An agreement to curtail oil production announced overnight saw crude prices surge, the USD lift again, the global bond rout resume and metals prices stabilise. US share markets were flat, but the positive move in industrial commodities has futures for the Asia Pacific region firmly in the green. However, significant data releases may change the course of the trading session.
Oil traders are buying what OPEC is selling at the moment, despite the leaky history of previous production cut agreements. Coming against a backdrop of expected fiscal stimulus in the US, industrial sentiment improved further. Energy, financials and materials were the only groups in the S&P500 to rise. Collectively these sectors account for around 60% of the Australia 200 index, meaning the current futures market lift of 18 points could underestimate todays’ performance.
Capex numbers in Japan and Australia may shape the trading day, potentially in combination with official and unofficial PMIs in China. Expectations are subdued. Japan is expected to record a fall of 0.4% for Q3 capex. In Australia a 3% fall is forecast, supporting the idea that the Australian economy contracted in the quarter. Manufacturing PMIs are expected at 51 on both reads. Any higher reads on any one of these three releases could fuel the improved industrial sentiment fire.
A number of companies will address the market today. Investors may focus on AGM outlook statements from Nufarm, Bank of Queensland and Oroton. CSL is holding an R&D day, and Spark Infrastructure is hosting investors.