Overnight: US-China Deal Not Ideal

Investors globally are awaiting the signing of the Phase One deal between China and the USA. Meanwhile, first corporate results did not disappoint.

Greg Peel is still on holidays. In the meantime, Jessica Amir from Bell Direct is providing a snapshot of insights and developments from overseas markets overnight.

By Jessica Amir, Bell Direct

The Australian share market looks set for a very modest open with the futures suggesting a gain of 0.1%/5 points at the open, which should still push the ASX200 to another unprecedented record after it scaled 0.9%/59 pts higher yesterday to its highest level ever 6,962 points.

The subdued start to our session is expected, as the major indices in the US had a choppy and mostly negative session, as news broke that the US won’t be cutting any more China tariffs until after the November presidential election, all the while earnings season kicked off, propping up the blue chip, Dow Jones.

All this comes as the two superpower economies are to ink phase one of the trade agreement on Wednesday in Washington. As part of that deal, Trump said the US would scrap the new round of tariffs and cut existing duties to 7.5% on $120 billion on Chinese goods, while keeping the 25% tax on $250 billion of goods.

J.P. Morgan reported a record annual profit of $36.4 billion with quarterly earnings and revenue beating analyst expectations, with surging bond trading revenue, sending its shares up over 1.5%. Citigroup’s earnings also got a boost from strong fixed-income trading, with the divisions revenue surging 49% sending its shares 2.6% higher.

Those gains helped the Dow end 0.1%/33 points higher while the broader S&P 500 closed -0.2% lower, also bracing for profits this reporting season to fall -2% on a yearly basis in the fourth quarter, according to FactSet research, while the Nasdaq lost -0.24%.

Across the Atlantic Ocean, European stocks wait ever so slightly as traders await phase one of the trade deal being signed. The Stoxx 600 rose 0.3%, the French CAC closed 0.01% higher, the Germany DAX closed flat after gaining 5 points, and FTSE also only modestly rose 0.1% .

Gold slipped -0.2% to US$1,546 an ounce.

Oil rose, snapping its five-day losing streak, adding 0.3% to US$58.39 a barrel.

Iron ore gained 0.5% to US$94.03 a tonne.

Australian dollar tracked steady overnight ahead of the deal being signed and at 69.03 US, holding a week high.