Monday 12th November 2018

OPENING CALL: The Australian market looks to open lower with SPI futures down 37 points.

Australia’s stock benchmark held up better than most in the region, allowing the ASX 200 to log a second-straight weekly gain.
U.S. stocks slumped, as renewed global-growth concerns weighed on shares of everything from technology to materials to energy companies.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australia’s stock benchmark held up better than most in the region, allowing the ASX 200 to log a second-straight weekly gain. Falling for just the second day in 11 sessions, the index fell 0.1% to 5921.8 as much of Friday’s drop was erased by a 14.5-point end-of-session adjustment higher. The ASX rose 1.2% for the week. Energy stocks fell 1.3%, but that was largely offset by financials rising 0.2%. Individually, Lendlease plunged 18% after unveiling a A$350 million provision involving its engineering business. That was the stock’s biggest drop since the 1987 crash, coming a day after James Hardie also had its worst session in 31 years on earnings-related news. Its stock was flat today.

US Markets

U.S. stocks slumped, as renewed global-growth concerns weighed on shares of everything from technology to materials to energy companies. Eight of the 11 S&P 500 sectors dropped, with the materials, consumer discretionary and technology groups all losing more than 1%. Trade-sensitive stocks such as Caterpillar, Deere and Freeport-McMoRan slid as President Trump’s trade adviser Peter Navarro criticized Wall Street executives and accused Chinese President Xi Jinping, without mentioning him by name, of failing to live up to highly publicized trade deals. The Dow Jones Industrial Average dropped 201.92 points, or 0.8%, to 25989.30. The S&P 500 lost 0.9%, and the tech-heavy Nasdaq Composite shed 1.7%. All three major indexes ended higher for the second straight week after a run-up following the midterm elections.

Commodities

IRON ORE: 73.16s + 0.16 (December contract)

Oil Futures

Oil prices also continued to slide, pressuring stocks as well. U.S. crude lost 0.8% to settle at $60.19 a barrel, its 10th consecutive session of losses–its longest losing streak since 1984. “Markets currently see dropping oil prices as a sign of slowing global economy,” said Carsten Brzeski, chief economist at ING in Germany. “In my view, dropping oil prices should be rather positive, supporting consumption.”

Forex

The U.S. dollar retained the upper hand versus its rivals, one day after the Federal Reserve kept rates unchanged but signaled that further interest-rate increases were on the horizon. Comments from White House trade adviser, Peter Navarro, in which he called out Wall Street for pushing President Donald Trump toward a trade deal with China, pushed the dollar higher still. The trade narrative has been supportive of the buck, mostly because investors think an all out trade war would be worse for U.S. partners, despite also being bad for the U.S. The ICE U.S. Dollar Index was last up 0.2% to 96.928 on Friday, aiming for a 0.4% gain for the week, its fourth in a row. The buck’s gains added on to a 0.8% rally on Thursday, in its best daily performance since August, according to FactSet data, in the wake of an “unambiguously hawkish Fed statement,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management. The Fed Thursday left its key interest rates unchanged at 2%-2.25%, and said further rate increases would continue. The next increase is expected in December-the fourth of the year. Some market participants voiced concerns that the central bank didn’t address October stock-market volatility. The Mexican peso rallied late Friday, as President-elect Andrés Manuel López Obrador walked back some proposals banking regulation. Mexican banking stocks had suffered on Friday, after López Obrador’s Morena party proposed to cap fees. The British pound was weaker on the day, sliding to $1.2967 from $1.3061 late Thursday in New York. The euro last bought $1.1332, down from $1.1365 late Thursday in New York.

European Markets

The Stoxx Europe 600 index closed down 0.4% at 365.74, hurt by concerns about Italy, the potential for more U.S. interest-rate rises and signs of China’s economy slowing. Italy’s FTSE MIB was the poorest-performing index, down 0.9%, while Germany’s DAX closed flat and France’s CAC 40 was down 0.5%. The U.K.’s FTSE 100 ended down 0.5%, hurt by drops in mining and oil stocks as metals and crude-oil prices fell. Spain’s Ibex 35 falls 0.5%. German steel and technology stock Thyssenkrupp slid 9.1% after a profit warning, its second since July.

Asian Markets

Asian indexes also fell amid worries about China’s slowdown in economic growth. Hong Kong’s Hang Seng closed down 2.4%, the Shenzhen A Share index fell 0.4% and Japan’s Nikkei dropped 1.1%. Auto sales in China dropped 12% in October from a year ago. Markets were also growing tense over Chinese policy makers’ attempts to set tougher targets on bank lending.

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