0.9% CAC +1.1% DAX +0.9%
- Nikkei futures up 0.8%
- Spot gold -0.8% to $US1570.01/oz at 12.46pm New York
- Brent crude +0.8% to $US59.77 a barrel
- US oil +0.6% to $US53.47 a barrel
- LME aluminium -0.7% to $US1752 a tonne
- LME copper -0.7% to $US5703 a tonne
- 2-year yield: US 1.45% Australia 0.66%
- 5-year yield: US 1.46% Australia 0.67%
- 10-year yield: US 1.64% Australia 0.95% Germany -0.34%
- 10-year US/Australia yield gap: 69 basis points
This column was produced in commercial partnership between The Sydney Morning Herald, The Age and IG
Information is of a general nature only.