Progress in US/China trade talks and strong economic data set to bolster markets

Stock Markets

Australian shares are poised to open marginally higher today after US stocks closed higher overnight on positive developments made in the US/China trade talks. The Financial Times reported that the executive vice president for international affairs at the US Chamber of Commerce, said that "90% of the deal is done". This report boosted investor US/China trade optimism and signalled that the US and China have now resolved most of their trade agreement issues and are close to striking a deal. Positive data showing retail sales in the Euro zone were stronger than expected in February also assisted to lift market sentiment yesterday. A private business survey released yesterday, revealed that Activity in China's services sector picked up to a 14-month high in March as demand improved at home and abroad. The findings imply that the Chinese government's stimulus policies are gradually kicking in, thus subduing investor fears of global economic slowdown.

Wall Street's major indexes closed in positive territory overnight, bolstered by renewed US/China trade optimism. The Dow Jones, S&P 500 and NASDAQ 100 ended Wednesday's session up 39 (+0.15%), 6.16 (+0.21%) and 46.86 (+0.60%) points respectively.

The benchmark S&P/ASX200 index closed up 43 points (+0.7%) on Wednesday, after the prior nights' Federal budget lifted confidence for economic growth and activity. The energy sector was the only sector the close in negative territory yesterday, while Australian miners rallied on a surge in iron ore prices.

ASX 200 futures are currently up 1 point.

Today's data releases: German factory orders February

Commodities and Currencies

Oil prices closed mixed overnight after news of sharply increased US crude stockpiles interrupted the recent rally. Brent crude closed up 0.19% at US$69.50 while WTI crude closed in negative territory at US$62.46 (-0.19%).

Iron ore prices are up 3.5% at US$93.08 per tonne.

The spot price of gold is currently down 0.20% at US$1289.92.

The AUD is currently down 0.03% at US71.15¢.

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.