Tuesday 5th March 2019

OPENING CALL: The Australian market looks to open lower with SPI Futures down 43 points.

Australian stocks slowly edged back from midday highs this afternoon, though the market still logged a six-month best even while posting a gain less than many in Asia today.
U.S. stocks turned lower intraday, erasing early gains as investors continued to track trade negotiations between the U.S. and China as the two nations appear to inch closer to a pact.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian stocks slowly edged back from midday highs this afternoon, though the market still logged a six-month best even while posting a gain less than many in Asia today. The ASX 200 rose 0.4% to 6217.4 in climbing for a fourth-straight day and 10 of the past 12. Materials advanced 0.7% after Friday’s pullback, health care rallied 1% and IT jumped 2.1%. But yield plays declined on fresh end-of-week gains in bond yields.

US Markets

U.S. stocks turned lower intraday, erasing early gains as investors continued to track trade negotiations between the U.S. and China as the two nations appear to inch closer to a pact. The Dow Jones Industrial Average, which has risen for nine of the past 10 weeks, slid 287 points, or 1.1%, to 25738, after climbing more than 100 points early in the session. The S&P 500 lost 0.7% and the Nasdaq Composite shed 0.6%. All 11 sectors in the S&P 500 were lower, led by declines in heath-care, technology and financial stocks. The Wall Street Journal reported Sunday that the U.S. and China were in the final stages of completing a trade deal after months of sparring. Beijing was offering to lower tariffs and other restrictions on U.S. goods while Washington was considering removing most, if not all, sanctions levied against Chinese products since last year. Investors likely paused after not hearing from a Chinese delegation on being close to a trade deal, said R.J. Grant, director of equity trading at KBW Inc.

Commodities

Gold futures settled lower for a sixth straight session, the lowest finish in nearly six weeks. A turn lower for U.S. benchmark stock indexes, which had seen earlier support from optimism over a potential U.S.-China trade deal, failed to boost haven demand for the precious metal.

Iron Ore: 83.19 – 2.70 (April Contract)

Oil Futures

Oil prices rose on further production cuts by OPEC and fresh hopes a U.S.-China trade deal will be reached. West Texas Intermediate futures, the U.S. oil standard, ended 1.4% higher at $56.59 a barrel on the New York Mercantile Exchange. Prices have risen 12 of the past 14 sessions and are 25% higher from the start of the year. Brent crude, the global oil benchmark, rose 0.9% to $65.67 a barrel on London’s Intercontinental Exchange. The crude market recovered some of Friday’s losses at the start of the week, with traders homing in on continued signs that the Organization of the Petroleum Exporting Countries and its allies are delivering on promised production curbs. Output from OPEC members came down by 560,000 barrels a day last month, to 30.5 million barrels a day, according to a Bloomberg survey. Reuters, meanwhile, reported a 300,000 barrel-a-day drop month-on-month in February, to 30.68 million barrels a day. Oil markets were also getting a boost from a Wall Street Journal report Sunday that said the U.S. and China were in the final stages of completing a trade deal after months of sparring. Oil markets received bullish news Friday afternoon from Baker Hughes that the number of rigs drilling for oil in the U.S. fell by 10 last week to 843, a level not seen in 10 months, while the total rig-count including natural gas also hit a 10-month low of 1,038. It was the second straight week of declines, and could point toward less-robust U.S. crude production-growth than many have anticipated.

Forex

The dollar edged higher intraday as investors reacted to signs of progress in trade talks between the U.S. and China and recent economic data. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.1% at 89.82. The Wall Street Journal reported Sunday that the U.S. and China were in the final stages of completing a trade deal after months of negotiations. Some investors had worried that the trade conflict would contribute to a slowdown in global growth and eventually weigh on the U.S. economy. Some market participants also have been cheered by better-than expected U.S. data in recent days. The Commerce Department reported Thursday that gross domestic product rose at a 2.6% annual rate in October through December. That was down from the 3.4% growth rate in the third quarter, but better than the 2.2% forecast by economists surveyed by the Journal. Market participants also are looking ahead to U.S. jobs numbers for February, due Friday. Signs that the robust U.S. jobs market softened in the past month could bolster the case for the Federal Reserve to remain cautious on interest rates and weigh on the dollar, which becomes less attractive to yield-seeking investors when rates aren’t expected to rise.

European Markets
Asian Markets

Profit-taking hit Chinese equities this afternoon after another round of big gains, taking some steam out of what has been a white-hot market. The startup heavy ChiNext, which jumped as much as 5.3% early afternoon, finished with a 3.3% gain. The Shanghai Composite closed up just 2.2%–it had risen 4%–and the Shenzhen Composite climbed 1.1% as the country’s small caps again logged Asia leading advances and multimonth highs. Hong Kong’s Hang Seng Index, which is dominated by mainland Chinese companies and other businesses that are heavily exposed to China, advanced 0.5%. Major financials earlier hit a 13-month best before settling 0.85% higher. Growth stocks, though, outperformed for much of the day. South Korean stocks turned lower in midafternoon trading to log a soggy return from Friday’s holiday. The Kospi ended down 0.2% at 2190.66 despite fresh, broad gains in Asia. Construction stocks built on Thursday’s heavy selling following the early and abrupt end to the Kim-Trump summit.

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