As for the laggards last night, materials and energy stocks remain under pressure, as commodity prices fail to stage a full recovery in the face of concerns about Chinese economic growth. While financial stocks dropped as bets of global interest rate cuts lowered bond yields.
3. China pledges to lower tariffs – with a catch: Market sentiment was supported yesterday news that China would be lowering tariffs on $US75 billion worth of US imports. The move comes as China attempts to ease pressures on growth and potential price inflation in its economy in response to the coronavirus.
Purportedly, too, the move is intended as an olive branch to the Trump administration, before an attempt by the Chinese to enact a clause in the US-China trade agreement that would remove the obligation to purchase $US200b worth of US goods.
4. Growth proxies not as ebullient as stocks: Growth and risk sensitive assets have yet to demonstrate totally the same level of relief and optimism regarding the global growth outlook. Sovereign bond yields moved little, with the yield on 10 Year US Treasuring gaining only a point overnight.
Oil prices edged roughly 0.5 per cent higher, copper prices staged a 0.8 per cent rally, while gold prices added 0.5 per cent. The anti-risk Japanese Yen dropped by 0.1 per cent, while the A-Dollar traded practically flat around 0.6730.
5. ASX200 is expected to extend recovery: SPI Futures are indicating that the ASX200 ought to open around 11 points higher this morning, following Wall Street’s positive lead. This’ll back-up a day on Thursday which saw the benchmark index stage a 1 per cent rebound.
It was a broad-based, risk-on move from the ASX. Embattled commodity stocks lead the way, as did growth names in tech and biotech. At the opposite end of the market, defensive stocks in the real estate and utility space were the sole underperformers.
6. Local Retail Sales disappoints: Australian Retail Sales data topped the economic calendar locally yesterday, and largely disappointed market participants. Retail Sales were shown to have contracted by -0.5 per cent last month – someway undershooting the -0.2 per cent forecast.
Likely a small hangover November’s Black Friday sales season, Retail consumption was shown to have been weakest in department stores and in clothing and apparel. The poor figures seemingly came as little surprise to market participants, with the A-Dollar moving little off the back of the news.
7. RBA and US jobs highlight the calendar: In the day ahead, traders will be keeping an eye on high impact data, released globally and locally. The RBA releases its quarterly monetary policy statement, with market participants expecting the document to deliver the sort of upbeat tone about the Australian economy that’s characterized all of the RBA’s communications this week.
US Non-Farm Payrolls figures are also printed in US trade, ad is expected to show the US economy added 155k jobs last month, and maintained its unemployment rate at 3.5 per cent.
8. Market watch:
ASX futures up 12 points or 0.2% to 6992 near 7.45am AEDT
- AUD -0.2% to 67.32 US cents
- On Wall St near 3.25pm: Dow +0.2% S&P 500 +0.3% Nasdaq +0.5%
- In New York: BHP -0.7% Rio -0.7% Atlassian +1.3%
- In Europe: Stoxx 50 +0.7% FTSE +0.3% CAC +0.9% DAX +0.7%
- Nikkei 225 futures -0.3% Hang Seng futures -0.4%
- Spot gold +0.6% to $US1565.09 /oz at 1.07pm New York
- Brent crude -0.5% to $US55.03 a barrel
- US oil +0.4% to $US50.96 a barrel
- Iron ore +2.3% to $US83.17 a tonne
- Dalian iron ore +0.9% to 590 yuan
- LME aluminium +1.2% to $US1737 a tonne
- LME copper +0.2% to $US5735 a tonne
- 2-year yield: US 1.45% Australia 0.78%
- 5-year yield: US 1.46% Australia 0.79%
- 10-year yield: US 1.64% Australia 1.09% Germany -0.37%
- 10-year US/Australia yield gap: 55 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.