The local share market is likely to open higher today, with futures up 0.6% this morning following a solid day’s trade on Wall Street. The Australian dollar was even, buying 68.1 US cents at close of play.
Banks led the charge, with strong financial results from Bank of America (NYSE:BAC), which posted a 20% surge in second-quarter profit, and Morgan Stanley (NYSE:MS) exceeding expectations.
The banks’ results act as a harbinger of other company results, which are yet to drop – investors are betting that these will exceed expectations too.
The Dow closed at its highest level since April last year, gaining 1.1% in its seventh straight session of gains and longest green streak since March 2021, while the S&P rose 0.7% and the Nasdaq picked up 0.8%.
Trade talks at G20
Treasurer Jim Chalmer was in India as part of the G20 meeting, spruiking a renewed trade relationship with China in sideline talks with that country’s finance minister Liu Kun.
The treasurer petitioned the Chinese minister on the lifting of tariffs on barley, wine, live lobster and other commodities, saying it was in the interest of both countries for those tariffs to be lifted and that he would like to see progress on this front.
"It's really important that we've been able to re-establish this dialogue," Chalmers told the ABC.
"We are much more likely to stabilise this key relationship with engagement and dialogue. And that's what this meeting was about.
"We'd like to make progress on that in advance of a prime ministerial visit to China ideally later in the year.”
Chalmers said that it was his understanding that the message would be passed on to Beijing.
Currencies, crude and commodities
Currencies were weaker against the greenback overnight, with the Euro dropping from US$1.1273 to US$1.1208 to rest near US$1.1225 at the US close.
The Aussie dollar fell from 68.30 US cents to 67.88 US cents and was near 68.10 US cents at the US close.
The yen eased from 137.81 yen per US dollar to JPY139.11 and was near JPY138.80 at the end of the day.
Global oil prices rose as much as 2.2% yesterday on the news out of China that it would act to support domestic economic growth. US optimism about easing monetary policy didn’t hurt either.
Brent crude was up by US$1.13 or 1.4% to US$79.63 a barrel, while US Nymex added US$1.60 or 2.2% to US$75.75 a barrel.
Base metal prices were flat yesterday as investors processed the Chinese economic data. Copper futures fell by 0.4%, while aluminium futures slumped by 1.9%.
On the other hand, gold futures were up US$24.40 or 1.2% to US$1,980.80 an ounce, spot gold was trading near US$1,978 an ounce at the US close and iron ore futures lifted by 36 US cents or 0.3% to US$112.17 a tonne on expectations of economic stimulus in China.
What’s happening in small caps?
The S&P/ASX Small Ordinaries closed at 2,874.67 yesterday, down 0.57% on the previous day.
Making news this morning, which you can read more about throughout the day with Proactive are: