Tuesday 13th November 2018

OPENING CALL: The Australian market looks to open lower with SPI futures down 65 points.

Australia’s stock benchmark steadily rebounded from early weakness to finish at session highs.
The Dow Jones Industrial Average tumbled more than 500 points intraday as anxiety over the health of technology behemoths sparked a broad retreat from the stock market.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australia’s stock benchmark steadily rebounded from early weakness to finish at session highs. The ASX 200 climbed 0.3% to 5941.3, adding to last week’s gains as most Asia Pacific markets fell then. Energy stocks were key, rising 1.2% as oil prices have bounced more than 1% following weeks of consistent declines. Utilities jumped 2.2% after last week’s beatdown on the APA takeover coming into question. But the heavily weighted financial sector lost 0.3% and IT shed 0.8%.

US Markets

The Dow Jones Industrial Average tumbled more than 500 points intraday as anxiety over the health of technology behemoths sparked a broad retreat from the stock market. Monday’s selling began in the technology sector, then morphed into a broad rout that dragged lower everything from oil conglomerates to manufacturers to entertainment firms. It was the latest setback for the stock market, which has struggled to break out to new highs since the S&P 500 capped off its worst month in more than seven years. The Dow industrials fell 518 points, or 2%. The S&P 500 lost 1.6% and the Nasdaq Composite dropped 2.4%. Some pinned the retreat to worries that risky assets as a whole look increasingly vulnerable to a reversal following a yearslong rally. Others said flaring tensions in Italy and the U.K. were contributing to the general unease in the markets. And still others blamed nervousness around the future of chip makers and consumer device companies that had driven much of the bull market’s gains earlier in the year. Apple fell 4.7% after one of its suppliers, Lumentum, cut its earnings and revenue outlook-triggering fresh worries about demand for the company’s iPhone line. The fall of companies like Apple, among others, has often preceded broader pullbacks this year as investors have questioned what sectors can ride higher as the global economy shows more signs of slowing. Among the biggest decliners in the Dow industrials: Goldman Sachs. Shares tumbled 7.1%, wiping out more than 100 points from the blue-chip index of 30 stocks, as concerns grew over the bank’s interaction with a financier charged with stealing billions of dollars from the 1Malaysia Development Bhd. investment fund. General Electric also took a hit, dropping 7% and heading for its fourth consecutive daily decline after comments from the firm’s chief executive on CNBC failed to assuage investors’ worries about the future of the industrial conglomerate. As stocks slumped, investors flocked to shares of dividend-paying sectors that tend to perform well during periods of heightened volatility. The utilities and real-estate sectors rose 0.8% and 0.4% apiece, the only two groups in the S&P 500 to post gains so far in the day.

Commodities

IRON ORE: 72.20s – 0.96(December contract)

Oil Futures

Oil prices declined, giving up earlier gains to push the U.S. benchmark below $60 a barrel for the first time since February, down a record 11 sessions in a row, after President Donald Trump said he hopes OPEC doesn’t cut crude production. The move lower marks a reversal from earlier gains in prices, which had found support after the Organization of the Petroleum Exporting Countries and its allies signaled a tepid willingness to again cut production amid hefty global supply.

Forex

The dollar jumped to its highest level in a year-and-a-half intraday, propelled by expectations for higher U.S. interest rates and an uncertain political landscape in Europe. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.4% at 91.00, on track for its highest close since March 2017. Monday’s biggest gains for the dollar came against the British pound and the euro in a critical week for both Brexit negotiations and the Italian budget. The British pound was recently down 0.7% against the dollar at $1.2850, following reports that the U.K. government’s preparations to leave the European Union are close to faltering. On Friday, U.K. Transport Minister Jo Johnson resigned over the lack of progress in Brexit talks, calling for the public to have another say. Weekend media reports also suggested cabinet ministers have expressed doubts about the prime minister’s plan. Meanwhile, the euro was down 0.8% at $1.1244. Pressure on the common currency came ahead of Tuesday’s deadline for Italy to resubmit its 2019 budget plans to the European Commission. The European Union rejected Italy’s draft budget in October as incompatible with the bloc’s rules on fiscal discipline, with the escalating tensions triggering a selloff in the euro and Italian government bonds. Many investors remain concerned that the deadline is likely to pass without substantial changes to the budget, deepening the standoff. The dollar was also slightly stronger against the Chinese yuan amid tensions over U.S. and China trade and security issues. As a raft of concerns cloud the global outlook, U.S. economic data has remained mostly solid. Last week, the dollar got a lift after a gauge of U.S. business prices surged in October, with producer prices increasing the most since late 2012. U.S. economic data later this week is expected to provide further support for the dollar, with the U.S. Labor Department publishing October inflation and real earnings figures Wednesday and the Commerce Department releasing retail sales data for October on Thursday. With the economy firm, the Federal Reserve is also widely expected to continue raising interest rates this year and next. Fed-funds futures tracked by CME Group this morning suggested investors currently price a roughly 76% chance of a rate increase in December, compared with 72% a week ago.

European Markets

European shares closed more than 1% down as political uncertainty continued to weigh on sentiment. The Stoxx Europe 600 ended the session 3.71 points adrift at 362.03, with the DAX down 1.8% and the CAC-40 retreating 0.9%.

Asian Markets

In Asia, Japan’s Nikkei 225 closed 0.1% higher, while Hong Kong’s Hang Seng gained 0.1%. Concerns about slowing growth in China and trade tensions weighing on consumption were assuaged by Alibaba Group Holding Ltd.’s Singles Day on Sunday, when Chinese consumers bought $30.8 billion worth of goods in 24 hours, surpassing last year’s $25.3 billion.

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