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ASX set to open higher as oil deal optimism boosts Wall Street


3. Emergency OPEC+ meeting: Such high expectations of an immediate resolution to the Saudi-Russian oil price war were tempered somewhat, as traders began to doubt the veracity of US President Trump’s claims. But hopes were ameliorated by reports that the Saudis were looking to convene an emergency OPEC+ meeting to discuss a coordinated cut to global oil production.

The surge in oil prices was broadly supportive of stockmarkets, with the energy sector leading the S&P500s gains. While oil sensitive currencies like the CAD and NOK also climbed.

4. Wall Street finishes in style: The session for US stocks was generally and on the face of it positive. The S&P500 finished the day’s trade 2.3 per cent higher, backing up a day in European trade that saw the DAX edge higher by 0.27 per cent, and the FTSE100 add 0.47 per cent. Though a positive day’s trade, some technical factors in the market reveal the weakness underlying equities right now.

Volumes were low on Wall Street, while market breadth barely reaching 50 per cent during overnight trade. It speaks of a market driven by a narrow set of very large stocks, notably in the US tech sector, as investors search for size and quality. Beyond that preference, the darkening outlook for the US and global economy has market participants in no mood to sift through the market for greater risk. Of course, that’s being driven by an unshakeable concern about the COVID-19 crisis, and its knock-on impacts to economic growth, with the number of global cases of COVID-19 exceeding 1 million overnight.

5. Tech in vogue: It speaks of a market driven by a narrow set of very large stocks, notably in the US tech sector, as investors search for size and quality. Beyond that preference, the darkening outlook for the US and global economy has market participants in no mood to sift through the market for greater risk.

Of course, that’s being driven by an unshakeable concern about the COVID-19 crisis, and its knock-on impacts to economic growth, with the number of global cases of COVID-19 exceeding 1 million overnight.

6. The economic devastation is also becoming more apparent: US jobless claims numbers were released for the week last night, and showed the number of Americans seeking unemployment benefits rose by a record 6.6 million.

Adding to last week’s previous record-high of 3.3 million, the signs of deteriorating US fundamentals catalysed a little pop in safe haven assets. The US Dollar Index rose 0.6 per cent, largely because of a plunging Euro. While gold also jumped 1.3 per cent, to trade back above $US1600 per ounce.

7. ASX set for bright Friday: Wall Street’s solid lead is setting up the ASX200 for a solid open this morning. SPI Futures are pointing to a 114-point jump for the index today. It follows a soft day’s trade for the ASX200 yesterday, with the market losing 1.98 per cent.

The losses were largely attributable to a fall in bank stocks, after the RBNZ instructed New Zealand’s banks not to pay out dividends, to ensure its banking system remains well capitalised, raising some concerns that Australian regulators may at some point follow suit.

8. Market watch:

ASX futures are 114 points, or 2.2 per cent, higher at 7.50am AEDT.

  • AUD -0.3% to 60.54 US cents
  • On Wall St near 4pm: Dow +2.2% S&P 500 +2.2% Nasdaq +1.7%
  • In Europe: Stoxx 50 +0.3% FTSE +0.5% CAC +0.3% DAX +0.3%
  • Spot gold +1.3% to $US1612.80 an ounce at 1.14pm New York time
  • Brent crude +21.8% to $US30.13 a barrel
  • US oil +24.1% to $US25.21 a barrel
  • Iron ore +1.5% to $US83.72 a tonne
  • Dalian iron ore +2.9% to 577.5 yuan
  • LME aluminium -0.7% to $US1489 a tonne
  • LME copper +2% to $US4900 a tonne
  • 2-year yield: US 0.22% Australia 0.20%
  • 5-year yield: US 0.39% Australia 0.39%
  • 10-year yield: US 0.62% Australia 0.75% Germany -0.44%
  • US yields as of 4.11pm New York time

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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