The local share market is set to open flat despite solid gains on Wall Street overnight. (AAP/FILE)
Australian shares are likely to start the day flat as investors trade cautiously ahead of this afternoon’s Reserve Bank decision.
Market snapshot at 7:45am (AEST):
- ASX SPI futures +0.1pc at 6,687, ASX 200 (Monday’s close) -0.4pc at 6,688
- AUD: 67.49 US cents, 54.9 British pence, 61.9 euro cents, 72.94 Japanese yen, $NZ1.08
- US: Dow Jones +0.4pc at 26,917, S&P 500 +0.5pc at 2,977, Nasdaq +0.75pc at 7,999
- Europe: FTSE 100 -0.2pc at 7,408, DAX +0.4pc at 12,428, CAC +0.7pc at 5,678, Euro Stoxx 50 +0.7pc at 3,569
- Commodities: Brent crude -1.9pc at $US60.75/barrel, spot gold -1.6pc at $US1,472/ounce, iron ore +2.8pc at $US93.38/tonne
The market has priced in an 80 per cent chance of the RBA cutting interest rates by 25 basis points to stimulate the flagging domestic economy — down to a fresh record low of 0.75 per cent.
By 7:20am (AEST), ASX futures were up 5 points or 0.1 per cent.
The Australian dollar, meanwhile, is buying 67.49 US cents.
In economic news, the Bureau of Statistics will publish its August building approvals data, which will track the slowdown in Australia’s construction industry.
Property analyst CoreLogic will release its latest house price index at 10:00am (AEST), which will reveal how much property prices increased by in September.
Market downplays Trump’s threats
Wall Street finished trading with solid gains driven by technology stocks, despite reports that Washington was considering escalating its trade war with Beijing by delisting Chinese companies from US stock exchanges.
US President Donald Trump is looking at the move as part of a broader effort to limit US investment in Chinese companies, though it was not clear how any such delisting would work.
White House trade adviser Peter Navarro dismissed the reports as “fake news” on Monday (local time).
“That story, which appeared in Bloomberg — I’ve read it far more carefully than it was written,” Mr Navarro told CNBC.
“Over half of it was highly inaccurate or simply flat-out false.”
Market players said the threat of delisting was being seen as just a tactic ahead of US-China trade negotiations resuming on October 10.
Investors were accustomed to Mr Trump acting belligerent before dialling down his rhetoric, Luca Paolini, chief strategist at Pictet Asset Management, said.
“It’s a strategy that we have seen in the past — keeping the pressure very high and then settling for whatever deal is possible.”
Any progress in talks next month would probably fall short of a comprehensive deal, he added.
“It’s more likely than not that there will some kind of agreement that would be more cosmetic in nature.”
The benchmark S&P 500 and tech-heavy Nasdaq indices jumped by 0.5 and 0.75 per cent respectively.
The Dow Jones index rose 0.4 per cent to 26,917 points.
US stocks were also boosted by stronger-than-expected economic data from China, which showed sustained weakness in exports but a surprising improvement in domestic consumption indicators.
“This is better than what the market was expecting,” Alessia Berardi, senior economist at Amundi Pioneer, said, adding that markets were downplaying the likelihood of a major escalation in the trade war by Washington.
“The probability of implementing the (delisting) decision for the market is still quite low,” she said.
Chinese markets will be closed for the rest of this week to mark the 70th anniversary of the founding of the People’s Republic of China.
Meanwhile, it was a mixed performance across European markets — as London’s FTSE fell 0.2 per cent, and Germany’s DAX added 0.4 per cent.
Oil prices slipped as the US-China trade war continued to weigh on the economic growth outlook for China, the world’s largest crude importer.
Brent crude dropped 1.9 per cent to $US60.75 a barrel.
Spot gold fell 1.6 per cent to $US1,472 an ounce.