Futures point to another positive day after late rally in the US

The Australian sharemarket defied extremely negative overseas trends that prevailed towards the end of last week, despite a steep dip on the open.

The S&P/ASX 200 index (XJO) fell by about 50 points in the first hour of trading, but by midday it had rallied 80 points from the morning low to push past 5950 points before closing at 5945 points, a gain of 0.3% compared with Friday’s close.

Not only did this fly in the face of negative overseas trends, but it also represented an outperformance of about 1% against futures markets as they stood just prior to the open.

While not a significant development in terms of driving the index, one of the highlights of the day was the debut of Laybuy Group Holdings (ASX: LBY) which finished at $2.05, representing a 45% premium to its IPO price of $1.41.

It was mainly the finance sector and a strong performance from index heavyweight BHP (+2.4%) that supported the benchmark index gains.

Based on the performance of overseas markets, the positive momentum could continue with the ASX SPI200 futures also pointing to a bright start, up 25 points to 5949 points.

US markets trended upwards after heavy losses

While the headline closing numbers in the US don’t exude confidence with negative performances across the Dow (-0.6%), S&P 500 (-0.8%) and the NASDAQ (-1.3%), all of the indices spent most of the day in an upward trend as they recovered from steep early-morning declines.

The other lead that will be influencing futures traders is the extremely strong performance of European markets.

The FTSE 100 gained nearly 140 points or 2.4% to close at 5937 points.

Across the channel it was the DAX that led the way, surging 257 points to 13,100 points, a gain of 2%.

The CAC 40 increased 1.8% or 88 points to close at 5053 points.

There are signs that other bourses in the Asia-Pacific region are poised to turn around recent losses with the Hang Seng futures index currently up 120 points or 0.5%.

This would be a welcome recovery given that the index has come off about 1000 points in the last fortnight.

With regard to the Asian region, recent export data out of China was positive.

However, the same couldn’t be said for rhetoric from the White House with President Trump’s pin recently landing on the word ‘decoupling’, prompting a diatribe of ‘’it’s an interesting word’’, ‘’if we didn’t do business with China we wouldn’t lose billions of dollars’’ and in true scholarly style, ‘’It’s called decoupling, so you’ll start thinking about it.’’

It is incredible to think that he could be only two months away from a second term.

On the commodities front, it was a mixed bag for oil with the West Texas Intermediate price falling 1.6% to US$39.12 per barrel while the Brent Crude Oil Continuous Contract varied little as it closed at US$42 per barrel.

The gold price trailed off towards the end of the session to close in the vicinity of US$1930 per ounce.

Iron ore was only up marginally to US$129.10 per tonne.

Base metals were generally out of favour but there weren’t any substantial declines.

The Australian dollar continues to hover just shy of US$0.73.