US Stocks Continue to Rally

US:

US stocks continued to climb overnight as the possibility of a US/China trade deal was raised by news of a meeting between Trump and Chinese Vice Premier Liu He. The stock market continues to shrug off possible confrontation between Turkey and northern Syria. Last night, US CPI data was released which showed inflation running below expectations. The increase in core CPI came in at 0.1% for the month, below the 0.2% expected and well below the prior month's figure of 0.3%. This data comes after a run of relatively strong inflation so the reprieve in CPI growth for September will likely give the Federal Reserve more breathing room to implement further rate cuts and/or quantitative easing if needed. According to the CME Fedwatch Tool there is a 78% chance of another 25 basis point rate cut at the next meeting in late October.

ASX:

The ASX 200 had a volatile session yesterday, repeatedly swinging between profit and loss but eventually closing flat at 6,547. Futures are pointing to a higher open this morning on the back of gains in US stocks. The consumer staples sector was the best performer, with Woolworths (WOW) and Coles (COL) gaining 0.87% and 0.73% respectively.

Commodities and Currencies:

The WTI oil price rose after almost a month of declines. Sentiment in oil is highly correlated with general market sentiment at the moment as traders are concerned about a decline in demand due to weak global economic growth. Offsetting this, OPEC production in September was down substantially from the prior month due to the attack on Saudi Arabia. The Aussie dollar is holding ground against the US dollar, currently trading at US$0.6746.

The spot price of gold is currently down 0.84% at US$1,493 per ounce.

The AUD is currently up 0.30% at US$0.6746.

This article was written by William O'Loughlin – Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3633.