ASX Expected to Open Flat with Optimism Surrounding US-China Trade Talks

Stock Markets

US:Trading overnight was dominated by a definite 'risk-on' sentiment in most assets. Stocks closed higher while gold sold off, oil rallied and us bonds sold off. The Dow Jones closed 1.25% higher, as did the S&P 500 while gold lost US$15 per ounce. This brings the Dow's gain to a healthy 2.84% for the week that more than undoes the losses of the prior week. The US released its revised second quarter GDP estimate last night which came in at 2.0%. This was slightly below the 2.1% first estimate. According to the Atlanta Fed GDPnow tracker, the forecast for third quarter GDP is currently 2.3%, indicating a slight pick-up in activity in the third quarter.

ASX:The ASX is expected the open flat on the back of optimism surrounding the US-China trade talks. Investors are also waiting on several key sets of data this week with Q2 GDP and a Treasury update of the Budget forecast. With the RBA meeting tomorrow, the consensus is that Philip Lowe will hold rates for another month.

Commodities & Currencies: Major currencies were mixed against the US, with the Australia dollar increasing slightly US67.08 cents to US67.13 cents. The Euro fell from its highs from US$1.1050 to US$1.0993. Global Oil prices recorded a further decrease, largely as a result of Hurricane Dorian threatening the Florida coast with crude prices down 1.1% to US$60.43 a barrel. Gold future prices fell by 0.5% to US$1,529.40 an ounce whereas iron ore recovered some of losses from the previous day increasing by 5.4% to US$85.85 a tonne.

The spot price of goldis currently down 0.5% at US$1,529 per ounce. 
The AUD
 is currently down 0.15% at US$0.6713.

This article was written by Alex Single – Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3633.