Shares Shrug Off Trade War Fears
Our market is heading for a solid opening this morning after Wall Street survived the biggest rise in US jobs in a month for nearly two years in the February jobs report.
The strong jobs report and the 313,000 new position last month means the US Federal Reserve will be lifting interest rates at its meeting on March 20 and 21.
That will be the first increase for the year and the big argument in US markets is whether it will be the first of three or four increases.
The jobs report pushed the Trump steel and aluminium tariffs issue to the background, as did the confused story about whether the President will indeed meet North Korea leader Kim Jong-un.
That is increasingly problematic after the White House started insisting on pre-conditions to the meeting a day after the story broke.
But all markets ended higher - eurozone shares rose 0.3% on Friday and the US S&P 500 jumped 1.7% on the back of the goldilocks February jobs report and its 313,000 new jobs.
That saw a 57 point gain on the ASX 200’s futures trading which points to a strong start to trade for the Australian share market later this morning.
The ASX 200 Index closed at 5963.2 points on Friday, up 20 points, or 0.3%.
China’s consumer price index rose an annual 2.9% in February, topping forecast for 2.5% growth, and sharply higher than the 1.5% in January and the strongest annual growth rate in over four years.
Food prices surged by 4.4% (but pork prices fell) while and producer price slowed to an annual rate of 3.7% in February, the slowest rate of growth in 15 months.
Over the week US shares rose 3.5%, Eurozone shares leapt 3.2%, Japanese shares rose 1.4%, Chinese shares gained 2.3% and Australian shares rose 0.6%.
The strong wall Street finish will see Asian markets trade higher today.
Bond yields rose a bit in the US, UK, and Australia but fell in Germany and Japan.
Oil and copper prices rose, the US dollar weakened a touch on Friday and the $A rose.
But watch for more weakness in Chinese commodity markets, especially iron ore and steel where a big sell off seems to be underway.
That will be bad news for the likes of BHP, Rio Tinto, Fortescue Metals and other miners after the Chinese iron ore price moved into correction territory with an 11% slide last week and more than 7% on Thursday and Friday alone.
On wall Street, Nasdaq hit a new all time high on a day when shares surged off the back of the strong jobs report and a slowing in the pace of wage growth.
With a 1.8% gain on Friday to a record high, Nasdaq was up six days in a row. The S&P 500 jumped 1.7% and the Dow was up 1.8% as well on the day.
For the week, the S&P 500, Dow and Nasdaq climbed 3.5%, 3.3% and 4.2%, respectively, as the nervy days in early February were put behind them.
Friday also saw S&P Dow Jones Indices release the results of its March quarterly rebalance, which takes effect from March 19. Promoted into the ASX 200 are Ausdrill, Bellamy’s Australia, Smartgroup and Xero while exiting are Australian Agricultural Company, HT&E (the old APN) and department store retailer Myer, which fell 4.4% to 43.5 cents.
QBE was dropped from the ASX 20. QBE shares are down nearly 22% in the past year.
The company was valued at $13.4 billion at Friday’s close.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.