The ASX Today
The ASX is expected to start the week higher on the back of stronger metal markets and a Wall Street run-up on Friday.
The ASX is expected to start the week higher on the back of stronger metals prices and a Wall Street run-up on Friday.
ASX SPI 200 Futures rose by 31 points earlier this morning, or 0.5 per cent.
This would put the local market on more solid footing for the week ahead having just capped off its worst weekly performance since late November (losing 0.85 per cent in the five days to Friday). The miners are likely to be among the biggest gainers on the local index this morning.
- Commodity prices continue to rise, boding well for the ASX materials sector today
- Brent crude gains 0.9 per cent to $US69.87, while WTI puts on 0.8 per cent to $US64.30
- Light local economic data to start the week: monthly MI inflation gauge for December
- Hong Kong's Hang Seng and US equities hit record highs on Friday
- Australian dollar keeps muscling up (US79c) on metals rising and US dollar sliding
- Martin Luther King holiday in the US tonight
In the smaller metals markets, zinc prices edged up to their highest level in more than a decade on Friday on the London Metal Exchange. The base metal has rallied around 11 per cent since the start of December. But for the day alone, aluminium was the best performer on Friday, having risen by 1.8 per cent.
Gold has been gaining solidly lately, the spot price rising 1.2 per cent on Friday, around $US10, to $US1337.64 an ounce.
All that said, the commodities story should support the heavyweight materials sector on the ASX this morning.
The local data stream will be slow until the second half of this week when major data drops should either lend strong support to ongoing economic recovery story or derail some of the recent gains.
Greg McKenna, chief market strategist at AxiTrader, believes this week's data is really significant to the outlook, the biggest drop being unemployment on Thursday.
“[It's] important because Australian – and Chinese – data has improved sharply recently as measured by the Citibank economic surprise index (CESI). From a low around -47.4 in December the Aussie CESI is at 24.8,” explained McKenna in a research note this morning.
“That turn in the data, unsurprisingly coincided with the turn in the Aussie dollar. Throw in the fact that the Metals and Mining shares ratio to the overall MSCI global index is at its highest since 2015 and you can see why the Aussie dollar caught a bid.”
Gaining over the festive season, the Australian dollar has retaken US79c, as commodities continue to gain ground and the US dollar slides to a three-month low.
For US stocks, it's been a different story. US stocks rose to record levels on Friday after the release of stronger retail sales data. The biggest of the major indices by number of companies, the S&P 500, rose 0.7 per cent to 2786 points. The S&P 500 rose 1.6 per cent last week and is higher by 4.2 per cent in January already, and we're less than halfway through the month.
In Asia, Hong Kong's Hang Seng ended up closing at a record high on Friday as well, rising for 14 consecutive days to cap off its longest ever winning streak. IT and energy stocks were the standouts on the Hang Seng.
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