The ASX looks set to open near an all-time high after upbeat economic data lifted Wall Street.
SPI200 index futures rallied 22 points or 0.3 per cent to 6881 as US stocks rose on thin volume ahead of tonight’s Thanksgiving holiday. The ASX 200 sealed a record close yesterday and looks likely to start today’s session near the July intraday peak at 6875.5.
The local market caught a fresh tailwind yesterday from a speech by Reserve Bank Governor Philip Lowe outlining the central bank’s plans to support a flagging economy. Westpac declared it now expects the RBA to cut the cash rate twice next year to a new low of 0.25 per cent, then switch to quantitative easing by buying government bonds. The ASX 200 rose for a fourth day, climbing 63 points or 0.9 per cent.
A slew of upbeat economic data helped lift Wall Street to fresh highs even as many traders abandoned trading desks to head home for Thanksgiving. (The market is closed tonight and re-opens for a few hours on Friday morning.) The S&P 500 advanced 13 points or 0.42 per cent to a fourth straight gain and another record close. The Dow added 42 points or 0.15 per cent and the Nasdaq 57 points or 0.66 per cent.
With no significant news on trade talks, the market spotlight swung to the economy, which appeared in better shape than most analysts predicted. Third-quarter GDP was revised upwards to growth of 2.1 per cent from an initial reading of 1.9 per cent. Orders for US-made durable goods increased 0.6 per cent last month, defying expectations for a 1.1 per cent downturn. Consumer spending increased 0.3 per cent during October, an eighth straight rise. Inflation remained weak, offering the Federal Reserve no reason to raise rates.
With the economy looking bright, traders picked up companies exposed to the holiday shopping season. Consumer discretionary was the best-performing sector. Amazon and Apple both gained at least 1.2 per cent.
Sentiment towards Australia’s big miners appeared to improve during the night, with BHP and Rio Tinto recording gains in the US after falling in the UK. BHP’s US-listed stock rose 0.56 per cent after its UK-listed stock shed 0.42 per cent. Rio Tinto added 0.24 per cent in the US after losing 0.41 per cent in the UK. Iron ore fell for a second day, the spot price for ore landed at China’s Tianjin port declining $1.70 or 1.9 per cent to $US87 a dry ton.
Copper hit a three-week high, rising for a fourth session on positive signals on US-China trade talks. Benchmark copper on the London Metal Exchange rose 0.4 per cent to $US5,945 a tonne. Aluminium gained 0.6 per cent and tin 0.5 per cent. Zinc eased 0.1 per cent and nickel 1.5 per cent. Lead closed flat.
Oil retreated from two-month highs after an unexpected increase in US inventories. Brent crude reversed 21 cents or 0.3 per cent to $US 64.06 a barrel. The Energy Information Administration said US supplies increased by 1.6 million barrels last week as refineries reduced output.
Gold was a wallflower as strength in the economy doused haven demand. Gold for February delivery declined $6.60 or 0.4 per cent to $US1,460.80 an ounce. The fall accelerated post-settlement, the precious metal lately down another $6.70 or 0.5 per cent at $US1,453.60.
A resurgent US dollar send the Australian unit down more than a tenth of a cent to 67.76 US cents.
Quarterly capital expenditures by private businesses – a leading indicator of economic health – are today’s big-ticket domestic economic release at 11.30 am EST. Wall Street is closed tonight for Thanksgiving and re-opens on Friday for an abbreviated session.