The Australian equity market were modest higher for third straight session on Thursday, 05 June 2019, on following Wall Street's solid lead overnight on persistent expectations that the U.S. Federal Reserve may slash interest rates this year to support an economy. However, market gains were capped on concerns over the United States' latest tariff issues with Mexico. ASX sectors were mostly higher, with information technology, financials, realty, and consumer discretionary issues being notable gainers. Around late afternoon, the benchmark S&P/ASX200 index inclined 33.88 points, or 0.53%, at 6,392.40 points, while the broader All Ordinaries rose 31.92 points, or 0.5%, at 6,475.50.
Local market received a boost from gains in the Wall Street overnight on growing hopes that the Federal Reserve will lower interest rates this year to reignite an economy wounded by trade battles. Powell said the central bank will keep an eye on current developments in the economy, and would do what it must to sustain the expansion. The Dow Jones Industrial Average rose 207.39 points to 25,539.57, while the S&P 500 advanced 0.8% to 2,826.15. The Nasdaq Composite closed 0.6% higher at 7,575.48.
However, market topside capped, as investors risk sentiment remains fragile as optimism over monetary policy is offset by ongoing concerns over trade after a meeting between U.S. and Mexican officials ended with scant sign of progress.
The U.S. and Mexico failed to reach a deal on immigration issues during a Wednesday meeting, just days before 5% tariffs on all Mexican imports are set to kick in. Talks will resume on Thursday. Progress is being made, but not nearly enough! Trump said in a tweet on Wednesday evening. Trump announced those duties in a surprise tweet last week, saying they would be imposed “until such time as illegal migrants coming through Mexico, and into our Country, STOP.”
The most recent U.S. tariff threat on Mexico has led several market experts to forecast increased risk of a recession in the world's largest economy, which could put pressure on the Federal Reserve to cut rates.
Shares of banks and financials traded higher. The big four banks continued to do much of the heavy lifting with ANZ Bank (ANZ) the most improved, up 1.1%. Bank of Queensland (BOQ) rose 0.7% after announcing Mr George Frazis as its new Managing Director & CEO, effective September 5. Mr Frazis was previously the head of consumer banking at Westpac.
Among individual stocks, Santos (STO) rose 2.1% on a positive update with a large amount of oil reserves at its Dorado well, situated off the coast of WA. STO has an 80% stake in the oil and gas asset with a 20% stake held by Carnavon Petroleum (CVN). CVN shares have jumped 10% on the news.
Wisetech Global (WTC) rose 5.5% as the logistics software firm holds an investor conference. It has provided an FY19 revenue guidance of A$326-339 million which would be an uplift of 47-53% on FY18 while Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) would come in between A$100-105 million.
ECONOMIC NEWS: Australia Trade Surplus Slides In April - Australia's trade surplus decreased slightly in April on higher imports, data from the Australian Bureau of Statistics showed Thursday. The trade surplus fell unexpectedly to A$4.87 billion from A$4.88 billion in March. The surplus was forecast to increase to A$5.0 billion in April. Nonetheless, the surplus remained around the record level. Exports advanced 2% to A$40.42 billion and imports increased 3% to A$35.55 billion.
CURRENCY NEWS: The Australian dollar was little changed against the U.S. dollar on Thursday. The Australian dollar was quoted at 69.7 US cents after easing from a high of 70 US cents against the greenback in US trade overnight.