Australia Market improves on upbeat US lead

Headline indices of the Australian share market were higher on Monday, 07 October 2019, as risk sentiments boosted up on tracking gains on the Wall Street last Friday as moderate U.S. jobs growth in September 2019 eased recession fears while maintaining rate cut expectations. However, market gains were limited amid caution ahead of the Sino-U.S. trade talks scheduled to resume later this week. Around late afternoon, the benchmark S&P/ASX200 index grew 40.82 points, or 0.63%, to 6,557.90, while the broader All Ordinaries advanced 44.60 points, or 0.67%, to 6,681.50.

All three main indexes on Wall Street rallied on last Friday, as investors breathed a sigh of relief that the jobs figures did not miss badly, with most still expecting another Fed rate cut at its next meeting this month. The unemployment stateside touched a fresh 50-year low in September, though the nonfarm payrolls rose by 136,000. The US jobs data was slightly weaker than anticipated but not bad enough to further stoke concerns over the health of the economy. With the release of several pieces of soft economic data last week, the market is now raising expectations for the US Fed to cut interest rates.

 

The United States and China are expected to meet again this week in Washington for another round of trade talk, when Chinese Vice Premier Liu He meets U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in Washington. Ahead of this week's trade talks between the world's two largest economies, there were reports that Chinese officials are growing hesitant to pursue a broad trade deal pursued by U.S. President Donald Trump.

The outcome from this week's trade discussions "will likely be pivotal in determining if the two sides can reach an interim trade deal that postpones further tariff escalation. Tariffs on $250 billion worth of Chinese goods are scheduled to rise to 30% from 25% on Oct. 15. Also, the Trump administration plans to impose 15% tariffs on December 15 on consumer-facing imports from China, including laptops, smartphones and certain footwear and apparel. Both countries have slapped tariffs on billions of dollars worth of each other's goods, which has roiled global markets, created uncertainty and dampened economic growth outlooks around the world.

The most improved stock among the top 200 companies was investment house Washington H. Soul Pattinson (SOL), which rose around 5%. Gold miner, St Barbara (SBM) and nickel miner Western Areas (WSA) were up 3.2% and 2.7% respectively.

The major banks were also recovering from heavy losses of up to 6.5% for the big four lenders last week. Westpac (WBC) was leading the way with a gain of 0.6%.

The main laggards were coming from defensive names from the utilities sector. Pipeline operator, APA Group (APA) fell 0.5%. Some of the heaviest losses were coming from Mayne Pharma (MYX), which was down 3.5%. Both Magellan Financial (MFG) and Caltex were also down more than 2%.

CURRENCY NEWS: The Australian dollar inclined against greenback on Monday. The Australian dollar, sensitive to shifts in broader risk appetite, changed hands at $0.6759 following a rise from levels below $0.669 last week.

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