Originally published by Rivkin Securities
Australian shares are poised to open higher today as US indices continued their rally yesterday. Dow Jones Industrial Average, Nasdaq 100, and S&P 500 all closed approximately +1%, with the Dow Jones gaining 256 points. All of the major sectors comprising the S&P500 ended Tuesday’s session in positive territory, with the real estate, communications services and information industrials sectors closing with the highest percentage gains. The primary cause of this extended rally in the US indices is attributed to a rebound in the price of oil progression in US/China trade talks with news of extended talks into an unscheduled third day.
Gold prices are hovering around US$1,285 per ounce, failing to break through US$1,300. Priced in AUD, however, gold has fallen back to AU$1,800 per ounce after briefly reaching AU$1,900 last week.
Crude oil prices have continued their rebound with WTI oil now trading at US$49.86 per barrel. A break through US$50 per barrel would bring it back to levels not seen since early December. Oil inventories have stopped rising over recent weeks as OPEC cuts begin to take effect.
The US Dollar Index rose overnight although the Australian dollar held up better than other currencies in the basket. The Australian dollar is currently trading at US$0.714, which is relatively low relative to historical levels. Weakness in the housing market and fears of an associated recession have been weighing on the Aussie dollar in recent months.
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