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ASX to open lower due to bruised Wall St

<i>Photos: Getty</i>
Photos: Getty

The Australian stock exchange is poised to open lower off the back of a weak Wall Street that has been weighed down by stagnant US-China trade talks and a drop in Apple shares.

After a late rally from mining and health care stocks lifted the ASX into the black on Friday, the major bourse looks to open flat, indicated by the SPI200 futures contract which was down 0.09 per cent, or 5 points, to 5,783.00 at 0700 AEDT.

Westpac announced flat cash earnings of $8.065 billion on Monday morning, little changed since last year.

The Reserve Bank of Australia is set to announce their monthly cash rate decision tomorrow at 2:30pm, but it is widely expected that there will be no change.

The Australian dollar has also retreated and is buying 71.89 US cents, down from 72.37 on Friday.

The dollar had hit a monthly high of 72.58 US cents in the week’s final session.

On Wall Street on Friday, US stocks snapped a three-day rally as Apple shares dropped following a disappointing forecast and the White House dampened optimism over US-China trade talks.

The Dow Jones Industrial Average fell 109.91 points, or 0.43 per cent, to 25,270.83, the S&P 500 lost 17.31 points, or 0.63 per cent, to 2,723.06, and the Nasdaq Composite dropped 77.06 points, or 1.04 per cent, to 7,356.99.

Wall St bruised by disheartening US-China talks, falling Apple stocks

Concerns that a trade deal between the United States and China may not be imminent have reined in a rally in world equity markets and reversed gains on Wall Street.

Markets had earlier climbed on hopes that the world’s two biggest economies were mending their shaky trade relations.

A steep decline in shares of Apple further weighed on sentiment in the US stock market after the iPhone maker warned that sales during the crucial holiday quarter would likely miss expectations.

White House economic adviser Larry Kudlow told CNBC that while US President Donald Trump plans to meet Chinese President Xi Jinping later this month, he has not asked US officials to draw up a proposed trade plan, contradicting a report earlier in the day that had buoyed hopes of a trade dispute resolution.

That erased early gains in US stocks and curtailed a rally in global markets that had lifted emerging market stocks by their largest daily gain since 2016.

“The stock market is focused on tariffs and they believe that increased tariffs are going to hurt the economy,” said Mike Rask, director of trading at Hodges Capital in Dallas.

“There was the belief overnight that we were close to a trade deal with China and now it looks like that is not the case.”

Apple’s shares tumbled 6.6 per cent, taking its market value below $US1 trillion, after the company said sales for the final quarter would likely miss expectations.

In Europe, Germany’s export-heavy DAX had jumped as much as 1.5 per cent, its best session since July, before giving up most of its gains.

The pan-European STOXX 600 index rose 0.28 per cent and MSCI’s gauge of stocks across the globe shed 0.06 per cent.

US job growth rebounded sharply in October and wages recorded their largest annual gain in nine-and-a-half years, pointing to further labour market tightening that could encourage the Federal Reserve to raise interest rates again in December.

The dollar index, tracking the US greenback against six major currencies, rose 0.19 per cent, with the euro down 0.11 per cent to $US1.1394.

Oil prices were weighed down by a report that the US government has agreed to let eight countries, including close allies South Korea and Japan, as well as India, keep buying Iranian oil after Washington re-imposes sanctions.

US crude fell 1.13 per cent to $US62.97 per barrel and Brent was last at $US72.68, down 0.29 per cent on the day.

—Yahoo Finance AU with AAP