Good Morning Fellow Traders,
A strong start is tipped for the Australian share market after Wall Street closed with record highs after a surge in technology markets.
The S&P 500 information technology sector in the US rose 0.3 per cent, powered by an Nvidia-led surge in chipmakers, while Apple rose one per cent in its first gain since unveiling the new iPhones.
Investors will look to the Reserve Bank this week when it publishes minutes from its September board meeting on Tuesday, and there will also be speeches from Governor Philip Lowe and Assistant Governor Luci Ellis later in the week.
AMP Capital's chief economist Shane Oliver expects the central bank to show a degree of comfort in how the economy is evolving, while expressing concern with the rise of the Australian dollar.
"The RBA indicated last month that a higher Australian dollar will threaten growth and inflation," Dr Oliver told AAP on Sunday.
"I think rates will be on hold for sometime yet."
The Australian dollar closed at 79.96 US cents on Friday.
RBA Governor Philip Lowe will address the American Chamber of Commerce in Perth on Thursday with a speech titled The Next Chapter.
Dr Oliver says it's uncertain whether the speech will focus on the Western Australian economy or look more broadly to the Australian economy, but expects Dr Lowe to be questioned on both.
"There's the potential for it to have broader ramifications," he said.
On Thursday morning the US Federal Reserve will announce a policy decision, which Dr Oliver says is likely to indicate a possible interest rate hike in December.
"It's more significant to us than usual as it should help put a lid on the Australian dollar," Dr Oliver said.
The policymakers are also expected to signal the start of reducing the central bank's $4.5 trillion stock of bond and other assets.
In the U.S., Wall Street reached record highs on Friday, with the S&P 500 surpassing 2,500 points as telecommunications shares rose and technology bounced back after two days of declines.
The S&P 500’s breach of the 2,500-mark came less than four months after it closed above 2,400, and brought 2017’s gain to nearly 12 percent.
Professional investors frequently say they see little special significance in the S&P 500 and Dow Jones Industrial Average hitting round-numbers in the hundreds and thousands. But such milestones do affect the sentiment of investors on Main Street, said Phil Blancato, head of Ladenburg Thalmann Asset Management in New York.
“People are concerned about missing out as the market continues to rally. They think maybe they need to finally jump in,” Blancato said. “The behavior of the retail investor is more important than ever.”
The S&P 500 information technology sector .SPLRCT rose 0.30 percent, powered by an Nvidia-led surge in chipmakers, while Apple rose 1.01 percent in its first gain since unveiling new iPhones on Tuesday.
The semiconductor index .SOX surged 1.71 percent, boosted by Nvidia’s (NVDA.O) 6.32-percent jump to a record high after Evercore ISI raised its price target on the stock.
AT&T (T.N) rose 2.15 percent and Verizon Communications (VZ.N) added 1.44 percent. Along with T-Mobile, they are offering deals for the newest iPhones that are less generous than in the past.
Wall Street largely shrugged off reports showing an unexpected drop in U.S. retail sales last month and the first drop in industrial output since January, both in part due to the impact of Hurricane Harvey.
“Investors are keeping an eye on the retail sales data, thinking it may be transitory, and are focusing on growth areas such as technology, which is mostly immune to policy decisions in D.C. and has avoided all the global noise,” said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee.
U.S. stocks have surged this year, despite turmoil in the White House, doubts about President Donald Trump’s ability to push through his pro-business reforms, uncertainty over the timing of interest rate hikes, and lately, tensions over Pyongyang’s missile tests.
The Dow Jones Industrial Average .DJI rose 0.29 percent to end at 22,268.34 points, while the S&P 500 .SPX gained 0.18 percent to 2,500.23, records for both.
The Nasdaq Composite .IXIC added 0.3 percent to 6,448.47.
Advancing issues outnumbered declining ones on the NYSE by a 1.76-to-1 ratio; on Nasdaq, a 1.47-to-1 ratio favored advancers.
Earlier, North Korea fired a second missile in as many weeks over Japan, drawing criticism from global leaders but barely moving shares as investors await the next catalyst - the Federal Reserve’s meeting on Sept. 19-20.
The S&P 500 is trading near 17.6 times expected earnings, down from 17.9 at the end of July but still much higher than its 10-year average of 14.3, according to Thomson Reuters Datastream.
About 8.5 billion shares changed hands on U.S. exchanges, above the 20-day average of 5.9 billion shares.
Source: Netwealth Morning Business Roundup
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