Australian shares are set to open modestly higher, on a positive start to the US earnings season, anticipation of the signing of the US-China phase one trade deal and iron ore’s continuing rebound.
ASX futures were up 15 points or 0.2% to 6924 near 5.20am AEDT. The local currency was little changed.
Shares on Wall Street were modestly higher with the Dow advancing the most in the wake of JPMorgan reporting record annual profit for a US bank and on optimism as the US and China prepare to initial a trade pact tomorrow.
The US listed shares of both BHP and Rio were higher, bolstered in part by further gains in the price of iron ore.
The spot price of iron ore, as reported by Fastmarkets MB, rose 1.1 per cent to $US97.03 at its Tuesday setting, nearing its highest in four months. It has risen 23 per cent from a November 11 low.
Local: NZ food prices December
Overseas data: China-US trade accord signing in Washington; Japan machine tool orders November, Producer price index December; Euro zone industrial production November, Trade November; UK consumer prices December, House price index November; US producer prices December, Empire manufacturing index January, Fed Beige Book
ASX futures up 15 points or 0.2% to 6924 near 5.20am AEDT
- AUD flat at 69.05 US cents
- On Wall St near 1.15pm: Dow +0.5% S&P 500 +0.1% Nasdaq +0.2%
- In New York: BHP +0.8% Rio +0.4% Atlassian -0.7% JPMorgan +1.8%
- In Europe: Stoxx 50 -0.1% FTSE +0.1% CAC +0.1% DAX flat
- Nikkei 225 futures flat
- Spot gold -0.3% to $US1543.57 /oz at 1.16pm New York
- Brent crude +0.8% to $US64.72 a barrel
- US oil +0.4% to $US58.31 a barrel
- Iron ore +1.1% to $US97.03 a tonne
- Dalian iron ore -0.1% to 665.5 yuan
- LME aluminium +0.6% to $US1809 a tonne
- LME copper +0.2% to $US6302 a tonne
- 2-year yield: US 1.58% Australia 0.82%
- 5-year yield: US 1.63% Australia 0.87%
- 10-year yield: US 1.83% Australia 1.25% Germany -0.17%
- 10-year US/Australia yield gap near 5.15am AEDT: 58 basis points
From today’s Financial Review
Chanticleer: Inside BlackRock’s climate epiphany: In a move that will reverberate through global capital markets, the world’s largest fund manager plans to dump $521 million in thermal coal shares – and that is just the beginning.
Costello warns of boom in risky assets: Australia’s longest-serving treasurer, Peter Costello, says investors are being lured by products similar to the CDOs which fell over in the GFC.
Super funds hold antidote to rising financial anxiety: The majority of Australian retirees are worried about outliving their savings and super funds need to step up and provide quality advice.
Financial planners reveal what’s wrong with their industry: Proponents argue that the industry is increasingly focused on the wealthy, as an emphasis on tailor-made solutions inhibits the greater use of technology.
Boeing reported its worst annual net orders in decades, along with its lowest numbers for plane deliveries in 11 years, as the grounding of its 737 MAX jet saw it fall far behind main competitor Airbus .
Allowing for cancellations and changes to earlier orders, Chicago-based Boeing said it had received just 54 new orders for planes in 2019 and delivered less than half as many as a year earlier, losing the top spot to its European rival for the first time in eight years.
Boeing said unidentified customers cancelled orders for three 787-9s in December and another customer cancelled an order for a 787-8.
Ten months after the MAX was grounded following a pair of fatal crashes linked to its MCAS anti-stall system, Boeing still has a backlog of more than 5400 orders for its long- and short-distance commercial jets.
By comparison, Airbus said earlier this month it racked up a net 768 orders last year after cancellations and delivered a record 863 planes.
Boris Johnson backs Trump on Iran but not on Huawei: The British PM reverses course on his previous solidarity with the Europeans on Iran, but sounds a defiant note on US pressure for a Huawei ban.
Irish PM seeks to put Brexit at centre of February 8 election: Leo Varadkar’s Fine Gael and the fellow centre-right Fianna Fail are closely matched in opinion polls, increasing the likelihood of another minority government.
The pan-European STOXX 600 index closed up 0.3% after two sessions of losses.
Luxury stocks were boosted when UBS analysts said they were expecting 2020 to be another busy year for the sector, supported by consumer sentiment being at record levels and continued M&A speculation. LVMH rose 1% to touch record highs.
