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Category: Stockmarket / Currency / Futures / Markets / Money and Monetary Policy

Wall Street finishes flat ahead of earnings season, key US-China meeting

07:11 UTC+8 April 5, 2017 | Lucia Stein

Rising oil prices provided support for energy stocks on the NYSE. (f-l-e-x: www.flickr.com)

It was a fairly flat session on Wall Street overnight, as investors exercised caution ahead of the first-quarter earnings season and a meeting between the US and Chinese presidents later this week.

Markets at 8:00am (AEST):

  • ASX SPI 200 futures +0.46pc to 5,872
  • AUD: 75.63 US cents, 60.77 British pence, 83.73 Japanese yen, 70.79 euro cents, $NZ1.08
  • US: S&P 500 +0.05pc to 2,360, Dow Jones +0.19pc to 20,689, Nasdaq +0.07pc to 5,898
  • Europe: Euro Stoxx +0.23pc to 372.23, FTSE +0.54pc to 7,321, DAX +0.2pc to 12,282
  • Commodities: Gold +0.03pc to $US1,256.86/ounce, Brent crude oil +2.2pc to $US54.26

Investors will be focussed on the potentially tense meeting between Donald Trump and Xi Jinping on Thursday and Friday, after Mr Trump held out the possibility of using trade as a lever to secure China's cooperation against North Korea during the talks.

Retail stocks took a hit after luxury clothing company Ralph Lauren announced it would be cutting jobs and closing a number of its stores and offices, including its flagship polo store in New York.

But the market bounced back somewhat due to stronger crude oil prices and Mr Trump's announcement on a proposed infrastructure bill.

Crude oil prices were higher as expectations of a fall in US inventories drove investor sentiment, according to an ANZ analyst note.

"A Bloomberg survey suggests investors and traders are expecting supplies fell by 150,000 barrels last week," it observed.

"Brent also found some additional support after news of an unplanned shutdown of the Buzzard field.

"Libya said it was still on track to reach output of 1.1mb/d by August, despite challenges such as salary payment delays and military action in the region."

Mr Trump said in a speech overnight that his proposed infrastructure bill may top $1 trillion and that his administration was working on a major "haircut" to banking regulation, leading to a rise in industrial and material stocks.

However, financial investors remained more cautious, perhaps because, as an ANZ analyst note suggested, Mr Trump continued to use broad strokes and lacked specific detail on policy reform.

European shares were also up, as gains in oil-related stocks and miners offset weakness in the auto sector.

Locally, the market is on track to open higher.

It follows the Reserve Bank's decision yesterday to keep interest rates on hold at 1.5 per cent.

The RBA governor, Phillip Lowe, signalled in a speech last night that the bank is focussed on the labour market, the level of household debt in Australia and the housing market.

"We will want to see an improvement [in the labour market] before we can be confident that growth in the overall economy is strengthening," he said.

He said the RBA supported the need of additional strengthening in lending standards, but warned that more needs to be done to address the issue of housing supply.

The Australian dollar lost some ground overnight, following the RBA policy announcement yesterday afternoon.

NAB currency strategist Rodrigo Catril wrote in an analyst note that the RBA's acknowledgement of a weaker labour market, together with clear stress on macro-prudential restraints were seen as an "excuse to sell" the Australian dollar.

"Even though earlier in the day the Australian dollar had been boosted by better than expected trade data," he added.

But this morning the Australian dollar has made some headway, a short time ago it was just above $US75.60.

West Texas crude oil was up at $US50.94 a barrel, a barrel of Tapis was worth $US54.22 and spot gold rose to $US1,255 an ounce.

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