Today's Trade: Aussie shares set to climb
- Australian shares to open higher as risk-on sentiment returns
- All three US benchmarks either near or more than 1% higher
- Futures tip stronger opens in Tokyo, Sydney and Seoul
By Saxo Capital Markets
Asian stocks are set to advance after US equities recovered from a technology-fueled drubbing on Monday. The yen held losses even after the US issued its list of Chinese products proposed for tariffs.
All components of the blue-chip index rose, with the exception of International Business Machines.
The S&P 500 added 32.57 points, or 1.3%, to 2614.45 and the tech-heavy Nasdaq Composite climbed 71.16 points, or 1%, to 6941.28.
The shares sit well above early price indications and private-market trading, marking a win for its shareholders. After going public through a nontraditional route known as a direct listing, the company has a valuation of $26.5 billion.
China announced tariffs Sunday of as much as 25% on American pork and eight other kinds of goods, as well as 15% tariffs on fruit and 120 types of commodities.
Local markets and commodities
- S&P/ASX 200 Index futures rose 0.3% to 5,740 as of 6:59 a.m. in Sydney. Futures relative to fair value suggest an early gain of 0.1.
- Bank of New York Australia ADR Index is up 0.9% to 263.3, BHP Billiton ADRs are up 1.1% to A$28.72 equivalent, a 0.0% discount to last Sydney close, Rio Tinto ADRs are unchanged at A$66.75 equivalent, a 10.0% discount to last Sydney close.
- Gold prices pared some of their Monday gains, as fears of a trade war abated slightly and stocks and the dollar rose. Front-month gold for April delivery was down 0.7% to $1,332.80 a troy ounce on Comex. Holdings in exchange-traded funds tracked by gold rose 6 tons on Monday: Total of 2,273.3 tons is highest since May 2013. Goldies sunk 2.15% overnight. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SLR.
- Oil prices rose overnight but remained under pressure amid heightening trade tensions between the US and China. Light, sweet crude for May delivery rose 50 cents, or 0.8%, to $63.51 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 48 cents, or 0.7%, to $68.12/barrel.
- Prices had slid to a two-week low Monday, with Brent closing down 2.5%, after China imposed import tariffs on US goods. That was a response to tariffs on Chinese steel and aluminum imports introduced by the Trump administration earlier this year. Analysts and traders have warned that these actions could trigger a global trade war that would weigh on economic growth and subsequently damp demand for petroleum products. Brent had closed above $70 a barrel ahead of the Easter weekend—close to a three-year high—with growing geopolitical risk lifting prices. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, AWE, KAR, ORG, SXY.
- Iron ore sunk over 3% in China as supply concerns kept pressure on prices, and Shanghai steel futures retreated in afternoon trade. China’s President Xi Jinping urged local governments to speed up efforts to reduce debt, which is raising concerns amongst investors that investment in the industrial and manufacturing sectors will weaken. This saw steel futures prices fall, dragging steel-making raw material prices with them. This was despite ongoing supply concerns in the iron ore market. Anglo American said that its Minas Rias iron ore mine in Brazil would be shut for at least 90 days as it surveyed the damage to its pipeline. The mine was expected to produce around 15m tonnes of high grade iron ore fines in 2018. This is likely to see the premium that high grade iron ore commands over lower grades remain high for the foreseeable future. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL.
- Copper rose as London Metal Exchange reopened following a four-day break, supported by continued growth in China’s manufacturing sector. Copper rallied 1.2% to settle at $6,796/tonne in London, climbing for a fourth day. China’s official manufacturing PMI showed strong growth in March, in first increase since November. Caixin’s private gauge also showed expansion in China’s manufacturing sector, albeit at a slower-than-expected rate.
- Copper traded in Comex successfully closed above its 200DMA for its second consecutive session. Since May 2013, copper crossed above this level 14 times and rose an average 0.2% in the following five days. It advanced eight times for an average gain of 1.8%, and declined five times for an average loss of 2.2%. Aluminium ended 1.3% lower at $US1978/t, their lowest since August last year, partly due to record high stocks above 970,000 tonnes in ShFE warehouses. Climbing for a fifth day on the LME in its longest streak since January, nickel which enjoyed a rally of 1.2%. Copper stocks: OZL, SFR; Nickel stocks: IGO, WSA; Aluminium stock: AWC.
- In other news: Santos (STO AU): Harbour Proposal Faces Uncertainty From FIRB; AGL (AGL AU): Alinta Is Said to Prepare Bid for AGL’s Liddell Coal Station: Australian; Macquarie Group (MQG AU): Macquarie Is Said to Halt Plan to Sell MST Global Unit: AFR; Prairie Mining (PDZ AU): Prairie Takes Polish Ministry to Court Over Jan Karski Mine; Blue Sky Alt (BLA AU): Blue Sky Says Glaucus Report Is Materially Misleading. Shares to resume trading; Fonterra Cooperative (FSF NZ): Whole Milk Powder Average Price Rises to $3,278/t; Blackstone Minerals (BSX AU): Blackstone Minerals One On One Set By Spark Plus for April 4.
- BHP (BHP AU): BHP Upgraded to Sector Perform at RBC
USDCAD sold off more than 100 pips as a speculation grows for the White House to reveal a preliminary NAFTA (North American Free Trade Agreement) deal to be ready by mid-April.
The head and shoulders pattern is also visible with the neck line at 1.28 handle which has been broken last night to make a fresh 1 month low. The resistance level should remain at 1.2950 and we look to add bearish exposure if we see another daily close below 1.28.
USDCAD monthly chart
-- Edited by Adam Courtenay
Today’s Trade is compiled by the Sydney trading desk at Saxo Capital Markets