After an initial surge, Wall Street gave up most its gains in late afternoon trade following a report that the Federal Bureau of Investigation raided the office of President Donald Trump’s personal lawyer.
Markets at 7:15am (AEDT):
- ASX SPI 200 futures -0.1pc, ASX 200 (Monday’s close) +0.4pc at 5,809
- AUD: 76.99 US cents, 54.44 British pence, 62.48 Euro cents, 82.2 Japanese yen, $NZ1.05
- US: Dow Jones +0.2pc at 23,979, S&P 500 +0.3pc at 2,613, Nasdaq +0.5pc at 6,950
- Europe: FTSE +0.2pc at 7,195, DAX +0.2pc at 12,262, Euro Stoxx 50 +0.2pc at 3,413
- Commodities: Brent crude +2.5pc at $US68.76/barrel, spot gold +0.3pc at $US1,336.75/ounce
The Dow Jones index surged by 440 points at its peak. By it closed higher by just 46 points, or 0.2 per cent, at 23,979.
The S&P 500 rose by 0.3 per cent, while the Nasdaq lifted by 0.5 per cent.
The FBI’s search of Michael Cohen’s office in New York was a referral by the Office of Special Counsel, Robert Mueller — as part of his investigation into whether the Trump election campaign colluded with Russia.
“Even if it ultimately ends up being nothing, the initial reaction is almost always negative in the market,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
One reason for Wall Street’s slight bounce-back was US policymakers adopting a softer stance on China trade tensions.
In particular, Mr Trump’s new economic adviser Larry Kudlow told CNBC that the president may be open to forming an international coalition to grapple with trade issues involving China.
Also, investors are upbeat about corporate earnings season — which kicks off later this week with Citigroup, JP Morgan and Wells Fargo’s quarterly results.
Analysts expect quarterly profits for S&P 500 companies to rise 18.5 percent from a year ago, which would be the biggest gain in seven years, according to Thomson Reuters
Shares in Apple and Alphabet (Google’s parent company) jumped by 1 per cent each, while Amazon rose by just 0.06 per cent.
Facebook’s share price recovered by 0.5 per cent after US Congress released Mark Zuckerberg’s prepared remarks, ahead of his testimony on Wednesday regarding the Cambridge Analytica data scandal.
Mr Zuckerberg apologised for not doing enough to prevent the personal information of up to 87 million users from being compromised.
“We didn’t take a broad enough view of our responsibility, and that was a big mistake,” he wrote.
“It was my mistake, and I’m sorry.”
If Mr Zuckerberg does not provide satisfactory answers this week, Congress is more likely to push new laws to strictly regulate Facebook.
Anticipating such a move, the company has already said it favours new legislation that would make social networks disclose who is behind political ads, much as TV and radio stations must already do.
Australian market today
ASX futures have slipped by 0.1 per cent, which indicates Australian shares are expected to begin the day slightly lower.
In economic news, NAB will release its latest report on business conditions and confidence.
As for currencies, the Australian dollar is buying 76.99 US cents, 54.44 British pence, and 62.48 Euro cents.
The local currency had fallen to as low as 76.5 US cents overnight, ahead of a speech that China’s President Xi Jinping is scheduled to deliver today.
“Expectations are reasonably high that China’s President will re-affirm Beijing’s ongoing commitment to reform and more open markets, while not being seen to overtly acquiesce to Washington’s demands,” said ANZ senior economist Daniel Gradwell.