ASX poised to open higher following RBA Policy Statement and Federal Budget

Stock Markets

Australian shares are poised to open higher today after US stocks ended mixed overnight. ASX 200 futures are currently up 30 points. The Dow Jones broke a three-day rising streak, closing down 79.29 (-0.30%) points yesterday after an earnings miss from Wallgreens Boot Alliance (-12.8%) dented market sentiment. Conversely, the S&P 500 closed flat while the NASDAQ 100 was marginally up 19.78 (+0.25%) points overnight. US factories reported a bigger than expected decline in new orders for long-lasting machinery in March.

The benchmark S&P/ASX200 index closed up 25.4 points (+0.41%) on Tuesday, after progress in US/China trade talks and strong Chinese manufacturing data lifted market sentiment. As expected, the RBA left the official interest rate on hold at 1.5% at its monthly board meeting. Yesterday also saw Treasurer Josh Frydenberg announce the first budget surplus in a decade. The Coalition government handed down a $7.1 billion surplus which was largely attributed to a surge in iron ore prices.

Today's data releases: China Caixin services PMI March; Japan Nikkei services PMI March; Euro zone Markit services PMI March; UK Markit/CIPS services PMI March; US ADP employment March; Markit services PMI March; ISM nonmanufacturing March; AiG performance of services March; Australia Retail sales February; Australia Trade February

Commodities and Currencies

Oil prices continued to rally overnight on the possibility that more sanctions against Iran and further Venezuelan disruptions could worsen and OPEC-led supply cut. Brent and WTI crude both closed in positive territory overnight at US$69.58 (+0.83%) and US$62.58 (+1.61%) respectively.

Iron ore prices are up 1.4% at US$89.89 per tonne. China's iron ore futures jumped to a new record price overnight as increasing demand for iron ore from Chinese steel mills lends support to iron ore prices.

The spot price of gold is currently up 0.36% at US$1292.43.

The AUD is currently down 0.03% at US70.69¢.

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3633.