Good morning traders, hope you all had a fine weekend. Thanks @ttward, @Ravgnome & the aftermarket loungers.
So much going on, who know what’ll happen in the markets these days. The trade talks… as I am sure is a total shock to you all… are probably they main thing people will be keeping an eye on, as we hope for a deal to be finally struck.
ASX Market Report
The Australian share market has finished higher for a third day, hitting its highest level in five months.
The benchmark S&P/ASX200 index closed up 23.7 points, or 0.38 per cent, at 6,192.7 points at 1615 AEDT on Friday, while the broader All Ordinaries was up 21.1 points, or 0.34 per cent, at 6,273.8.
It's the ASX200's best level since late September. In the last 11 sessions, it has only been down twice, with the index finishing the week up 0.41 per cent. "Today's been a positive session, we've got a bit of a lull in market news, following of course the end of reporting season on Thursday," said CommSec market analyst James Tao.
Most sectors were higher led by property trusts, then tech stocks. Energy, materials and industrial stocks were down.
BHP was down 0.13 per cent, Rio Tinto down 1.29 per cent and Fortescue Metals down 1.32 per cent.
Woodside Petroleum and Oil Search declined 1.63 per cent and 1.91 per cent, respectively.
Afterpay, meanwhile, was up 6.13 per cent, at $19.57. The buy now, pay later company, which reported earnings on Tuesday, finished up 13.78 per cent on the week following some big swings.
Bellamy's was up 8.34 per cent, to $8.83, with shares of the infant formula maker rebounding following Wednesday's disappointing earnings results.
A number of stocks went ex-dividend, most notably Caltex, which closed down 4.83 per cent, and Origin Energy, down 1.09 per cent.
Retail Food Group was down 7.41 per cent after revealing on Thursday that it had slumped to an $111 million first-half loss.
Unibail-Rodamco-Westfield was up 1.07 per cent after announcing it had sold its 34 per cent stake in Helsinki's Jumbo centre.
The big banks edged higher, led by CBA, up 0.54 per cent.
Since its Christmas Eve low of 5,410.2, the ASX200 has gained 14.4 per cent, amid a similar rally by other global indices. Chris Weston, head of research at Pepperstone in Melbourne, said central banks were responsible for the rally after institutions like the US Federal Reserve laid out all the stimulus tools at its disposal, such as quantitative easing and negative interest rates.
The Reserve Bank of Australia has also moved to a neutral stance and it appears the European Central Bank may soon re-launch its offer of long-term loans to banks. "There's been a concentrated alignment among central banks to ease economic conditions," which has reduced volatility, Mr Weston said. "When volatility is low, people just go out and buy stocks," he said. "Basically, central banks have said to equities traders, we've got your back."
ON THE ASX:
* The benchmark S&P/ASX200 index was up 23.7 points, or 0.38 per cent, at 6,192.7 points at 1630 AEDT on Friday.
* The All Ordinaries was up 21.1 points, or 0.34 per cent, at 6,273.8.
* At 1630 AEDT, the SPI200 futures index was down 2 points, to 6190.
CURRENCY SNAPSHOT AT 1630 AEDT:
One Australian dollar buys:
* 70.92 US cents, from 70.94 US on Thursday
* 79.23 Japanese yen, from 79.12
* 62.36 euro cents, from 62.40
* 53.48 British pence, from 53.50
* 104.04 NZ cents, from 104.18
GOLD:
The spot price of gold in Sydney at 1630 AEDT was $US1312.77 per fine ounce, from $US1313.25 on Thursday.
The Australian share market is tipped to open higher this week, taking strong leads from Wall Street amid growing optimism US-China trade tensions are beginning to ease.
Both US and European markets closed higher last week, with soft US economic data being outweighed by indications President Trump and his Chinese counterpart are making progress in trade talks.
The ASX is expected to open around 20 points higher on Monday, according to AMP Capital's chief economist Shane Oliver.
"I think the positive news on trade seems to be dominating any softer economic data out of the US, that's what pushed it higher and benefited Europe as well," Dr Oliver told AAP on Sunday.
