Trading Day: live markets coverage; Global Food Forum: Rod Sims on energy affordability crisis; plus analysis and opinion
Jessica Rudd tells the Global Food Forum that we need to band together to reap the opportunities of the Chinese market.
And that’s a wrap for the Trading Day blog for Tuesday, March 27. You can find highlights of today’s Global Food Forum below.
Samantha Bailey 4.48pm: Longtable made all the difference: Beer
Maggie Beer has told the Global Food Forum that without the 48 per cent stake Longtable Group bought in Maggie Beer products back in 2016, investment in new technology would not have been possible.
“We’ve commissioned … new equipment that will give us an edge … that we never could have afforded to do,”
“It allows us to go into a different market.
We must, in a sense, always reinvent ourselves in this food space and I see really exciting opportunities in the indulgent health space. Now with this new equipment, we are able to enter into that, we couldn’t have do it without that.”
“Flavour is first but it’s only first if the product also has health and sustainability.”
4.30pm: Stocks rise on miner-led rally
Australian shares have closed higher, led by the big miners but with broadbased gains following strong overnight leads from Wall Street as fears of a trade war between the US and China receded.
The benchmark S & P/ASX200 index was up 41.8 points, or 0.72 per cent, at 5,832.3 points at 1615 AEDT, while the broader All Ordinaries index was up 42.3 points, or 0.72 per cent, at 5,943.7 points.
AAP — Read more
4.00pm: Battle of the retail bulge in JB Hi-Fi
The battle of the retail bulge is on again in earnest as JB Hi-Fi shares linger near three-month lows.
In the red corner are the shorts at a hefty 16.6 per cent short, sweating on JBH stumbling as the global gorilla Amazon, comes swinging through the retail trees, while in the blue corner are two high conviction, stock picking fund managers.
On the recent dip John Sevior’s Airlie Fund has increased its stake 1.1 per cent to a 6.7 per cent stake while the Ashok Jacob/Chris Kourtis managed Ellerston added 1.25 per cent to hold a solid 9.7 per cent.
Both of these funds are run by veteran managers who like to back their judgment and swing the bat hard on big calls, so will they “crack” the shooters heads this time around?
JBH last up 0.5pc at $25.90.
Samantha Bailey 3.25pm: GFF: Australia must grab China opportunity
Jessica’s Suitcase chief executive Jessica Rudd has told Glenda Korporaal at the Global Food Forum that Australian businesses need to band together to reap the opportunities the Chinese market presents.
“We aren’t competing with each other there, we are competing with Denmark, we’re competing with Germany we’re competing with what the Japanese are offering, so we need to start competing as a group,” she said.
“People have an expectation that because the number of people is so massive that we can put a bunch of things online and hope for the best, and that’s the China strategy.”
Ms Rudd said that a China strategy has to be incredibly well thought out because it’s a highly competitive marketplace.
“I think that there is a degree of complacency when it comes to the China market,” she said.
Ms Rudd said that if Australian businesses continue to take the Chinese market for granted, they risk losing the China opportunity.
“This is our window, we’ve just got to climb through it,” she said.
Michael Roddan 3.10pm: Life insurance industry braces for overhaul
Executives in the $34 billion Australian life insurance industry would face the same tough regulations that the government foisted on badly behaved bankers, under wideranging proposals put forward after an 18-month long parliamentary investigation into the scandal-ridden sector that found bonuses and “hidden payments” led to bad advice and poorly-sold policies for customers.
Life insurers will be bracing for a raft of expensive overhauls, after the parliamentary joint committee on corporations and financial services made numerous and unanimous recommendations to reform the troubled life insurance sector, including removing the industry’s exemption from parts of consumer law, tougher code of conduct compliance, a bundle of watchdog investigations into behaviour and greater powers for regulators.
“There are sections of the industry that can and must do better in delivering the protection they promise while remaining financially viable long into the future,” said Liberal MP Steve Irons, who chaired the inquiry.
The inquiry’s recommendations, which were made unanimously and without a dissenting report by deputy chair Labor Senator Deborah O’Neill, will likely heap pressure on Financial Services Minister Kelly O’Dwyer and Treasurer Scott Morrison to adopt sections of the proposals in the May Federal Budget.
