Australian Stocks Poised to Open Higher

Stock Markets

Prior to the US cash open, US index futures were briefly negative as investors assessed comments made from Fed Chairman Jerome Powell that the central bank would continue to shrink its balance sheet as planned. Despite Powell’s comments raising concerns about the size of US debt and adding momentary weakness into the markets, the Dow Jones (+0.5%), Nasdaq100 (+0.5%), and S&P500 (+0.4%) all managed to close in positive territory.

Australian shares are poised to open higher today as US indices further extended their rally. Ten of the eleven major sectors comprising the S&P500 ended Thursday’s session in positive territory, with the real estate, industrials and utilities sectors closing with the highest percentage gains.

US/China trade related optimism faded yesterday, as China released vague details on the key issues such as forced technology transfers, intellectual property rights, tariff barriers and cyber attacks.

Hard Currencies

The spot price of gold fell about 0.4% and is now hovering around US$1287.20, from US$1292.00 on Thursday. From a technical perspective, the strong uptrend in the spot price of gold remains intact and is expected to retest recent highs of US$1300.40.

Commodities

Crude oil prices have benefited from OPEC production cuts and steadying equities markets, and are currently down about 0.1% after rising a staggering 4.8% to US$52.36 per barrel on Wednesday. The steep downtrend remains intact for now, although it is likely to be broken if the rally upwards continues.

Fiat Currencies

AUD (against the USD) has extended its rally in the wake of last week’s flash crash which saw it drop to as low as 67.43¢ last Thursday and is currently 71.87¢ (+0.2%), which is relatively low relative to historical levels. Weakness in the housing market and fears of an associated recession have been weighing on the AUD in recent months. 


This article was written by Mithun Fernando - Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633. 

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