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Posted: 2018-01-18 21:20:24

Updated January 19, 2018 08:59:51

Despite a weak trading day on Wall Street, Australian shares are expected to open higher today.

The Australian dollar has surged back to almost 80 US cents.

Market snapshot at 8:10am (AEDT):

  • ASX SPI 200 futures +0.2pc at 5,963, ASX 200 (Thursday's close) flat at 6,015
  • AUD: 79.97 US cents, 57.57 British pence, 65.34 Euro cents, 88.8 Japanese yen, $NZ1.09
  • US: Dow Jones -0.4pc at 26,018, S&P 500 -0.2pc at 2,798, Nasdaq flat at 7,296
  • Europe: FTSE -0.3pc at 7,701, DAX +0.7pc at 13,281, Euro Stoxx 50 +0.1pc at 3,616
  • Commodities: Brent crude -0.3pc at $US69.16/barrel, spot gold -0.1pc at $US1,326.81/ounce, iron ore +0.5pc at $US74.87/tonne

It fell yesterday after the latest job figures revealed the nation's unemployment rate rose to 5.5 per cent.

The local currency's rebound was due to a weaker greenback — amid a possible US government shutdown tomorrow if the congressional Democrats and Republicans can't agree to pass a spending bill.

"The imminent focus is whether or not the US can avoid a government shutdown." said ANZ Bank's senior commodity strategist Daniel Hynes.

"Such an event is certainly not unprecedented by any stretch, but would likely lead to some increased volatility."

What happened on Wall Street?

The main US indexes were weighed down by losses in the utilities, energy and industrial sectors.

The S&P 500 fell 0.2 per cent, while the Nasdaq dropped slightly below breakeven point (by 0.03 per cent).

However, the biggest drop was felt by the Dow Jones index, which closed 0.4 per cent lower.

Wall Street has jumped by almost 5 per cent since the start of the new year — while Australia's ASX 200 has fallen by 0.8 per cent.

Stocks fall on political uncertainty

The weak performance in US markets overnight was partly due to investors' concerns about a potential government shutdown tomorrow.

This could be averted if Republicans and Democrats in Congress can agree to extend a temporary spending bill to fund government operations, with a vote scheduled today.

Democrats are arguing that any compromise needs to include protections for almost 700,000 young, undocumented immigrants, known as Dreamers, who were brought to the US when they were children.

This is in contrast to the Trump administration's hard-line stance against illegal immigration.

If US Congress can reach a bipartisan deal, this would be its third temporary funding extension since October last year.

The last government shutdown happened in October 2013, after Republicans refused to approve spending on former US president Barack Obama's healthcare legislation.

This resulted in a 16-day shutdown which affected up to 850,000 federal employees.

Historically, a government shutdown has led to a short-term pullback in the stock market.

Topics: stockmarket, company-news, economic-trends, currency, australia

First posted January 19, 2018 08:20:24

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