Donald Trump’s tweet about US-China trade negotiations lifted sentiment on Wall Street. (AP: Alex Brandon)
Australian shares are expected to open flat, despite United States President Donald Trump boosting optimism on Wall Street with his latest tweet about the US-China trade war.
Meanwhile, the Australian dollar has jumped to 72 US cents — its highest level in a month, after rising 1.9 per cent overnight.
Markets at 7:30am (AEDT):
- ASX SPI 200 +0.1pc at 5,813, ASX 200 (Thursday’s close) +0.4pc at 5,830
- AUD: 72 US cents, 55.36 British pence, 63.11 Euro cents, 81.12 Japanese yen, $NZ1.08
- US: Dow Jones +1.1pc at 25,381, S&P 500 +1.1pc at 2,740, Nasdaq +1.75pc at 7,434
- Europe: FTSE -0.2pc at 7,115, DAX +0.2pc at 11,469, CAC -0.2pc at 5,086, Euro Stoxx 50 flat at 3,197
- Commodities: Brent crude -3pc at $US72.76/barrel, spot gold +1.5pc $US1,233.17/ounce, iron ore -0.6pc at $US75.25/tonne.
The local currency’s rebound was due to a weaker US dollar — which in turn fell in part because of a surge in demand for the risk-sensitive British pound overnight.
The pound strengthened due to:
- reports that the United Kingdom is close to securing a Brexit deal with the European Union; and
- the Bank of England voting to keep British interest rates on hold at 0.75 per cent — but hinted that the rate hike cycle might accelerate if Brexit proceeds smoothly.
The Australian dollar also rebounded to 63.2 euro cents, a two-month high, but has weakened slightly to 55.4 British pence.
In local economic news, the Bureau of Statistics will release its latest figures on retail sales (September) and the producer price index (third quarter).
Optimism over trade war resolution
Mr Trump said he had a “long and very good conversation” with Chinese President Xi Jinping, and that trade talks were “moving along nicely” — reviving hopes that they can resolve their countries’ trade war amicably.
Both presidents will meet to discuss trade at the G20 summit in Argentina at the end of this month.
Wall Street advanced for the third straight day, with the industrial-skewed Dow Jones index rising sharply by 265 points, or 1.1 per cent, to 25,381.
The benchmark S&P 500 lifted by 1.1 per cent to 2,740. Meanwhile, the tech-heavy Nasdaq jumped 1.75 per cent to 7,434.
Technology-related stocks have led the stock market’s bull run in recent years.
The S&P tech sector’s 8 per cent pullback in October was its worst monthly loss since 2011.
“Maybe there’s going to be some hope that a trade deal with China will actually come through,” said Robert Pavlik, chief investment strategist at SlateStone Wealth, New York.
Beyond that, investors are feeling a bit more comfortable after gains this week, he said.
“Now you get a little bit of fear of missing out, mixing in with, ‘I don’t believe this is actually happening’.
“The fear of missing out seems to be on the winning side.”
The trade-sensitive S&P industrial sector rose 1.6 per cent, with Boeing and Caterpillar leading the gains.
Adding to optimism, the latest round of results from US companies were mostly upbeat.
Of the 348 companies in the S&P 500 that have reported results so far, 77 per cent have reported earnings above analysts’ expectations.
This has pushed aggregate third-quarter earnings growth estimates for S&P 500 companies to 26.2 per cent, according to IBES data from Refinitiv.