The Reserve Bank is expected to leave rates on hold on Tuesday, but Dr Oliver said more attention would be paid to its governor's speech on Wednesday. "Obviously the speech will probably be looked at a bit more than the decision itself because the speech will be longer," he said. Dr Oliver expects the RBA to cut rates in September, and then again in November.
The market will also be watching for GDP data to be released this week, with a slight bounce back expected after a poor September quarter. "The problem is that the indications we've got so far on consumer spending, trade, and even construction activity have been fairly soft," Dr Lowe said. While the consensus is for GDP growth to be up .5 per cent, Dr Oliver said it could be as low as .2 per cent.
Retail sales figures to be released on Thursday could also show a slight rise after a weak December. Meanwhile Dr Lowe said investors would be keeping an eye on the NSW election and any policy that could upset expectations of continued growth in local infrastructure spending. "That would be seen as a bit of a concern because it's one source of support for the Aussie economy when housing is slowing down," Dr Oliver said.
5 Things to Watch
1/U-TURN IF YOU WANT TO
It was a bit of a U-turn by UK Prime Minister Theresa May when she signaled readiness to allow Brexit to be delayed a few months beyond the March 29 deadline to ensure Britain doesn’t crash out of the EU without a trade deal. A “meaningful” vote on the arrangement she negotiated with Brussels will be held by March 12 in parliament.
And in another U-turn of sorts: opposition leader Jeremy Corbyn has backed holding another referendum - the first time he has endorsed giving voters a chance to change their mind. With no-deal Brexit looking less likely, sterling has posted two straight weeks of one percent-plus gains against the dollar.
2/NO WALKING THIS TALK
He’s walked away from a deal with North Korea, yet no one seriously believes U.S. President Donald Trump will walk away from a trade deal with China, given how much is at stake for the world’s two biggest economies and their leaders. Chinese stock markets are celebrating both — the news of a delay in higher U.S. import tariffs and hopes that trade talks will bear fruit. After all, Trump’s economic advisor Larry Kudlow has touted “fantastic” progress on the talks.
For Chinese markets, the calendar for the coming weeks is looking busy. Trade aside — and a possible meeting between Trump and Chinese counterpart Xi Jinping — China’s parliament kicks off its annual meeting on March 5. Growth-boosting measures such as tax cuts may be rolled out, alongside laws banning forced technology transfer and government “interference” in foreign business practices — a nod to those accusing Beijing of intellectual property theft. Finally, we will get the latest data slice on the state of China’s exports and imports. That should show how much damage the U.S. onslaught has caused so far.
3/GREAT EXPECTATIONS
There’s palpable excitement about the prospect of another round of euro zone stimulus ahead of the ECB’s March 7 meeting. Most expect the bank to at least drop hints that cheap bank loans are imminent; failure to do so could put European bank stocks and Italian government bonds in the firing line.
But it’s shaping up to an interesting meeting for other reasons too. The ECB will release economic projections, a day after the OECD does so. Downward revisions appear likely, given that heavyweight Germany is struggling and Italy is in recession. But with most recent indicators suggesting a growth pick-up later this year, the forecasts may provide a clearer idea of the ECB’s reading on the economy.
4/JOBS, JOBS, JOBS
The February employment report, due on Friday March 8, could affirm the Federal Reserve’s significant flexibility to be patient with future interest rate hikes. The U.S. economy continues to add jobs while inflation remains very low. It added 304,000 non-farm payrolls in the first month of 2019, compared to consensus expectations of 165,000. But here’s the rub — average hourly earnings rose just 0.1 percent in January over December – the slowest climb since October 2017. That’s important because hourly earnings are watched as a key inflation gauge.
The Fed’s January policy statement noted “muted” inflation pressures. More recently Fed officials say that while it’s close to meeting its goals of full employment and 2 percent inflation, rising pay shows no sign of translating into price increases.
5/NOT ‘IF’ BUT ‘WHEN’
Decision time is coming up at Turkey’s central bank. It’s expected to hold its main interest rate at 24 percent on Wednesday. But the trajectory in coming months hinges to a high degree on inflation — data on Monday is expected to show February price growth at 19.9 percent, down a touch from January’s 20.35 percent.
With inflation grinding lower as the economy adjusts after last year’s currency crisis, an interest cut is on the cards sooner rather than later.
