Late Rally on Wall St Provides Positive Lead for Local Market
Wall street rallied late in the trading day with investors' attention focused on the outlook for the Fed's decision on interest rates and a drop in the price of oil.
Oil fell back with a big move that retraced about half of the previous session's losses with reports that the Saudis expected output to recover within 2 or 3 weeks. Investors remain wary on equities pending tomorrow's decision on the US federal reserve's policy decision.
Eyes are on forward guidance and economic data to determine if the likelihood of further rate cuts will be on the cards. While positive data has noted that the US economy is stabilizing, the risks of trade and slow global growth are still in play.
The S&P500 is now less than 1% short of its record high close on July 26.
The ASX200 finished slightly in positive territory as the bulls battled to bring the index to 6695.30. Futures were up 9 points near 7am pointing to a cautious trading day.
The RBA released minutes from their September meeting which can be interpreted that there is a high likelihood of further rate cuts coming before the end of the year.
Commodities and Currencies:Following the week's earlier drone strike on one of their oil facilities, Saudi Arabia sought to calm markets with sources stating that their output was recovering much more quickly than initially thought – this being a very impressive feat as their production is responsible for about 5% of global output.A prolonged outage of the oil refinery giant would bode well for the likes of Australian producers Karoon, Woodside and Santos.China Steel futures slipped on Tuesday, retreating on concerns about demand in the real estate market.
- AUD flat at 68.67 US cents
- Brent Crude -6.7% to $US64.40 a barrel.
- 10 year yield: US 1.80% Australia 1.13% Germany -0.48%
The spot price of goldis currently up 0.21% at US$1,501 per ounce.
The AUD is currently flat at US$0.6865.
This article was written by Luke Bell – Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3633.