The inquiry was launched in the wake of revelations of poor claims handling at Commonwealth Bank’s life insurer CommInsure, which was found to be using outdated definitions of heart attack to deny claims. Since the scandal, the committee has discovered widespread use of problematic remuneration in the industry, anti-competitive sales practices, weak consumer protections, troublesome behaviour around genetic testing and customer medical records, and a failure of self-regulation by the sector.
2.55pm: Boardroom battle at Deutsche
Deutsche Bank has begun a search to oust its British boss amid an escalating boardroom row over the lender’s future and alarm at its performance.
The German investment bank has approached one of Goldman Sachs’ most senior executives to replace John Cryan as chief executive less than two years into his tenure.
Richard Gnodde, vice-chairman of Goldman Sachs and the Wall Street bank’s most senior executive outside the United States, was sounded out amid a breakdown in the relationship between Mr Cryan and Paul Achleitner, the bank’s chairman.
Mr Gnodde is thought to have turned down the offer. Others said to have been considered are Jean Pierre Mustier, chief executive of Unicredit, the Italian financial group, and Bill Winters, chief executive of Standard Chartered.
Shares in Deutsche Bank have lost more than a tenth of their value in the past week after the business issued a profit warning only days after an upbeat assessment in its annual report.
Read more
The Times
Samantha Bailey 2.30pm: GFF: Deliveroo ‘trying to grow the pie’
Deliveroo’s Australian manager, Levi Aron, has told the Global Food Forum that the business isn’t looking to change how people dine but help restaurants to improve capacity, where kitchens aren’t fully used.
“People have dined in restaurants for years and we’re not trying to change that,” he said.
“What we are looking to change is to really maximise capacity in restaurants.
“We’re trying to grow the pie.”
On the topic of using gig economy workers, Mr Aron said that labour hire is mutually beneficial and that workers wouldn’t want to be forced into part time or casual employment.
“The way that our riders ride for us, they do want flexible work. It’s not just about the commercial realities for our business, its about looking at the opportunity cost … by doing anything else, we lose them,” he said.
Deliveroo's Levi Aron tells #GFF2018 'we can bring data to the restaurant' in terms of brand and trends in suburb. pic.twitter.com/urIT2CMARO
— Business Review (@aus_business) 27 March 2018
Michael Roddan 2.10pm: Fresh push to break up AMP
The biggest institutional shareholders in AMP will launch a renewed push on the group’s senior management to break up the $15 billion wealth management company, as under-pressure chief executive Craig Meller plans to leave the group at the end of the year.
AMP chairwoman Catherine Brenner yesterday said Mr Meller would retire at the end of the calendar year, five years after taking the top job at the company. Her announcement comes just a week before she meets with key institutional shareholders ahead of the wealth manager’s annual general meeting in May.
Mr Meller’s departure will cap off a tumultuous period for AMP, with the collapse in the group’s value a source of frustration for shareholders.
Mr Meller said the end of the year was “the right time to leave”. He told The Australian he had promised his family that, due to the demands of the job and the time spent away from home, he would step down after a certain period of time.
John Durie 1.45pm: Sims on farmers’ side
ACCC chair Rod Sims today expressed confidence the new owner of the Murray Goulburn Koroit processing plant would have adequate milk supply. At capacity, the Koroit facility accounted for about 30 per cent of Murray Goulburn’s past production.
Sims was speaking at the Global Food Forum in Sydney earlier today.
Over the past two years, both Saputo and Fonterra have taken large swathes of MG’s milk production so that, today, Fonterra processes two billion litres a year and Saputo 1.1 billion.
While MG still processes 1.9 billion litres a year that’s well down from the 3.7 billion litres it handled in the past.
The ACCC said it would only approve the Saputo takeover of Murray Goulburn if it sold the Koroit plant.
Read more
Samantha Bailey 1.25pm: Fonterra CEO on Aust. dairy’s competitive edge
Fonterra Australia CEO Rene Dedoncker has told the Global Food Forum that Chinese customers want to buy dairy products from Australia because of the quality of the product.
“People need to trust in the source of the product that we make here, that is our competitive edge, that’s the advantage,” he said.
“But to do that, we need to systemise. People judge us in the moment. If we want to continue to have integrity, we need systems that give authenticity to where something comes from.”
