The Australian dollar rose against the US dollar overnight, gaining 1.2% after falling close to 60 US cents in recent weeks, with the ASX set to open on a similarly positive note when trade begins today.
By late North American trade, the Australian dollar was trading near 62.70 US cents, with Commonwealth Bank analysts noting the potential for it to hit 63.22 US cents if the US dollar continues to ease.
US share markets were closed for the Martin Luther King Jr. Day holiday but futures traded higher. Dow Jones futures rose 167 points (0.4%) while S&P 500 and Nasdaq futures gained 0.4% each.
On Friday, US indices posted strong gains, with the Dow up 335 points (0.8%), the S&P 500 rising 1.0% and the Nasdaq adding 1.5%.
Back to the future
The surge was attributed to markets reacting positively to the absence of a mention of specific tariff increases in the new US President’s inauguration speech.
Welcome (back) to the reality of market outlooks based on presidential mind-reading, with whole economies betting on the least-worst-case scenario of tweeted pronouncements or offhand remarks.
European markets inched higher on Monday, also cautiously optimistic that the newly inaugurated US President might forget about tariffs on trusted trading partners and allies – at least for now.
The FTSEurofirst 300 index rose 0.1%, hitting a three-month high during the session. The basic resources sector led gains, up 1.2%, followed by a 1.1% rise in the automobile sector.
Utilities lagged, declining by 1.1%. In London, the FTSE 100 index rose 0.2%, closing at a record high.
Currencies and commodities
As mentioned, the Aussie dollar has been fighting back following a poor showing in recent weeks, up against the US dollar and expected to continue on this path.
The Euro also strengthened against the US dollar, rising to US$1.0415 by late trade, while the yen also firmed to JPY155.65.
Global oil prices declined on Monday following Trump's thought bubble about a national energy emergency.
Brent crude fell 64 US cents (0.8%) to US$80.15 a barrel, while US Nymex crude dropped 99 US cents (1.3%) to US$76.89 a barrel.
Base metals saw gains in London, with copper futures rising 0.9% to a one-month high. Aluminium added 0.3%, driven by optimism over reduced tariff concerns.
Gold prices fell by US$16.90 (0.6%) to US$2,731.80 an ounce as investors anticipated possible tariffs on metals.
Iron ore futures eased slightly, down 4 US cents to US$101.53 a tonne, with Port Hedland resuming operations after a weather-related closure.
Key Australian corporate updates are expected from BHP, Liontown Resources, Northern Star Resources and others, while US earnings season continues with results from Netflix, United Airlines and Charles Schwab.
In Australia, weekly consumer confidence data will also be released.
Market snapshot
- ASX 200 futures: +0.3% to 8,355 points.
- Australian dollar: +1.3% to 62.7 US cents.
- Wall Street: closed.
- Europe: DAX +0.4%, FTSE +0.2%, Eurostoxx +0.1%.
- Spot gold: +0.3% to $US2,708/ounce.
- Brent crude: -1.2% to $US79.85.
- Iron ore: +0.8% to $US104.70 a tonne.
- Bitcoin: -0.9% to $US103,746.
Source: ABC