In Asia
World markets enjoyed a lively end to an otherwise slow week on Friday, with Chinese A-shares leaping after MSCI quadrupled their weight in its global benchmarks and strong U.S. economic data lifting the dollar and bond yields.
China figured heavily in a sudden end-of-week flurry of news that lifted Asia then Europe and helped U.S. futures hop higher as they digested some benign inflation.
China’s blue-chip CSI300 index surged 2.2 percent to land its best week since November 2015 after index provider MSCI’s boost that could draw more than $80 billion of fresh foreign inflows to the world’s second-biggest economy.
Chinese PMI manufacturing for February had also surprised to the upside, with the fact that it remains in contraction territory helpfully offset by a sharp increase in the forward-looking new orders index component.
It followed Thursday’s official Chinese PMI data which also showed new orders expanding and a stronger-than-expected U.S GDP figure
Elsewhere in Asia, Japan’s Nikkei 225 ended 1 percent higher, helped by a weaker yen, while Australian shares added 0.4 percent.
South Korea’s financial markets had been closed on Friday for a public holiday.
In Europe
European shares rose to five-month highs on Friday, starting the month on a strong footing, as a fresh batch of corporate updates fueled risk appetite, even after U.S. President Donald Trump raised some concerns over trade talks with China.
The pan-regional STOXX 600 index closed up 0.4 percent after hitting its highest since Oct. 8 earlier in the session.
“Momentum has flagged slightly in recent sessions and concrete news of an agreement between the U.S. and China is now needed to prolong the rally in risk assets,” wrote Peel Hunt analyst Ian Williams. In the meantime it was up to corporate earnings to maintain morale, he added.
Gains spread across all regional bourses with Germany’s exporter-heavy DAX leading the charge thanks notably to rising car makers stocks. “If corporate profits do grow, which I think they will, equities look reasonably good value,” said Edward Rumble, European equity portfolio manager at RWC Partners.
The Dublin bourse was up 1.3 percent, outperforming its European peers as worries that Britain will crash out of the European Union without a deal at the end of this month eased. The market is often seen as a barometer for Brexit sentiment.
The optimism on markets came despite mixed news from economic indicators. Data showed euro-zone manufacturing activity went into reverse for the first time in more than five years, but German retail sales jumped and the bloc’s powerhouse unemployment remained at record lows.
Still, the market pared some of its earlier gains in the afternoon after data showed February U.S. manufacturing activity dropped to its lowest since November 2016.
In the United States
The S&P 500 and the Dow Jones Industrial Average snapped a three-day run of losses on Friday as optimism about the prospects for a U.S.-China trade agreement countered downbeat U.S. and China manufacturing data. The Nasdaq meanwhile marked its longest streak of weekly gains since late 1999.
Following President Donald Trump’s announcement last weekend of a delay in higher tariffs on Chinese imports, Bloomberg reported late Thursday that a summit between Trump and his Chinese counterpart Xi Jinping to sign a final trade deal could happen as soon as mid-March.
“The optimism over trade resolution is outweighing the weakening economic data,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.
ISM data also showed U.S. manufacturing activity for February dropped to its lowest since November 2016, and the University of Michigan survey showed consumer sentiment fell short of expectations in the month. Detrick said that while the data was week investors hoped a U.S.-China trade deal would improve global growth prospects.
The Dow Jones Industrial Average rose 110.32 points, or 0.43 percent, to 26,026.32, the S&P 500 gained 19.2 points, or 0.69 percent, to 2,803.69 and the Nasdaq Composite added 62.82 points, or 0.83 percent, to 7,595.35.
Friday marked the first close above 2,800 for the S&P since Nov. 8. Nate Thooft, global head of asset allocation for Manulife Asset Management in Boston said technical investors would see a close above that level “as a good omen.”
The index closed 4.2 percent under its September record closing high. It has risen 11.8 percent so far this year, bolstered by trade hopes and the Federal Reserve’s cautious stance on interest rates.
For the week, the S&P rose 0.4 percent while the Dow fell 0.02 percent and the Nasdaq rose 0.9 percent.
Economic Data for Mar 3-10
(Via CommSec)
Australian News
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This breakfast goes out to @zurich, still not much tops Vegemite on toast.
Good morning traders, hope you all had a fine weekend. Thanks...
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