Strong Chinese manufacturing data and US/China trade progress lift sentiment

Stock Markets

Australian shares are poised to open higher today following an overnight rally in US stocks on the strongest reading of manufacturing output in China in the past eight months and further indications of progress in US/China trade talks. Yesterday's Caixin PMI data indicated that China's manufacturing activity in March rose above the 50 mark for the first time in four months, signalling growth in China's economy. The data also implies that Beijing's planned $300 billion in spending and tax cut was starting to offset output declines stemming from the ongoing us/China trade war. The Chinese government has stated its intent to extend a suspension of retaliatory tariffs on the US, with Vice Premier Liu He expected to arrive in the US early this week for to continue US/China trade talks.

Wall Street's major indexes rallied on Monday with the Dow Jones, S&P 500, and NASDAQ 100 gaining 329.74 (+1.27%), 32.79 (+1.16%) and 99.59 (+1.29%) points respectively.

The benchmark S&P/ASX200 index closed up 36.3 points (+0.60%) on Monday, bolstered by strong performance in the consumer staples sector which acted to offset losses from the real estate sector. The consumer staples sector was collectively up 1.9%, while the real estate sector was collectively down 0.7%. Investors on the ASX will be on edge today ahead of the RBA's latest policy meeting and tonight's federal budget.

ASX 200 futures are currently up 38 points.

Today's data releases: Building approvals February at 11.30am; RBA policy statement at 2.30pm; Federal budget at 7.30pm; Euro zone PPI February; US durable goods orders February

Commodities and Currencies

Brent and WTI crude both closed in positive territory overnight at US$69.01 (+2.12%) and US$61.70 (+0.18%) respectively.

Iron ore prices are up 2.2% at US$88.69 per tonne.

The spot price of gold is currently down 0.32% at US$1288.18.

The AUD is currently down 0.04% at US71.09¢.

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.