Friday 12th July 2019

OPENING CALL: The Australian share market is expected to open lower. The SPI200 futures contract expected to open down 26 points.

Optimism around a rate cut helped push the Dow industrials on the last leg of its journey to 27000

In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 2.089%, compared with 2.061% Wednesday.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australia shares closed higher on Thursday, following other markets up as investors
globally cheered dovish commentary from U.S. Fed Chairman Powell. The S&P/ASX 200
benchmark finished about 0.4% higher at 6716.1, though that’s still below where the index
closed at the end of last week.
Information-technology shares surged about 1.4% and energy companies were up about 1%
on Thursday. The real estate sector underperformed the broader market with a 0.2% rise;
Australian housing-finance data showed a slip in May from April but was better than
economists expected.

US Markets

A rally in health-care stocks pushed the Dow Jones Industrial Average over 27000 for
the first time after the Trump administration abandoned a plan to curb drug rebates.
The decision canceled a proposal that would have eliminated rebates from government
drug plans, easing concerns of a massive disruption to the U.S. pharmaceutical industry.
Shares of UnitedHealth jumped 5%, leading the Dow industrials 166 points higher to 27027
in afternoon trading.
Broader stock indexes gave back some of their earlier gains in the afternoon following
a jump in bond yields, which rise as bond prices fall. The Dow fell off its highs, the
S&P 500 toed the flat line and the Nasdaq Composite declined 0.2%. At the same time, the
yield on the benchmark 10-year U.S. Treasury note climbed to 2.113% from 2.061% a day
earlier.
Stocks have been supported this week as Federal Reserve Chairman Jerome Powell has
doubled down on signaling the central bank could cut interest rates later this month.

Commodities

The gold futures price fell by US$5.80 an ounce or 0.4% to US$1,406.70 an ounce. The spot gold price was trading near US$1,406 an ounce in late US trade. Iron ore fell by US$1.95 or 1.6% to US$119.25 a tonne.

Base metal prices were mixed on the London Metal Exchange (LME) on Thursday. Zinc (+1.3%) and nickel (+1.1%) led gains. But aluminium (-1.4%) and lead (-0.3%) both fell.

Oil Futures

U.S. oil futures finished with a loss, giving up earlier gains from storm-related
disruptions to oil output in the Gulf of Mexico, as a reduction to global demand
expectations for OPEC crude raised concerns over growth in U.S. production.
A monthly report from the Organization of the Petroleum Exporting Countries released
Thursday shows that “production outside the group, particularly from the U.S., is still
overwhelming for OPEC,” said Barani Krishnan, senior commodities analyst at
Investing.com.
August West Texas Intermediate oil fell 23 cents, or 0.4%, to settle at $60.20 a barrel
on the New York Mercantile Exchange. Prices rose 4.5% Wednesday to settle at $60.43, the
highest since May 22.

Forex

The dollar ticked up after stronger-than-expected U.S. inflation data but is still down
on the session, in a follow through from Fed Chairman Jerome Powell’s dovish
congressional testimony.
Though market expectations of a 50 basis point rate cut later this month are lower than
they were Wednesday, they are still much higher than they were before Powell’s remarks.
The WSJ Dollar Index was recently down 0.2% at 90.08, reflecting the dollar’s decline
against a broad range of developed and emerging-market currencies.

European Markets

European stocks fell as economic and trade caution offset hopes for a potential double
rate-cut from the U.S. Federal Reserve. The FTSE 100 dropped 0.2%, the DAX was off 0.3%
and the CAC-40 fell 0.2%.
The International Monetary Fund reportedly said the eurozone faces a period of anemic
growth, while risks from Brexit and trade tensions with the U.S. are rising.

Asian Markets

Hong Kong stocks closed higher, in line with other Asian markets, most of which ended
no more than 1% higher from yesterday’s finishing levels. The Hang Seng Index climbed
0.8% to 28431.80, helped by gains for oil and gas, food, and electronic component stocks.
CNOOC and China Petroleum & Chemical Corp were up 2.4% and 1.8% respectively. Geely
Automobile, which ended higher yesterday after a four-day losing streak, fell again, this
time by 1.5% to HK$11.82. After the market closed, Sinofert Holdings said its 1H profit
could rise 35% to 55% on year, while Citic Ltd. said its unit Citic Offshore Helicopter’s
1H profit could rise 105%-120% on year.
Singapore’s benchmark share index closed higher Thursday amid gains across Asian
markets as a Fed rate cut signal buoyed sentiment. The Straits Times Index added 0.3% to
close at 3350.45.
Malaysian stocks tick higher, but some blue chips weighed on a generally positive
result, with gainers exceeding losers by 501 to 329. The Kuala Lumpur Composite Index
closes 0.02% higher at 1679.26.

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