US-China phase one trade deal signed: Aus shares to open higher

Market Reports

by Katrina Bullock

The Australian share market is poised to open higher. After a week of flirting with the 7000-point barrier, the ASX200 managed to push above the 7000 mark yesterday for the first time on record, extending the gains we’ve seen since the New Year. Strong leads from the US overnight as Wall Street rallied on the execution of the US-China phase one trade deal. Under the newly signed agreement, China has committed to removing barriers for US agricultural imports and strengthening intellectual property rights for US companies. The US on the other hand has agreed to halve the tariffs it imposed on $120 billion worth of Chinese goods. This pulls the handbrake on the US-China trade war that has dominated market commentary for 18 months. However, analysts warn that this is only a ceasefire between the two superpowers. The trade deal incentivises China to purchase more of its goods from the US, which may result in it purchasing less from Australia. Given this, Australia’s dairy, meat, liquid gas and coal industries are tipped to see a dip on the back of this deal.

Markets

Wall Street closed higher yesterday: The Dow Jones Industrial Average gained 0.9 per cent to close at 29,298, the S&P 500 added 0.8 per cent to close at 3,317 and the NASDAQ added 1.1 per cent to close at 9,357.

European markets closed mixed: London’s FTSE lost 0.4 per cent, Paris added 0.1 per cent and Frankfurt was steady.

Asian markets closed mixed: Tokyo’s Nikkei added 0.1 per cent, Hong Kong’s Hang Seng was up 0.4 per cent, and China’s Shanghai Composite fell 0.5 per cent.

Taking all of this into equation, the ASX futures are pointing to a 26 points gain. Yesterday the Australian share market closed higher with the S&P/ASX 200 Index closing 0.7 points higher at 7,042.

Company news

Sealink Travel Group (ASX:SLK) has completed its acquisition of Transit Systems, Tower Transit Group and their broader group of entities. The acquisition target is Australia’s largest private operator of metropolitan public bus services, and has established bus operations in London and Singapore. The acquisition is designed to create an integrated land and marine passenger transport business, with enhanced scale and capabilities to compete for large government contracts. It diversifies SeaLink’s end-market exposure and poises the company for further international expansion. The acquisition comes with some management changes. The current Group CEO of Transit Systems Group, Clint Feuerherdt, has replaced Jeff Ellison as SeaLink Group CEO. Jeff will remain a director of SeaLink to support the transition. In addition, the current Chairman of Transit Systems Group, Neil Smith, has also joined the SeaLink Board of Directors. Shares in Sealink Travel Group (ASX:SLK) closed flat at $4.52.

Ex-dividends

2 companies are going ex-dividend today. Alternative Investment Trust (ASX:AIQ) paying a dividend of 0.26 cents unfranked. Turners Automotive Group (ASX:TRA) is paying a dividend of 3.78 cents – 85 per cent franked.

Currencies

One Australian Dollar at 8:45AM was buying 68.97 US cents, 52.77 Pence Sterling, 75.98 Yen and 61.95 Euro cents.

Commodities

Iron Ore has lost 0.1 per cent to $96.36.
Iron Ore futures suggest a 0.1 per cent rise.
Gold has lost $1.20 to US$1553 an ounce.
Silver has lost 4 cents to US$17.95 an ounce.
Oil has added 81 cents to US$58.65 a barrel.