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A fourth night of gains on Wall Street points to a tentatively positive start to Australian trade after China announced tariff cuts to support its economy.
ASX SPI200 index futures edged up 12 points or 0.2 per cent to 6992 as Wall Street’s rapid bounceback from the coronavirus scare began to lose momentum. The local market pre-empted some of the overnight gains when the Chinese trade news broke late in yesterday’s session, helping lift the ASX 200 by 73 points or 1.1 per cent to a two-week high.
A US rally that saw the three major indices recoup two weeks of losses in three quick gulps slowed overnight despite strong economic data and earnings results. The Dow joined the S&P 500 and the Nasdaq at record levels, but gains moderated from the hectic pace from Monday through to Wednesday.
The S&P 500 put on 11 points or 0.33 per cent to extend its rise for the week to 3.8 per cent. The Nasdaq gained 63 points or 0.67 per cent and the Dow 89 points or 0.3 per cent.
China gave Asian markets a late boost yesterday when it announced it will halve tariffs on about $75 billion worth of US goods imposed last year during the trade war. The cuts match a US commitment under the ‘phase one’ deal signed last month. The finance ministry’s move was seen by analysts as an attempt to raise confidence as the virus outbreak threatened growth in the world’s second largest economy. The Shanghai Composite responded with a rise of 1.72 per cent. Markets in Hong Kong and Japan both climbed more than 2.3 per cent.
Twitter stood out during a night of broadly positive quarterly earnings updates in the US. Shares in the social network surged 15 per cent after quarterly revenue hit $US1 billion for the first time. Estee Lauder rose 5.2 per cent and New York Times Co 12.8 per cent. Tesla bounced 1.9 per cent.
In Washington, the Senate acquitted President Donald Trump on impeachment charges that he abused his power and obstructed Congress. With a two-thirds majority needed to convict, the Senate voted 52:48 and 53:47 against each charge.
Jobless claims fell to their lowest level in nine months, continuing a run of positive employment signals ahead of tonight’s monthly jobs report. First-time claims fell by 15,000 to 202,000, beating expectations.
Resource stocks may prove a headwind today after BHP and Rio Tinto lost ground in US trade. BHP’s US-listed stock eased 0.59 per cent after its UK-listed stock closed barely changed at +0.03 per cent. Rio Tinto shed 0.5 per cent in the US after adding 0.41 per cent in the UK. The spot price for iron ore landed in China rose $1.60 or 2 per cent to $US82.15 a dry ton.
A rebound in oil stalled as OPEC – the Organization of the Petroleum Exporting Countries – reportedly faced resistance from Russia to a proposal to cut production to prop up prices. While the US benchmark, West Texas Intermediate, edged up 20 cents or 0.4 per cent to $US50.95 a barrel, the international benchmark, Brent crude, settled 35 cents or 0.6 per cent weaker at $US54.93 a barrel.
Copper’s rebound from five-month lows showed signs of fatigue overnight, with the benchmark on the London Metal Exchange ending 0.2 per cent ahead in final open-outcry trading at $US5,735 after being up as much as 1.6 per cent. Aluminium gained 1.2 per cent, lead 1.3 per cent and tin 0.8 per cent. Nickel shed 0.8 per cent and zinc 0.3 per cent
Gold rose for a second session. Gold for April delivery settled $7.20 or 0.5 per cent ahead at $US1,570 an ounce.
The dollar declined a quarter of a percentage point to 67.29 US cents.
The January performance of services index is due at 8.30 am EST. Reserve Bank Governor Philip Lowe is due to testify before a standing committee of the House of Representatives from 9.30 am. The RBA releases its quarterly monetary policy statement at 11.30 am. China is expected to unveil January trade data after lunch. A big night ahead on Wall Street, with the January employment report, as well as earnings updates from News Corp, Hasbro and Goodyear.
