ASX set for flat start on busy earnings day

Sovereign bond yields climbed, and gold eased by -0.3 per cent. Oil prices bounced, though the WTI Crude remains in a battle with the $US50-mark. And the Aussie Dollar returned to trade within the 0.6700, as the US Dollar pulled back, and then Yen broadly sold-off.

3. ASX200 expected to open flat today: After yesterday’s solid performance, SPI Futures are suggesting the ASX200 is looking at a flat open today. It was a broad-based, 0.61 per cent rally for the Australian stock market on Tuesday, with all sectors closing in green, on relatively robust volume. The financials added the most to the market in points terms.

However, it was the IT space that delivered the largest intraday gains, as investors seemingly went back to searching for growth stocks in the market.

4. Local corporate news a mixed bag: Though the macro proved positive for the ASX yesterday, the micro was a little more mixed. The health care sector found itself hampered by a -3.39 per cent dip in Cochlear shares, after that company flagged it expects a hit to its profits from the outbreak of the coronavirus.

Beach Energy also fell -2.53 per cent, after the company reported yesterday, and missed profit estimates. The travel and tourism industry also continues to underperform, as concerns linger about the impact of the coronavirus.

5. UK GDP slightly better than expected: The UK saw a release of a spate of economic data last night. Topping the data were GDP figures, and although they showed quarterly growth came-in flat, as expected, monthly GDP came-in at a better than forecast 0.3 per cent.

The data alleviated some concern that the UK economy is heading for a material slowdown. The Pound rallied on the news, as the market lowered the odds of a BOE rate cut next month to 7 per cent.

6. Powell testimony delivers few surprises: A testimony delivered by US Fed Chair Jerome Powell headed a slew of central bank related news overnight. In the speech before US congress, Chairperson Powell reiterated his view that US economic fundamentals are positive, but that risks, which now includes the coronavirus, remain elevated, and that the Fed is prepared to provide policy support should those risks impact US growth.

The market-reaction to Chair Powell’s testimony proved muted overnight, but it did result in a slight lift in US Treasury yields.

7. The day ahead: Today will see a loaded corporate and economic calendar. The CBA reports their results this morning. The Westpac Consumer Sentiment will be reported, and will follow the improvements shown in the NAB Business Confidence survey yesterday.

The RBNZ meet at midday, with the central bank being given little more than a 7 per cent chance of cutting rates. While in tonight’s session, US Fed Jerome Powell will deliver the second leg of his testimony. And US Crude Oil Inventory data is released for the week.

8. Market watch:

ASX futures flat at 6990 near 7.55am AEDT

  • AUD +0.4% to 67.12 US cents
  • On Wall St near 3.30pm: Dow -0.1% S&P 500 +0.1% Nasdaq flat
  • In New York: BHP +0.7% Rio +0.5% Atlassian -2.3%
  • In Europe: Stoxx 50 +0.9% FTSE +0.7% CAC +0.7% DAX +1%
  • Nikkei 225 futures +0.2% Hang Seng futures +0.4%
  • Spot gold -0.3% to $US1567.66 /oz at 1.43pm New York
  • Brent crude +1.7% to $US54.16 a barrel
  • US oil +0.9% to $US50.02 a barrel
  • Iron ore +4.9% to $US86.93 a tonne
  • Dalian iron ore +4.4% to 605.5 yuan
  • LME aluminium +1.9% to $US1734 a tonne
  • LME copper +1.4% to $US5745 a tonne
  • 2-year yield: US 1.42% Australia 0.74%
  • 5-year yield: US 1.41% Australia 0.74%
  • 10-year yield: US 1.59% Australia 1.01% Germany -0.39%
  • 10-year US/Australia yield gap: 58 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.

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