12.40pm: Industrials drive stocks higher
Australia’s S & P/ASX 200 has risen 0.8pc to an intraday high of 5837.5, tracking a 0.4pc rise in S & P 500 futures.
The industrials sector is strongest with solid gains in Reliance Worldwide, Transurban, Sydney Airport and Aurizon.
But the gains in the Australian market so far today have been quite muted versus Wall Street, which saw its biggest 1-day gains in 2.5 years overnight.
Samantha Bailey 12.10pm: Supermarket threat to agriculture companies
Bell Potter stockbroker and agriculture specialist Hugh Robertson has told the Global Food Forum that the biggest problem for agriculture companies is the lack of an ability to fight off the major supermarkets.
Costa Group’s success has been driven by “unbelievably good management” and a good market position, he said.
“The stockmarket is problematic in terms of the way it looks at things. It took the resources boom to be five years in before equity markets realised they had a boom on their hands,” Mr Robertson said.
“The same thing could be said for agriculture. The Europeans are here, the Chinese are here, the Americans are here and finally the light bulb is going off.”
Samantha Bailey 11.50am: GFF: Sims on energy affordability crisis
ACCC chair Rod Sims has told the Global Food Forum that electricity affordability is the biggest crisis facing the country.
“Let’s make sure that we keep the energy focus on affordability,” he said.
“We want to make sure that we don’t overdo the conversation about the reliability of electricity because the more you try to take any outage out of the equation, and that’s what we’ve seen in the past with the high network costs, most of those increasing network costs are due to concerns over the system not being reliable enough.
“To have no risk of a blackout, is too expensive.”
Samantha Bailey 11.35am: GFF: Morris on north’s energy challenge
Sheriden Morris, chair of the Cooperative Research Centre for Developing Northern Australia CRC tells Ticky Fullerton at the Global Food Forum that the energy subsidies required to send reliable power to the Far North, are not sustainable and alternatives have to be looked at.
“The north, in terms of energy, is very different from the south,” she said.
“The reality of socialised energy — wires, poles — is not a reality of Northern Australia.
“The costs are ridiculous in the north, but they are heavily subsidised by everybody here in the southern states.
“I think that’s one of the big challenges that Australia has for the future.”
She said that while population is a significant challenge in the far northern region of the country, it has agricultural potential.
“It has enormous potential if people are familiar with the environment and know how to work with it,” Ms Morris said.
“In the face of climate change, the north is very used to dealing with harsh climates so adapting our plants, adapting our genetics and adapting our pastoral industry and adding some capacity to do that … that would make a big difference.”
Samantha Bailey 11.25am: High costs hurt ag industry: Elders CEO
Elders chief executive Mark Allison told the Global Food Forum that Australian farmers are very innovative, but the industry is lacking in terms of being globally competitive.
“Infrastrastructure costs make us globally uncompetitive in a number of markets,” he said.
“It costs twice as much to send a tonne of wheat from western New South Wales to Newcastle, than it costs to send it from Newcastle to China.”
If it's dry in Pitt Street then analysts mark down your shares, Elders CEO Mark Allison tells @BizTicky #GFF2018 pic.twitter.com/ywAC5lBd9A
— Business Review (@aus_business) 27 March 2018
11.15am: Avanco shares double to 7-yr high
Avanco shares have more than doubled, hitting a seven-year high of $0.155 today after recommending a cash and shares bid from OZ Minerals worth about $0.168 a share.
OZ Minerals shares are down 1.7pc at $8.845.
Samantha Bailey 11.00am: GFF: Sims on dairy code of conduct
On the proposed $1.3 billion acquisition of dairy producer Murray Goulburn by private Canadian diary giant Saputo, on which the ACCC is withholding its approval, chair Rod Sims told the Global Food Forum it favours a mandatory code of conduct because “we’ve got this risk transfer that goes from the processor back to the farmers”.
“It’s not clear to me that the farmers are better placed to manage that risk and to put it another way, there’s just nothing to stop another Murray Goulburn price reduction happening in the sector as it stands,” he said.
It comes as the ACCC conducts an inquiry into the competitiveness, trading practices, and transparency of the Australian dairy industry.
Mr Sims said that comparing the difference in Australian diary production to New Zealand’s monopoly, we have to understand that they have a favourable climate, as well as lower labour costs and significantly lower energy costs have a large impact, as well as the monopoly structure.
