Thursday 14th February 2019

OPENING CALL: The Australian market looks to open lower with SPI Futures down 10 points.

Australia’s stock benchmark was pressured by noted declines in some major health-care stocks, resulting in the market missing out on broad gains in Asia Pacific.
U.S. stocks edged higher intraday, supported by optimism about U.S.-China trade negotiations and reports that President Trump is likely to sign a border-security deal that would keep the government open past Friday.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australia’s stock benchmark was pressured by noted declines in some major health-care stocks, resulting in the market missing out on broad gains in Asia Pacific. The ASX 200 fell 0.25% to 6063.6 as health care lost 2.5% amid drugmaker CSL sliding 3.9% following its fiscal first-half report despite a beat-and-raise. That overshadowed a 1.1% gain in energy as oil prices have rebounded the past day. Meanwhile, financials dropped a further 0.3% as last week’s pop continues to fade and REITs slid 1.3%.

US Markets

U.S. stocks edged higher intraday, supported by optimism about U.S.-China trade negotiations and reports that President Trump is likely to sign a border-security deal that would keep the government open past Friday. The Dow Jones Industrial Average climbed 0.6%, after earlier rising as much as 200 points then erasing much of the day’s gains in midday trading. The S&P 500 advanced 0.5%. Both indexes closed Tuesday at their highest levels since Dec. 3 and entered Wednesday’s session up at least 9% for the year but 5.2% or more below last year’s records. The tech-heavy Nasdaq Composite added 0.3%, hovering above the level needed to exit bear-market territory with a rise of 20% from its Christmas Eve low. Jitters about slowing economic growth have eased in recent sessions following encouraging signals from the White House about the trade negotiations. Mr. Trump said at a cabinet session Tuesday that he was willing to push back a March 1 deadline for a trade agreement if continuing talks between the U.S. and China appeared to be moving along. Recent signs of progress have fueled hopes that negotiators will be able to reach at least a partial trade deal in time to avert another round of tariffs. And fears about another partial government shutdown slowing U.S. economic activity have also cooled. Mr. Trump signing the border-security deal would mark a potential concession by the president on his demands for border-wall funding. “Investors are looking at things glass half full so far this year,” said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management. “The U.S. economy so far has been able to sustain.” Still, some caution against reading too much into recent trade progress with many details of a possible agreement still uncertain.

Commodities

Iron Ore: 83.90 + 0.70 (March Contract)

Oil Futures
Forex

The U.S. dollar resumed a climb against many of its rivals early Wednesday after a brief period of jerky trading, as market participants digested reports surrounding Brexit, as well as updates from global central banks and myriad economic data, including a key inflation report in the U.S. The popular ICE U.S. Dollar Index had been inching higher before a sudden and short-lived pop in the British pound briefly pushed the gauge lower. The index since recovered and was last up 0.3% at 96.981. For the Federal Reserve, which appears to have taken its foot of the gas in terms of further interest rates increases, this creates an environment almost too good to be true: “They don’t have to worry about deflation but are also perfectly fine to hold their monetary policy where it is,” said Minh Trang, senior FX trader at Silicon Valley Bank. The British pound despite its brief spike into positive territory was in the red for much of early Wednesday. The currency was last down at $1.2878, versus $1.2890 late Tuesday. Earlier harmonized U.K. consumer price inflation data showed a drop to -0.8% in January, worse than expected. On the year, harmonized CPI stood at 1.8%. Core non-harmonized inflation read 1.9% year-over-year in January. The euro was weaker at $1.1288, compared with $1.1327. Industrial production data for December showed a contraction of 0.9% in December, and 4.2% year-over-year. Versus the Japanese yen , the dollar held stronger ahead of Japanese gross domestic product growth data and retail sales due to be reported late Wednesday in New York, which is early in the Asian Thursday session. One dollar last fetched Yen110.88, up 0.4%. Among the early top currency performers, the Sweden’s krona and the New Zealand dollar gained amid their steadily hawkish central banks.

European Markets

European shares closed higher, with the STOXX Europe 600 index settling up 0.6% at 364.97, as the prospect of a breakthrough in U.S.-China trade talks lifted risk appetite, boosting equities globally. Spanish stocks underperformed, however, after lawmakers blocked the Socialists’ 2019 budget bill, raising the chances that Prime Minister Pedro Sanchez’s leadership will be challenged by snap elections. Spain’s Ibex 35 index ended flat as a result, while Germany’s DAX rose 0.4% and France’s CAC 40 closed up 0.4%. U.K. stocks outperformed, benefiting from a weaker pound and gains for miners, with the FTSE 100 index ending up 0.8%, while Italy’s FTSE MIB closes up 0.9%. Dutch lender ABN Amro is the biggest pan-European faller after it said fourth-quarter net profit plunged 42% as it booked impairment charges.

Asian Markets

Trade-deal optimism and a strong session for Wall Street yesterday inspired gains across global markets. The Nikkei 225 index jumped 1.3% and the Shanghai Composite rose nearly 2%. Indian shares erased early gains to end down despite lower inflation data and positive global cues. The S&P BSE Sensex closed 0.3% lower at 36,034.11 after rising as much as 0.6% in early trade. Losses in banking stocks and index heavyweight Reliance Industries pulled down the index. Investors are worried about the earnings growth prospects despite improving macro data. Korean stocks logged decent gains throughout today’s trading, with the country’s benchmark little changed after opening higher amid broad gains across Asia. The Kospi closed up 0.5% at 2201.48, a third straight gain after 4 consecutive declines.

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