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ASX headed for small bounce, Wall Street wraps champagne month
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Australian shares, which rallied 3.9 per cent last month, are poised to open February on a positive note. ASX futures were up 5 points at about 7.25am AEDT, paring earlier gains. The Australian dollar came within a whisker of US73¢ before paring part of its advance.
Bolstering the currency yet again was the spot price of iron ore, which lifted another 3.4 per cent at its latest fix, bringing the advance so far this week to 14.3 per cent.
Local data: AiG performance of manufacturing January, PPI fourth quarter
Overseas data: China Caixin manufacturing PMI January; Japan jobless rate December, Nikkei manufacturing PMI January; Euro zone Markit manufacturing PMI Janauary, CPI estimate January; UK Markit manufacturing PMI January; US Nonfarm payrolls January, Markit manufacturing PMI January, ISM manufacturing January, University of Michigan consumer sentiment January
Market Highlights
SPI futures up 5 points or 0.1% to 5809 at about 7.25am AEDT
AUD +0.2% to 72.64 US cents (overnight peak: 72.95)
On Wall St at 3.24pm: Dow -0.3% S&P 500 +0.7% Nasdaq +1.1%
On the Dow: DowDuPont -8.7%, Visa -2.9% Goldman -2.3%
In New York, BHP +0.6% Rio +1.7% Atlassian +3.5%
FANG: Facebook +11%, Amazon +2.8%, Netflix -0.1%, Alphabet +2.2%
Apple +1.2%, Microsoft -2.2%
In Europe: Stoxx 50 -0.1% FTSE +0.4% CAC +0.4% DAX -0.1%
Spot gold +0.2% to $US1321.84 an ounce at 1.14pm New York time
Brent crude +0.5% to $US61.98 a barrel
US oil +0.4% to $US54.45 a barrel
Iron ore +3.4% to $US85.34 a tonne
Morgan Stanley no longer expects the Reserve Bank of Australia to raise interest rates in 2020.
The forecaster now sees interest rates on hold through to the end of next year. The revised rates call comes a week before the RBA's statement on monetary policy, due next Friday, and days before the first policy meeting on Tuesday.
"The recent data flow implies that the RBA's 2018 GDP forecast of 3.5 per cent is unlikely to be achieved. We also think its 2019 forecast for 3.25 per cent looks optimistic."
Morgan Stanley sees GDP growth at 2.5 per cent.
"We expect a nod to a more data-dependent outlook given the increased domestic and global uncertainty, without an explicit bias. In our view, the market would likely react negatively to a simple mark-to-market of recent data with no change in view, and while there is also a chance of a more aggressive shift (similar to the unexpected RBA cut in Feb 2015) this seems a low probability," Daniel Blake writes.
Any deterioration in the labour market would be a catalyst for interest rate cuts. Weakness in the housing sector and consumer sector should continue this year, when further downgrades and the adoption of an easing bias is likely.
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