“How much of it is the restructuring they did a while back and how much of it is inherent climate and costs is hard to determine,” he said.
ACCC chairman Rod Sims says dairy industry code of conduct because too much risk is falling on farmers rather than processors #GFF2018 pic.twitter.com/PPefJ74hUL
— Business Review (@aus_business) 26 March 2018
10.50am: Fortescue slumps on price guidance
Fortescue shares are down 2 per cent at $4.52, underperforming its peers, after the miner downgraded its iron ore price realisation guidance.
Fortescue said prices for its low-grade ore aren’t recovering as quickly as it expected because of lacklustre Chinese demand and fears of escalating trade tensions.
The world’s number four iron ore producer on Tuesday said it now expects to receive an average of roughly 65 per cent of the benchmark Platts 62 per cent CFR index during its fiscal year through June, 2018. That is downgraded from a forecast of 70-75 per cent alongside its half-year results in February.
Fortescue has been grappling with weaker demand for its ore, which contains less iron than its big rivals, as better profitability among steelmakers encourages mills to use ore with a higher iron content.
Fortescue received an average 68 per cent of the benchmark price during its first half, versus 86 per cent in the year-earlier period, but had projected a recovery in the second half of its fiscal year.
“The updated guidance reflects a slower than anticipated recovery in contractual realisations due to Chinese construction activity remaining subdued, the extension of temporary production restrictions in certain provinces in China as well as speculation regarding the potential impact of global trade tensions,” the miner said in a statement.
Fortescue said it still expects to increasingly lock in a greater percentage of the benchmark price as market conditions stabilise, without providing a time frame.
With Dow Jones Newswires
Bridget Carter 10.40am: Elmo Software launches $40m raise
Elmo Software has launched a $40 million institutional placement through Morgan Stanley and Wilsons to fund acquisitions.
Elmo’s shares are being offered at $5.40 each, representing a 10.1 per cent discount to the last closing price of $6.01.
As well as funding acquisitions, the proceeds are being used to strengthen the company’s balance sheet to support ongoing research and development, along with sales and marketing and general corporate purposes.
Elmo Software is an Australian and New Zealand provider of SaaS cloud-based talent management software solutions.
The company develops, sells and implements a range of modular software applications to manage human resource-related processes, including recruitment, performance management and succession planning.
10.35am: Rod Sims speaking at GFF
ACCC chair Rod Sims says a lot of people are looking to buy Murray Goulburn’s Koroit plant
ACCC chair Rod Sims: 'a lot of people' looking to buy Murray Goulburn's Koroit plant Says there's plenty of milk supply available #GFF2018 pic.twitter.com/WXUqNcRADB
— Business Review (@aus_business) 26 March 2018
10.25am: S & P/ASX 200 up 0.6pc in quite trading
Australia’s S & P/ASX 200 has risen 0.6pc to 5830.9 in quiet trading before the Easter long weekend.
Investors seem a bit cautious despite the biggest one-day rise on Wall Street in the past 2.5 years.
Indeed the massive bounce on Wall Street — while reassuring on a technical basis — shows just how sensitive the market is to any news on trade wars.
Despite the soothing words from Mnuchin a trade war could still occur if China doesn’t yield to US demands for trade access and protection of intellectual property.
All sectors of the Australian market are up bar real estate and utilities, which are back on the ropes after US 10-year bond yields rose 4 basis points to 2.84 per cent.
Materials are strongest but looking at the major stocks today there’s no sign of a stronger rise in the market at this point.
Still there’s a strong incentive for fund managers to put some of the dividend deluge this month back to work in the market.
10.15am: Upgrades drive Whitehaven, IOOF
Upgrades have boosted shares in Whitehaven, IOOF, Western Areas, Orocobre by 3-7 per cent in early trading.
Macquarie raised Orocobre and Whitehaven to Outperform, UBS lifted IOOF to Buy, while Morgan Stanley raised Whitehaven to Overweight.
Samantha Bailey 10.00am: GFF: Australian ag 'most innovative’
Olam co-founder Sunny Verghese tells the Global Food Forum: “There’s absolutely no doubt in my mind that Australian agriculture is the best and most innovative in the world because Australia has resisted the temptation to subsidise food production.”
