US growth worries temporarily subdued by Progress in US/China trade talks

Stock Markets

Australian shares are poised to open marginally higher today after US stocks rallied overnight as progress in the US/China trade talks temporarily subdued investor worries over slowing US growth. The Wall Street Journal reported that China is offering foreign technology firms better access to the country's fast-growing cloud-computing market. The report came after US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin arrived in Beijing for another round of trade talks with Chinese officials.  Chinese negotiators are expected to discuss technology issues with their US counterparts during meetings scheduled for Friday, the Journal said, citing people briefed on the matter. White House economic adviser Larry Kudlow stated that the US could lift some tariffs on China, while leaving others in place as part of an enforcement mechanism on a US/China trade deal. Kudlow also said the trade talks could stretch for months.

Wall Street's major indexes rose overnight on positive progress in US/China trade talks, however, gains were limited by lingering concerns about an economic slowdown following a considerable drop in the Q4 GDP growth for the US. The Dow Jones, S&P 500, and NASDAQ 100 all ended in positive territory, with the indexes gaining 91.87 (+0.36%), 10.07 (+0.36%) and 25.79 (+0.34%) points respectively.

The benchmark S&P/ASX200 index closed up 40.1 points (+0.65%) on Thursday, bolstered by strong gains in the consumer discretionary and materials sectors. The consumer discretionary and the materials sectors were up 1.34%, and 1.06% respectively. Investors are expected to be cautious today amid uncertainties around Brexit, with UK Prime Minister Theresa May expected to make a final push to pass her Brexit deal on today.

ASX 200 futures are currently down 1 point.

Commodities and Currencies

Oil prices were quite volatile overnight following another tweet by US President Donald Trump urging OPEC to relax its production cuts as the "price of oil is getting too high". After the tweet, oil prices fell about 2% before rebounding just below Wednesday's closing price. OPEC had shrugged off the previous request from Trump to increase the supply of oil. Brent crude was up overnight at US$68.00 (+0.25%) while WTI crude was down at US$59.30 (-0.19%).

Iron ore prices are currently down 0.57% at US$86.50 per tonne.

The spot price of gold is currently down 1.46% at US$1290.51 with a firmer US dollar helping to undercut demand for the metal.

The AUD is currently marginally up 0.04% at US70.77¢.

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.