ASX will rise as iron ore prices rise, market awaits GDP outcome
Australian stocks are expected to rise in morning trading, on higher commodity prices, namely oil and iron ore, which are expected to boost energy and mining stocks.
ASX futures were up 0.2% (to 7,159 points) at 8:00 am AEST.
The Australian dollar appreciated to 77.52 cents US (+ 0.3%).
In business news, ABS will release its March quarter GDP figures, which will reveal how quickly the Australian economy has recovered from COVID-19 and whether it has exceeded pre-coronavirus levels.
The country’s economy is expected to have experienced strong growth of 1.5% (compared to the previous quarter), according to a poll of economists by Reuters. ANZ’s forecast was the most bullish of the lot, with its economist jumping 2.1%.
ANZ Senior Economist Felicity Emmett said the “key message” from today’s data would likely be that “the economy is now moving strongly from recovery to expansion.”
“Consumer confidence has returned to pre-pandemic levels, and household consumption is poised to grow strongly over the next year given the still high savings rate and a large reserve of accumulated deposits. over the past year, “she said.
Rise in raw materials
The price of iron ore jumped 4.9% to US $ 208.67 per tonne, after jumping 10% in the past three days.
“Iron ore has climbed back above $ 200 a tonne as steel production surges, ”ANZ economist Brian Martin wrote in a note.
“Local regulators in Tangshan City are seeking to ease restrictions on iron smelting and lift emission controls to help alleviate soaring steel prices.
“China has frequently reiterated its commitment to reduce steel production in order to reduce emissions from the industry. However, the demand is strong.
“China’s fiscal stimulus is increasing demand from the manufacturing and construction sectors.
Strong sales of iron ore to China have boosted the country’s economy, despite deteriorating relations between Beijing and Canberra.
ABS on Wednesday released data showing Australia recorded its highest-ever current account surplus in the March quarter ($ 18.3 billion), largely on steel exports .
In the oil markets, Brent crude futures surged to US $ 70.52 per barrel (up 1.7%).
The rise in oil was supported by supply uncertainty from OPEC + as the International Energy Agency warned of an impending gap between growing demand and stagnant supply in the second half, exerting upward pressure on prices, “said NAB’s director of foreign exchange. strategist Rodrigo Catril.
“OPEC + agreed to stick with the plan to increase production in July, but the market had to guess what would happen after July, with Saudi Arabia keeping its options open as to whether to increase supply further as demand picks up. “
US markets stagnate as investors wait for jobs data
The Australian market is expected to appreciate today despite a gloomy night on Wall Street, which ended up trading virtually flat.
After the close of the Memorial Day long weekend, the Dow Jones index rose 45 points (+0.1 pc) to 34,575 on Tuesday (local time).
The S&P 500 lost 2 points to close at 4,202, while the Nasdaq Composite lost 12 points to 13,736. In percentage terms, they fell in tiny fractions (less than 0.1 percent).
Gains in energy and financial stocks offset declines in health care, with investors assessing the latest US economic figures for signs of rebounding and rising inflation.
Data showed US manufacturing activity picked up in May as pent-up demand in a reopening economy boosted orders. But unfinished work is piling up due to shortages of raw materials and labor.
“People came back from a holiday weekend convinced that the economy is recovering well and that any inflation we might see in labor and other costs is temporary,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
The main event this week is US wage data on Friday, with markets looking for a signal from the Federal Reserve on when it will begin canceling its $ 1 billion bond purchase program. dollars.
According to the median forecast, 650,000 jobs were added in May, but the outcome is uncertain following an unexpected gain of 266,000 in April.
ABC / Reuters