The ASX looks set to open modestly higher as hopes for further rate cuts overshadow worries about global growth.
Index futures rose 22 points or 0.3 per cent to 6761 as US stocks closed little changed following a generally soft night for global stocks and commodities. European and most Asian share markets fell with oil and industrial metals after unexpectedly weak Chinese and German data underlined the impact of the US-China trade war on the global economy.
US stock indices closed mixed but barely changed as a downbeat outlook from tech multinational Cisco stoked concerns about a global slowdown. The S&P 500 edged up three points or 0.08 per cent. The Dow eased two points or 0.01 per cent and the Nasdaq three points or 0.04 per cent.
Cisco, which manufactures computer hardware, plunged 7.4 per cent after warning global tech spending was much weaker than the company expected last quarter. CEO Chuck Robbins said the softness in demand was broad-based and significantly worse than forecast. “It feels like there’s a bit of a pause,” he said in a conference call.
Wall Street’s climb through record highs has slowed this week as investors awaited clarity on trade talks. Reports on Wednesday said negotiations had stalled over Chinese demands for tariff relief at the same time as it refuses to commit to buying specific quantities of agricultural produce, or to stamp down on the forced transfer of intellectual property. A Chinese Ministry of Commerce spokesman yesterday said rolling back tariffs was essential for an agreement.
A round of bleak economic data kept a lid on risk appetite. Jobless claims in the US hit a five-month high. The German economy just missed a technical recession by growing an anaemic 0.1 per cent last quarter. Chinese industrial production slowed sharply last month, and retail sales and investments also underperformed expectations.
The pan-European Stoxx 600 slipped 0.36 per cent. Germany’s DAX shed 0.38 per cent, Hong Kong’s Hang Seng 0.93 per cent and Japan’s Nikkei 0.76 per cent. The Shanghai Composite bucked the trend with a rise of 0.16 per cent on hopes of government stimulus.
The ASX 200 enjoyed a strong session, rising 37 points or 0.6 per cent and breaking a two-session losing run as grim jobs data rekindled expectations of further rate cuts. Although most commentators expect the Reserve Bank to wait until next year, the odds on a cut to the cash rate next month doubled from 13 per cent to 29 per cent yesterday, according to the RBA Rate Indicator.
Copper fell to a two-week low as the Chinese data raised demand implications. Benchmark copper on the London Metal Exchange dropped 0.4 per cent. Aluminium lost 1.3 per cent, lead 0.9 per cent, nickel 1.7 per cent and zinc 1.1 per cent. Tin rose 1.2 per cent.
Gold rose for a second session as falling bond yields and soft economic data increased its appeal. Gold for December delivery settled $10.10 or 0.7 per cent higher at $US1,473.40 an ounce.
BHP and Rio Tinto traded mixed but generally higher in overseas action as iron ore rose for a third day. The spot price for ore landed in China improved $2.25 or 2.8 per cent to $US83.40 a dry ton. BHP’s UK-listed stock eased 0.13 per cent after CEO Andrew Mackenzie announced his retirement at the end of the year. Its US-listed stock rallied 0.4 per cent. Rio Tinto gained 1.42 per cent in the US and 0.37 per cent in the UK.
Oil ticked lower after a report showed US stockpiles increased for a third week. Brent crude settled nine cents or 0.1 per cent weaker at $US62.28 a barrel. The US benchmark fell a chunkier 0.6 per cent.
The dollar dived three-quarters of a cent to 67.86 US cents since employment data yesterday showed the economy shed 19,000 jobs last month.
There is nothing on the economic calendar today with the power to move the market like yesterday’s jobs data. Reserve Bank Deputy Governor is due to discuss mortgage arrears at a Financial Services Institute panel discussion at 12.30pm EST. Wall Street ends the week with October retail sales, regional manufacturing data and industrial production.