Saturday, January 16, 2021

Australian shares to fall, Wall Street near record highs amid Donald Trump impeachment threat

Australian shares to fall, Wall Street near record highs amid Donald Trump impeachment threat

Australian shares are likely to slip at the open, with Wall Street closing largely flat as investors eyed the latest stimulus developments and US President Donald Trump’s second impeachment saga.

ASX futures dropped 8 points (-0.1pc) to 6,609 at 8:05am AEDT.

The Australian dollar jumped (+1pc) to 77.72 US cents, as the greenback slipped to its weakest level in more than 2.5 years.

It was a significant rebound given the Australian dollar fell as low as 76.68 US cents earlier this week.

Meanwhile, US markets fell sharply on Tuesday (local time), but managed to claw back all their losses by the end.

The Dow Jones index closed slightly higher (+0.2pc) at 31,069 points, the benchmark S&P 500 was steady at 3,801, while the tech-heavy Nasdaq lifted (+0.3pc) to 13,072.

Wall Street has been trading near record highs lately, on hopes of a large boost to public spending and speedy roll-out of coronavirus vaccines under a Democratic-led Congress.

“The Georgia Senate run-off elections (that gave the majority to the Democrats) really changed the landscape for the outlook pretty significantly, as there is now potentially very significant additional stimulus,” said Tom Simons, money market economist at Jefferies in New York.

The benchmark yield on America’s 10-year Treasury bonds lifted for a seventh straight session, to its highest level since March (at 1.136 per cent).

European markets weakened overnight, with Britain’s FTSE falling (-0.7pc) to 6,754 and Germany’s DAX down (-0.1pc) to 13,925 points.

Impeachment may delay US coronavirus stimulus

Democrats said they would give Mr Trump one last chance to leave office days before his term expires or face an unprecedented second impeachment over his supporters’ deadly January 6 assault on the US Capitol.

An impeachment trial could proceed even after the Republican president leaves office.

However, some Democrats have expressed concern that a trial could hamper president-elect Joe Biden’s agenda, slowing confirmation of his appointees and distracting from legislative priorities such as a new coronavirus relief package.

“Even if [additional stimulus] is delayed, it’s going to be a matter of days, maybe weeks, not months,” said Keith Buchanan, portfolio manager at GlobAlt in Atlanta.

“The question is the shape and form of it.”

Spot gold lifted (+0.4pc) to $US1,852.76 an ounce. Silver jumped (+2.4pc) to $US25.54 an ounce.

Bitcoin rebounded (+8.6pc) to $US34,652 in the past 24 hours.

The volatile cryptocurrency jumped to its highest value ever ($US41,692) on Saturday, prompting some investors to cash out while they were still ahead.

Meanwhile, oil hit its highest since February as tighter supply and expectations of a drop in US inventories offset concerns over rising coronavirus cases globally.

Last week, Saudi Arabia said it planned to cut output by an extra 1 million barrels per day in February and March.

“Saudi Arabia in particular is ensuring, through its additional voluntary production cuts, that the market is undersupplied, if anything,” said Eugen Weinberg of Commerzbank.

Brent crude lifted sharply (+1.6pc) to $US56.53 per barrel


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