Stocks rally as US-China keep feeding markets positive trade-news

Trade-war crumbs keep stocks well-enough fed

A gradual drip-feeding of positive trade-war news continues to support stock indices. That’s maintained the risk-on atmosphere in global markets. The rosy sentiment was backed-up by a speech by US Federal Reserve Chair Jerome Powell yesterday, in which the Fed-head spoke-up the prospects for the US economy. Our own central bank head had his time in the limelight yesterday, too: RBA Governor Lowe delivered a speech discussing “unconventional” monetary policy. In other geopolitical news, the Pound dipped as the latest polling showed a narrowing lead by the UK Conservative Party. And in the day ahead now, interest turns to Australian economic data.

S&P500 touches fresh highs, as Trump talks-up trade

There’s been little material development in the trade-war recently, but that’s not stopped global equities from adding to recent gains based on nice sounding headlines alone. The S&P 500, for one, hit fresh record highs overnight. Sweet-nothings are still being volleyed back and forth between the US and China, talking up the prospect of a trade-deal. And that’s keeping this momentum fuelled run in global stock markets sustained – albeit, with seemingly diminishing returns. The latest headline: US President Donald Trump stated overnight he’s been in continued talks with China’s President Xi Jinping, and that both men still remain focused on reaching a trade-deal.

ASX200 expected to open lower, after yesterday’s rally

Despite what’s on balance a positive lead for the Australian share market, the ASX 200 ought to open around 20 points lower today. It comes off the back of a day that the benchmark index put in a robust rally, supported by both macro and micro factors. Of course, the macro factors were all tied back to trade-talk progress. But the micro factor that really unleashed yesterday’s rally in the ASX200 was news that Westpac CEO Brian Hartzer would be exiting his post. The financial sector added 16 points to the index, as traders saw interpreted Hartzer’s as a step-forward in addressing the sector’s latest scandal.

US Fed’s Powell suggests “glass is more than half full”

The prevailing view in the marker at-this-moment is that global growth has hit an inflection point. And that outlook was somewhat backed-up by a speech delivered by US Fed Chair Jerome Powell yesterday. Though it was hardly of future policy significance, Chair Powell reiterated his recent point of view that the US economy is in a good place. The “glass is more than half full” the Fed-head stated, suggesting that US growth ought to continue at a moderate pace, and inflation should maintain under control. Chair Powell’s words supports the notion the Fed will keep rates on hold into the near future.

RBA Governor Low talks “unconventional” policy: Australia’s central bank head captured the limelight too, yesterday. RBA Governor Philip Lowe delivered a speech last night, titled: “Unconventional Monetary Policy - Some Lessons From Overseas”. Beyond the substance of Governor Lowe’s content, traders were carefully perusing the RBA head’s speech for signals as to whether “(un)conventional” policy might be soon something the central bank embarks on. The simple answer is: no, the central forecast is for growth conditions to improve in the economy, and no unprecedented measures will need to be employed as stimulus. Governor Lowe did suggest that a quantitative easing program would be undertaken – if it were ever necessary.

Australian GDP partials to come into focus

Australian economic growth will capture attention this morning – and probably in the day’s ahead, too. A series of GDP partials will be released – beginning with quarterly Construction Work Done data today. General weakness in the building and construction activity has been a headwind for the Australian economy in recent times, with downside surprises in that data having been the norm. The likelihood for an RBA cut next week is still rather slim, currently sitting at a modest 20% chance. A miss in today’s, and the coming days, data may see these odds boosted, as forecasters downgrade what’s in store for GDP figures next week.

Pound drops as polls show narrowing Tory lead

Of macroeconomic importance in last night’s trade, the Pound lead the G10 currency map lower, as fresh polling showed that the UK Conservative Party’s lead over its Labour Party opposition has narrowed. Though a Tory victory still looks like the most probably outcome, a smaller margin of victory in December’s General Election opens up the risk the Conservatives fail to obtain a clear majority in the House of Commons. It’s feared that this will raise the risk a smooth Brexit may not be achieved come January next year, as is currently, effectively priced-in. The GBP/USD traded back into the 1.28 as a result of the news.