Positive signals on trade point to a third straight ASX advance after Wall Street closed at a record.
ASX SPI200 index futures rallied 27 points or 0.4 per cent to 6769 after a Chinese state mouthpiece said Beijing was “very close” to a trade deal with the US. Over the weekend, a White House official said a deal was possible before the end of the year.
The domestic financial sector will be under the spotlight after Westpac this morning announced the departure of CEO Brain Hartzer in the wake of compliance failures that triggered a collapse in the company’s share price. Chairman Lindsay Maxsted said Hartzer will stand down on December 2. Chief Financial Officer Peter King will take over as acting CEO.
US stocks surged to record levels as trade bellwethers galloped higher. The S&P 500 put on 23 points or 0.75 per cent as Caterpillar, Apple and Boeing all advanced. The Dow added 191 points or 0.69 per cent and the Nasdaq 113 points or 1.32 per cent as semi-conductor stocks outperformed.
The Global Times, a tabloid run by the Chinese Communist Party, said negotiators were “closer to agreeing” on a phase-one deal and Beijing “remains committed to continuing talks for a phase two and even a phase three deal”. A Chinese expert close to the talks told the Times, “The two sides have basically reached broad consensus for the phase one agreement.” Over the weekend, the Chinese government indicated it will raise penalties for violating intellectual property rights – a major bone of contention between the two sides.
On the US side, National Security Adviser Robert O’Brien told reporters the White House hoped to complete a phase-one deal by the end of the year. “I still think that’s possible,” he said.
Sentiment was also helped by merger activity. Jeweller Tiffany’s agreed to be acquired by France’s LVMH (Louis Vuitton Moet Hennessy). Broker Charles Schwab swooped on discount brokerage T.D. Ameritrade. EBay offloaded its ticking unit to Viagogo. Tech was the best of the sectors, defensive consumer staples the weakest.
Surging iron ore prices helped the ASX 200 rise 22 points or 0.3 per cent yesterday. The rally accelerated overnight, the spot price at Tianjin climbing $2.65 or 3 per cent to $US90.45 a ton – a tenth straight gain. BHP’s US-listed stock added 1.23 per cent and its UK-listed stock 0.58 per cent. Rio Tinto gained 1.64 per cent in the US and 0.92 per cent in the UK.
Oil extended two-month highs, rising for the third time in four sessions. Brent crude settled 26 cents or 0.4 per cent ahead at $US63.65 a barrel.
Copper outperformed other industrial metals following a sharp drop in inventories at London Metal Exchange-registered warehouses. In late action, benchmark copper was ahead 0.7 per cent at $US5,895.50 a tonne. Aluminium was off 0.1 per cent, lead 0.5 per cent, nickel 1.1 per cent and zinc 0.2 per cent. Tin was up 0.1 per cent.
The shine continued to come off gold as traders stepped back from havens. Gold for December delivery sagged $6.70 or 0.5 per cent to settle at $US1,456.90 an ounce.
The dollar retreated almost a fifth of a cent to 67.76 US cents.
A busy day ahead for central bankers. Reserve Bank Deputy Governor Guy Debelle is due to deliver a speech in Canberra at 10.50 am EST. US Federal Reserve Chair Jerome Powell is due to speak in the US at 11 am. RBA Governor Phil Lowe is scheduled to speak tonight at 8.05 pm. Wall Street has consumer confidence and home sales figures on tap tonight.