London’s main index ended a choppy Tuesday session with slight gains. The FTSE 100 closed 0.1% higher. The FTSE 250 rose 0.2%, driven by a 9.2% jump in miniature wargame maker Games Workshop after reporting record profit and sales.
Homebuilder Taylor Wimpey was the second-best performer on the FTSE 100, rising 4% after a trading update showed that its order book surged 22% in 2019, aided by the government’s Help to Buy scheme.
French banks must tighten mortgage lending standards or they will be told to stump up extra capital for risky loans, the head of the central bank governor said.
At nearly 7% in a year, mortgage lending growth in France has outpaced almost all other euro zone countries, causing regulators to fret.
Last month the High Council for Financial Stability, which included the finance minister and central bank governor, told banks to snub borrowers taking on debt more than 33% of their income and to cap mortgages at 25 years max.
Hong Kong stocks reversed gains to end lower on Tuesday as investors pocketed gains following a strong rally underpinned by optimism towards the signing of a Phase 1 Sino-US trade deal.
The Hang Seng index closed lower 0.2% at 28,885.14 after rising as much as 0.7% to an eight-month high, while the China Enterprises Index lost 0.4% to 11,355.37.
The US Treasury Department dropped its designation of China as a currency manipulator, days before top officials of the world’s two largest economies were due to sign a preliminary trade agreement to ease an 18-month-old tariff war.
China has pledged to buy nearly an additional $US80 billion of manufactured goods from the United States over the next two years, plus over $US50 billion more in energy supplies, according to a source briefed on the trade deal to be signed tomorrow in Washington.
It’s quite understandable to see some profit-taking following recent strong gains, said Linus Yip, an analyst with First Shanghai Securities, while expressing optimism about the Hong Kong market in 2020 due to the easing of Sino-US trade tensions and signs of stabilisation in China’s economy.
The Swiss franc hit its strongest against the euro in almost three years on after the US Treasury added Switzerland to its watchlist of currency manipulators.
Analysts said the inclusion could discourage the Swiss National Bank (SNB) from intervening to try to limit further appreciation of the franc, although the Swiss finance ministry said it would have no immediate consequences.
The SNB denied its interventions to weaken the currency were intended to give Switzerland a trading advantage, citing the negative effects on inflation and its export-dependent economy from a too highly valued franc.
Buenos Aires bonds added to recent losses on Tuesday after the province asked holders for an extension on a more than $US250 million payment due later this month, dragging Argentina’s debt lower as well.
The provincial amortisation payment, due in two weeks, is tied to a 10.875% January 2021 bond, which slid 3 points, for a near 18-point drop since last week, according to Refinitiv data.
“The overall purpose of the proposed amendments is to temporarily relieve the Province from certain of its short-term financial obligations by deferring the next principal payment date, originally due on January 26, 2020, to May 1, 2020,” a filing by the province said.
Why gold still looks attractive: While many investors may consider reducing exposure on the back of easing geopolitical tensions, this may still be a good year for the precious metal.
Iron ore nears four-month high on shipment worries: The price of the steel-making material is heading back towards the $US100 a tonne mark as investors anticipate cyclone-disrupted shipments from Australia.
Copper prices reached their highest in eight months on Tuesday as better-then-expected trade data in China, the world’s largest metals consumer, pointed to a modest recovery in demand and the yuan strengthened.
Benchmark copper on the London Metal Exchange (LME) ended up 0.2% at $US6302 a tonne after touching $US6314.50, the highest level since May 1. It has risen 1.7% this week.
Macroeconomic factors including the stronger yuan, solid Chinese trade figures and the signing of a US-China Phase 1 trade deal this week were boosting prices, said Deutsche Bank analyst Nick Snowdon.
But a soft physical market heading into Lunar New Year celebrations later this month “should limit the near term upside”, he added. He said the market should tighten again in the second quarter as demand picks up, boosting prices to around $US6500.
Australian stocks are partying like it’s 1960: Australian industrial stocks are trading at their richest valuations since 1960 on reflation hopes but some strategists warn investors could be set for disappointment.
Mirrabooka sees strong offshore opportunities: Mirrabooka Investments managing director Mark Freeman says offshore growth has delivered strong returns.
The Australian sharemarket surpassed last week’s record to close at fresh highs on Tuesday, following a positive lead from the United States overnight.
The S&P/ASX 200 Index closed the session 58.5 points, or 0.85 per cent, higher at 6962.2, putting the benchmark within striking distance of the historic 7000-points level.