Olam's Sunny Verghese says everything in Aust agriculture comes down to water. 'Every calorie consumed requires a litre of water' #GFF2018 pic.twitter.com/6GGd3LOpDZ
— Business Review (@aus_business) 26 March 2018
“OECD countries provide about $400bn worth of subsidies and when you have those kinds of subsidies, there is really no incentive to get truly innovative,” he said.
“Australia has the highest production cost of cotton in the world but Australia is the most profitable cotton producer.”
9.40am: Stocks to bounce after Wall St rise
Australia’s S & P/ASX 200 should rise strongly today after Wall Street surged in response to a lessening of US-China trade tensions over the weekend.
Overnight futures versus estimated fair value point to an early rise of 0.6 per cent but the index could rise more than that based on the strength of the gains on Wall Street.
The S & P 500 surged 2.7 per cent — its best day in 2.5 years — after the WSJ said US and China were negotiating and US Treasury Secretary Steven Mnuchin said he was “cautiously hopeful” of an agreement to avoid a trade war.
In doing so the S & P/ASX 200 respected its 200-day moving average as it did when it bounced off a four-month low after the volatility storm in February.
There should also be a lot of pent-up demand from dividends hitting investors pockets this month, with this week alone seeing $10.37 billion plus franking credits flow to shareholders.
The local market is also reasonably good value as it trades on a one-year forward PE ratio near the five-year average of 15.2 times and a dividend yield near the five-year average of 4.7 per cent.
BHP’s ADR’s equivalent close at $28.94 was 1.2 per cent above BHP’s local close.
Index last 5790.46.
Samantha Bailey 9.30am: GFF: Food security ‘number one issue’
Tackling rising energy costs and water resources are important but food security remains the number one issue in many of Australia’s export markets, The Australian’s editor-in-chief, Paul Whittaker, said at the Global Food Forum this morning.
Australia provides a reliable solution to food security concerns in many markets and in exchange, Australian produce should carry a premium that producers can rely on, he said.
“Politicians need to be made acutely aware of how energy costs — a major input price — are savaging profit margins and cutting reinvestment. We will hear how real these issues are today,” Mr Whittaker said.
“Politicians are notoriously hard of hearing, but we are privileged to have a strong voice in Canberra, and we will raise it on your behalf.”
Samantha Bailey 9.25am: GFF: Aussie agribusiness at risk from tariffs
Speaking at the Global Food Forum, The Australian’s editor-in-chief, Paul Whittaker, said the push for global tariffs carries heavy risks for Australian exporters, whose access to markets will likely narrow.
“Australia’s agribusiness sector is particularly vulnerable to export markets being closed off, while there is an additional risk that cheap products from elsewhere in the world end up dumped here, wiping out Australian producers,” he said.
“The irony is that we are today talking about tariffs just weeks after Australia signed a landmark agreement with 11 key trading partners under the Trans Pacific Partnership.”
9.20am: GFF: A2 Milk market cap to surpass Qantas
The Global Food Forum hears how A2 Milk’s market capitalisation of $9.4 billion is on track to overtake Qantas’s market cap of $10.6bn by the end of the year.
The move comes as former Qantas executive Jayne Hrdlicka is set to take over as CEO of the export-focused A2 milk by mid year.
Glenda Korporaal 9.15am: GFF: Pratt to outline food export vision
Food industry experts are gathering for the 6th Australian Global Food Forum in Sydney today.
Visy’s Anthony Pratt will talk about his vision to double Australian food exports by tackling the real challenges facing agricultural production in Australia today.
Pratt will launch a “no fruit left behind” strategy to use R & D to boost production of fruit in Tasmania.
Other speakers include Sunny Verghese co founder of the $20 billion Olam group, food producer Maggie Beer and Freedom Foods chief executive Rory Macleod.
Other speakers will be Bega Cheese executive chairman Barry Irvin, Fonterra Australia managing director Rene Dedonker.
Samantha Bailey 9.10am: Blogging live from Global Food Forum
We’ll be blogging live from the Global Food Forum throughout the day. Hashtag #GFF2018 on Twitter.
