The overnight reversal of heavy losses on Wall Street helped the Australian sharemarket finish in the black today, but early gains were halved as US-China trade-war fears lingered.
Last night US stocks were down nearly 3 per cent following the arrest of Huawei’s chief financial officer, but the S&P 500 index rallied to finish down just 0.2 per cent following a newspaper report the US Federal Reserve might pause its rate-rise cycle.
The S&P-ASX dodged the worst of yesterday’s selling that saw European markets down 3 per cent, but it still climbed 0.8 per cent in morning trade before sliding to close up 23.8 points, or 0.42 per cent, at 5681.5.
Domestic investors shrugged off Reserve Bank deputy governor Guy Debelle’s that the economy was in “uncharted territory” where house price falls occurred while unemployment was still falling, and that there was room for rate cuts if needed
He said although the Reserve still expected to increase rates next year, “consumption was weaker than expected, so we just have to see how it goes over the next few months”.
The Australian dollar was up US0.2¢ at US72.30¢ and government 10-year bond yields little changed at e18-month lows of 2.455 per cent following a sharp reversals from 2.92 per cent back to 2.90 per cent in global benchmark 10-years as US rate-pause hopes countered the trade-war panic.
“Whether this arrest stymies next week’s US-China trade talks is unknown, but the arrest of a very senior officer in this prominent Chinese telecoms company raises for the market the importance of the issue in US-China geopolitical terms, given the prominence of Huawei in the US and global markets,” National Australia Bank economist David de Garis said.
The Shanghai composite index was marginally firmer at the close of the ASX.
Brent crude oil tumbled 3 per cent to $US59.30 a barrel after OPEC ended talks without a deal on oil production cuts for the first time in nearly five years.