More conciliatory comments from Washington and Beijing, and reports the US will delay tariffs on European car imports, delivered a boost to markets overnight despite weak economic data.
Market snapshot at 7:45am (AEST):
- ASX SPI futures +0.2pc at 6,301, ASX 200 (Wednesday’s close) +0.7pc at 6,284
- AUD: 69.31 US cents, 53.96 British pence, 61.85 euro cents, 75.95 Japanese yen, $NZ1.06
- US: Dow Jones +0.5pc at 25,648, S&P 500 +0.6pc at 2,850, Nasdaq +1.1pc at 7,822
- Europe: FTSE 100 +0.75pc at 7,296, DAX +0.9pc 12,099, CAC +0.6pc at 5,374, Euro Stoxx 50 +0.6pc at 3,102
- Commodities: Brent crude +1pc at $US71.97/barrel, spot gold -0.1pc at $US1,296.41/ounce
Trump administration officials told Reuters the US President is expected to delay a decision on tariffs on imported cars and parts by up to six months.
The pan-European Stoxx 600 index ended up by around 0.5 per cent, while the auto sector rose 2 per cent.
Adding to the improvement in market sentiment were comments from US Treasury secretary Steven Mnuchin that discussions between China and the US were continuing.
On Wall Street, the Dow Jones gained 0.5 per cent, tech stocks led the Nasdaq more than 1 per cent higher and the broader S&P 500 index rose 0.6 per cent.
Those gains were despite unexpectedly weak economic data out of both the US and China.
US retail sales and industrial production fell in April, while similar indicators out of China abruptly slowed.
“We expect [US] manufacturing to remain under pressure in the coming months,” said Wells Fargo senior economist Sarah House.
“The latest escalation in the trade war between the United States and China is not likely to immediately show up in next month’s production figures … but disarray to global supply chains and heightened levels of uncertainty are likely to negatively impact investment.”
Unemployment rate tipped to edge higher
Locally, SPI 200 futures are slightly higher, indicating a positive start could be in store for the ASX as the market awaits jobs figures for April.
Economists polled by Reuters expect the unemployment rate to edge slightly higher to 5.1 per cent.
The Reserve Bank has said employment will be crucial to its next move — and the market is currently pricing in around a 35 per cent chance of a rate cut at the RBA’s June meeting.
Yesterday, NAB’s closely-watched business survey showed a steep fall in job prospects, with its employment index tumbling to a below average reading for the first time since 2016.
Meanwhile, the ABS wage price index failed to pick up in the first three months of the year, with the quarterly and yearly pace of wage growth remaining steady around historically low levels.
“Despite decade low unemployment wages are arguably no longer gradually trending up,” wrote UBS economists.
“Looking forward, recent data show GDP is clearly slowing below trend, and weaker lead indicators also now suggest unemployment will rise, limiting wage and inflation pressure.