8.55am: Newcrest restarts Cadia mine
Newcrest is restarting mining at its Cadia copper mine today — months earlier than some analysts expected — although processing remains suspended. The gold and copper miner says it remains too early for updated guidance after an earthquake triggered a tailings dam breach on March 12. But the rapid restart of mining operations at Cadia may be positive catalyst for the share price today. While it’s unclear when full production will restart, the company had previously said it couldn’t say when output will resume and declared force majeure on copper concentrate shipments. Analysts had predicted a return to full production in the September quarter at the earliest. NCM last $20.17.
8.45am: Broker rating changes
Baby Bunting cut to Sell — Citi
IOOF raised to Buy — UBS
Bendigo & Adelaide Bank raised to Buy — Morningstar
Sigma Healthcare raised to Buy — Morningstar
Whitehaven raised to Overweight — Morgan Stanley
Western Areas raised to Hold — Canaccord
Kibaran started at Buy — Baillieu Holst
Centuria Industrial REIT started at Hold — Shaw & Partners
Orocobre raised to Outperform — Macquarie
Whitehaven raised to Outperform — Macquarie
8.20am: Copper slumps
Copper slid to its lowest since early December, weighed down by a sharp rise in stockpiles and simmering concerns over the outlook for US-China trade relations.
US President Donald Trump signed a memorandum on Friday that could impose up to $US60 billion ($A77.5 billion) in import tariffs on Chinese goods. That sparked a sharp drop in equities, with the Dow Jones Industrial Average falling more than 400 points.
Reports that talks have begun to improve US access to Chinese markets helped to allay fears over a potential trade war, leading to a bounce in equities on Monday and an upturn across most other base metals. However, concerns linger that growth, and consequently metals demand, could be hit.
“This was more fallout from the big equity decline we saw on Friday, and then this morning we had a 35,000 tonne increase in stocks,” said Societe Generale analyst Robin Bhar.
“I think the worst is over for copper and we should recoup some of those losses ... later this week. (But) that obviously depends on some of the rhetoric that follows what happened on Friday.”
Reuters
7.35am: ASX to open higher
The Australian share market is expected to open higher as US stocks bounce back from last week’s losses.
At 7am (AEDT) on Tuesday, the Australian share price futures index was up 33 points, or 0.57 per cent, at 5,811.
In the US, stocks were up almost three per cent as US-China trade tensions appeared to ease, with US Treasury Secretary Mnuchin optimistic a tariff deal could be reached between the two countries.
Australian shares yesterday fell back to levels not seen since mid-October, with almost every sector in negative territory amid worries of a trade war.
The benchmark S & P/ASX200 closed down 30.2 points, or 0.52 per cent, at 5,790.5 points, while the broader All Ordinaries index was down 27.6 points, or 0.47 per cent, at 5,901.4 points.
In economic news on Tuesday, ANZ releases its weekly consumer confidence survey.
AAP
7.25am: US stocks close sharply higher
Wall Street stocks surged amid bargain-hunting and hopes that the United States and China could negotiate new terms of trade and avoid a trade war.
The Dow Jones Industrial Average finished up 2.8 per cent at 24,202.60. The broadbased S & P 500 rose 2.7 per cent to 2,658.55, while the tech-rich Nasdaq Composite Index jumped 3.3 per cent to 7,220.54.
US stocks tumbled on both Thursday and Friday last week after President Donald Trump unveiled tariffs on up to $US60 billion of Chinese imports and vowed to counter China’s alleged “theft” of American intellectual property.
But analysts were heartened by a Wall Street Journal report that said the two countries were actually in talks and that the US had provided specific demands for China that could help resolve the conflict.
Investors are trying to deduce how much of Trump’s rhetoric is realistic and how much is a “bargaining tactic,” said Tom Cahill, portfolio strategist at Ventura Wealth Management.
“Negotiations behind the scenes are positive for the market,” he added. Technology shares were strong, with Apple advancing 4.8 per cent, Intel 6.3 per cent, Netflix and Adobe Systems both 6.5 per cent.
Microsoft led the Dow with a 7.6 per cent gain after Morgan Stanley lifted its price target on the company, citing the promise of its public cloud offerings.
Facebook’s gains were a comparatively tepid 0.4 per cent after the Federal Trade Commission confirmed news reports from last week that it had opened an inquiry over the harvesting of Facebook data on tens of millions of the social network’s users by the British consulting group Cambridge Analytica.
