Australian shares have hit fresh records for the third straight day, driven by record low interest rates and lingering enthusiasm over the United States and China signing a limited trade deal.
By 10:40am (AEDT) on Friday, the ASX 200 had jumped 0.6 per cent to 7,085 points – while the broader All Ordinaries Index had risen by a similar level to 7202 points.
It was only on Thursday that the benchmark index passed the 7000-point milestone for the first time.
So far, Australia has been the best performing market among developed economies, having surged 6 per cent since the year began.
Meanwhile, the Australian dollar has slipped to 68.96 US cents.
Spot gold edged slightly lower to $US1,551 an ounce, while Brent crude oil has jumped to $US64.67 a barrel.
Chasing record highs
It follows a strong lead from Wall Street, which ended its day at historic peak levels.
Markets hit new highs after Washington and Beijing signed a deal, on Wednesday (local time), that paused an 18-month long tariff war that had bruised financial markets and crimped global economic growth.
China is expected to boost its purchases of US goods and services in exchange for the Trump administration rolling back some tariffs, but several thorny issues remain unresolved.
“We believe the agreement underpins a positive outlook for risk assets, especially emerging market stocks,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.
“But it is also important for investors to understand the limitations of the deal. So we see the deal as representing a partial calming rather than an end to trade tensions.”
Nevertheless, the Dow Jones index shot up 267 points, or 0.9 per cent, to 29,298.
The benchmark S&P 500 lifted by 0.8 per cent to 3,317 – crossing the 3300-point threshold for the first time.
But the strongest gains were seen in the tech-heavy Nasdaq, which jumped 1.1 per cent.
Markets at 8:10am (AEDT):
- ASX SPI futures +0.5pc at 7,002, ASX 200 (Thursday’s close) +0.7pc at 7,042
- AUD: 68.99 US cents, 52.76 British pence, 61.94 Euro cents, 75.99 Japanese yen, $NZ1.04
- US: Dow Jones +0.9pc at 29,298, S&P 500 +0.8pc at 3,317, Nasdaq +1.1pc at 9,357
- Europe: FTSE 100 -0.4pc at 7,610, DAX flat at 13,429, CAC +0.1pc at 6,039, Euro Stoxx 50 +0.1pc at 3,774
- Commodities: Brent crude +1.3pc at $US64.82/barrel, spot gold -0.2pc at $US1,553.63/ounce, iron ore -0.1pc at $US96.36/tonne
It was helped by Microsoft shares climbing to a record high ($US166.17) and Google’s parent company, Alphabet, soaring to a $US1 trillion market value for the first time ever.
Strong earnings season (so far)
US markets received their largest boost from Morgan Stanley shares (+8pc) after the investment bank posted a strong quarterly profit which smashed expectations – and in a show of confidence, raised its performance targets for the next couple of years.
Wall Street was also boosted by solid economic data, showing that retail sales rose for a third consecutive month (+0.3pc in December, in line with expectations).
Furthermore, the number of Americans filing claims for unemployment benefits dropped for a fifth straight week, last week, indicating the US labour market remained strong
“The consumer needs to be strong and evidence of that is retail sales, which came in pretty well after some slowing over the last several months,” said Tom Martin, portfolio manager at Globalt.
“We’re in that environment where investors say – we’ve got low yields and a potentially re-accelerating economy and an earnings growth that is looking to be somewhere between 5 and 9 per cent.”
Analysts expect profits at S&P 500 companies to have dropped 0.4 per cent in the fourth quarter.
However, full-year earnings for the current financial year are estimated to grow 9.6 per cent, according to Refinitiv IBES data.
The post ASX hits record high for third straight day as Wall Street peaks appeared first on The New Daily.
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