Tech shares rebound as US eases Huawei restrictions

Stock Markets

Australian shares are poised to open higher today after tech stocks in Europe and the US rebounded after the US Commerce Department eased restrictions on the ability of China's Huawei to do business with US companies. Huawei will be able to access US technology and purchase equipment from American companies for up to 90 days, with the 90-day grace period raising investor optimism that the US and China would work towards a trade deal. The restrictions follow a decision made last week to lock Huawei out of US markets as it is deemed to be a cybersecurity risk. Shares in US suppliers to Huawei including Qualcomm Inc, Intel Corp and Lumentum Holdings Inc rose more than 2% with the PHLX Semiconductor Index rising 2.13%. In Europe, the technology sector closed 1.59% higher with 28 out of its 29 companies closing in positive territory. Yesterday, the RBA's board meeting minutes signalled that interest rates are likely to be cut next month. Overnight the AUD/USD slid to a low of US68.66¢ after financial markets priced in a 92% chance of a 0.25% point cut next month.

Wall Street's major indexes closed in positive territory on Tuesday, with the indexes lifted by a rebound in tech stocks. The Dow Jones, S&P 500 and Nasdaq rose by 197.43 (+0.77%), 24.13 (+0.85%) and 83.349 (+1.08%) points respectively.

The benchmark S&P/ASX200 index closed 24 (+0.37%) points higher on Tuesday as the ASX recouped early losses to finish higher for a fifth day following strong performance by the financial and real estate sectors. The financial sector led gains with the sector up 1.71% after the RBA signalled a likely interest rate cut.

ASX 200 futures are currently up 13 points.

Today's data releases:  AUS WBC leading index April; AUS Skilled vacancies April; AUS Construction work done first quarter; NZ retail sales volumes first quarter; Japan machinery orders March; UK April CPI; US Fed meeting minutes May.

Commodities & Currencies

Oil futures saw little change on Tuesday, as prices were supported by US-Iran tensions and expectations of ongoing OPEC supply cuts but under pressure from concerns about a drawn-out trade war between Washington and Beijing. WTI and Brent crude are currently sitting at US$62.97 (-0.25%) and US$72.18 (+0.29%) per barrel respectively.

Iron ore prices are currently up 0.3% at US$102.03 a tonne.

The spot price of gold is currently down 0.24% at US$1274.69.

The AUD is currently up 0.03% at US68.85¢.

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633.