AFP
6.45am:Dollar higher as US bounces back
The Australian dollar is higher as US stocks start to recover after their worst weekly performance since January 2016.
At 6.35am (AEDT), the local currency was worth US77.45 cents, up from US77.21 cents yesterday.
Westpac head of NZ strategy Imre Speizer said a more risk-friendly atmosphere returned to US markets, which helped the Dow Jones index and the S & P 500 gain more than two per cent.
“US-China trade tensions appearing to ease, with US Treasury Secretary Mnuchin voicing optimism a deal could be reached,” he said.
AAP
6.40am: Wall St surges as trade fears ease
US stocks vaulted higher as investor jitters over restrictive trade policies around the world moderated.
In late trade the Dow Jones Industrial Average gained roughly 628 points, or 2.7 per cent, to 24,160. The Nasdaq Composite added 2.9 per cent and S & P 500 rose 2.5 per cent.
Australian stocks are also set top rise at the open. At 6.45am (AEDT) the SPI futures index was up 29 points.
The reprieve for US stocks comes after the worst week in more than two years. Shares of financial and technology companies within the S & P 500 were some of the biggest winners Monday after investors dumped them in prior sessions, though all sectors got a lift.
A reassessment of trade policy rhetoric between the US and China after the weekend helped push stock indexes higher, analysts said.
“The anxiety from last week is going away,” said James Hickey, chief investment strategist at HD Vest Financial Services, adding that he is still bullish overall on US stocks, though expects some sectors to face challenges.
The Wall Street Journal reported that China and the US have started negotiating to improve US access to mainland Chinese markets. The behind-the-scenes discussions came after announcements of US plans to hit China with tariffs on as much as $US60 billion in imports and other restrictions — and the immediate threat of Chinese retaliation — sent US stock prices into their sharpest decline in more than two years last week.
US Treasury Secretary Steven Mnuchin yesterday said the administration was “working on a pathway to see if we can reach an agreement as to what fair trade is for them.”
Some investors pointed to tariff exemptions for certain countries as a sign that perhaps the impact of US tariffs wouldn’t be as heavy as initial rhetoric indicated.
A measure of equity volatility sank overnight but some investors remained cautious, warning that market turbulence was unlikely to subside in the near term. Continued discussions on trade tariffs and other geopolitical news will likely drive stock swings, analysts said. Investors are also grappling with other potential threats, including rising interest rates and a possible tightening of regulations for tech giants.
Shares of Facebook were one of the biggest losers in the S & P 500, falling 2.3 per cent after the company’s biggest weekly tumble since 2012, driven by concerns over the social media giant’s handling of user data.
Elsewhere, the Stoxx Europe 600 fell 0.7 per cent.
Dow Jones
6.35am: European stocks hit by Russia tensions
A flare-up in diplomatic tensions with Russia abruptly cut short an attempted recovery in European stock markets, as Wall Street’s initially strong comeback also lost momentum.
The United States and its European allies expelled dozens of Russian diplomats in a co-ordinated action against Moscow which they accuse of poisoning an ex-spy in the English city of Salisbury.
Trade war fears meanwhile continued to hang over market sentiment like a dark cloud, although some investors became more optimistic amid signs that global trade players are making efforts to avoid an all-out trade conflict, dealers said.
Having held on to modest gains since the opening bell, key markets London, Paris and Frankfurt all slipped into the red in reaction.
All three were also penalised by the strength of the euro and pound against the dollar.
“The rebound didn’t last,” said Marco Bruzzo, at Mirabaud Asset Management. “The market is still nervous.”
London closed down 0.5 per cent, Frankfurt ended 0.8 per cent lower and Paris finished down 0.6 per cent.
AFP
May rate cut ‘locked in’; ASX plots strong finish before Anzac Day break
Westpac's Luci Ellis predicts rate cuts in May, Aug, Nov. Miners lead local gains. Mixed Asian markets reflect Trump trade uncertainty amid softening stance on China.
ASX 200 mostly erases April tariff losses; gold miners dive
Trade deals optimism rises as US President Donald Trump softens stance on China, Fed chair Jerome Powell. Paladin top gainer. Safe-haven gold pulls back from its record high.