Thursday 14th March 2019

OPENING CALL: The Australian market looks to open higher with SPI Futures up 20 points.

Bucking gains across Asia-Pacific, Australian shares faltered in late trade to finish the session just in the red as the banks and consumer discretionary companies weighed.
U.S. stocks rose intraday, putting the S&P 500 on track for a five-month high after economic data showed fresh signs of stability in the manufacturing sector and muted inflation.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian shares pared losses through the afternoon to settle only modestly weaker, as energy and healthcare companies underperformed. With a spike higher in the final minutes, the S&P/ASX 200 settled 0.2% lower at 6161.2. It’s a fourth straight decline for the benchmark, the longest losing streak since late December, and pulls the market into the red March-to-date. The energy sector logged the sharpest retreat, with Beach Energy, Origin and Santos each losing more than 1%. Healthcare and industrial names also weighed on the market, countering strength in consumer stocks, utilities and telecommunications shares. Gold miners helped offset losers elsewhere, with Newcrest Mining climbing 3%.

US Markets

U.S. stocks rose intraday, putting the S&P 500 on track for a five-month high after economic data showed fresh signs of stability in the manufacturing sector and muted inflation. The benchmark equity gauge added 0.9%, heading for a third consecutive advance and its highest close since early October after falling in every session last week. The Dow Jones Industrial Average climbed 112 points, or 0.4%, to 25667. The tech-heavy Nasdaq Composite rose 1%. Renewed faith in U.S. economic growth and a patient approach by the Federal Reserve regarding interest-rate increases have powered this year’s stock rebound, pushing the S&P 500 up 12% for the year and within 4% of its September record. Despite slowing growth overseas, some analysts expect stable economic activity and the Fed’s cautious stance to keep markets supported moving forward. Wednesday’s market rally was broad, with every S&P 500 sector climbing, led by the health-care, financial and technology groups. Data Wednesday showed demand for long-lasting goods produced by U.S. factories rose in January for the third consecutive month, a sign of momentum for manufacturers. And producer prices edged higher last month, the latest sign that underlying inflation pressures remain tepid and a positive development for investors hoping contained inflation will prevent the Fed from raising rates this year. After worries about a sharp economic slowdown roiled markets last quarter, analysts have said data early in the year has pointed to more gradual weakness that won’t drastically crimp companies’ revenue growth.

Commodities

Gold futures scored a second straight gain, with a climb above $1,300 an ounce sending prices to their highest settlement month to date. U.K. Prime Minister Theresa May’s Brexit plan faces a fresh vote late in the session after a revised deal was rejected on Tuesday. Fears of a disorderly exit by the U.K. from the European Union before the March 29 deadline to formally leave Europe’s trade bloc has helped to drive appetite in haven assets like gold, market experts say. Gold for April delivery rose $11.20, or 0.9%, to settle at $1,309.30 an ounce, with bullion notching a second straight advance–the longest since mid-February, according to FactSet data. Prices for the most active contract marked the highest settlement since Feb. 28. Gold-backed exchange-traded fund SPDR Gold Shares (GLD) also climbed 0.6%. May silver gained 4.3 cents, or 0.3%, to $15.456 an ounce. Among other metals, May copper added 0.2% to $2.936 a pound. April rose 1.2% to $841.70 an ounce and June palladium traded at $1,506.70 an ounce, up 1.1%. “The prospects of an accommodative Chinese monetary policy have boosted the outlook for Chinese auto catalyst demand, which supports palladium,” the Zaner analysts said. “Palladium prices are at historic highs, but this doesn’t seem to be shutting off demand. Palladium is an essential part of automobile pollution control devices.”

Iron Ore: 82.10s – 0.26 (April Contract)

Oil Futures

U.S. oil prices climbed to a four-month high after domestic data showed a counter-seasonal drop in crude-oil inventories, and as supply losses continued from Venezuela and Iran. West Texas Intermediate futures, the U.S. oil standard, ended 2.4% higher at $58.26 a barrel on the New York Mercantile Exchange. That’s the highest close since Nov. 12, when WTI ended at $59.93. Brent crude, the global oil benchmark, ended up 1.3% at $67.55 a barrel on London’s Intercontinental Exchange. Prices surged above the $58 mark after the U.S. Energy Information Administration reported a 3.9-million-barrel weekly decline in domestic supplies of crude oil and a 4.6-million-barrel drop in gasoline supplies. Those sizable declines were unexpected, as was data in the report showing a bullish dip in U.S. oil production to 12 million barrels a day versus last week’s record-high of 12.1 million. The data might end up offering more lasting support beyond Wednesday’s uptick, said analysts at Ritterbusch & Associates in a research note. “We are viewing this recent sharp reduction in U.S. crude and gasoline supply surpluses as bullish dynamics that could keep WTI values supported comfortably above the $55 level for a longer period of time than we had anticipated, even if global risk appetite begins to decline.”U.S. sanctions on the oil industries of both countries — key members of the Organization of the Petroleum Exporting Countries — have curbed their output and exports, limiting the world’s supply of crude oil. The sanctions “have contributed to a significant reduction in global oil supplies,” said Stephen Brennock, analyst at brokerage PVM Oil Associates Ltd. “The Trump administration is clearly eyeing an additional reduction in Iranian crude of several hundred thousand barrels over the coming months. Coupled with Venezuela’s deepening crisis, this may provide the missing ingredients for oil prices to break out of their current range.” Adding to oil’s bullish uptrend was data Tuesday from the EIA’s monthly Short Term Energy Outlook. The agency said it now expects U.S. oil production this year to average 12.3 million barrels a day versus its month-ago forecast of 12.4 million, and said 2020 output could average 13 million barrels a day rather than 13.2 million. That could be a sign that booming production from shale, in which oil is extracted by fracking and horizontal drilling, may be starting to slow. Shale output surged by 1.6 million barrels a day over the past 12 months, to 8.4 million barrels a day.

Forex

The British pound advanced against the U.S. dollar intraday, paring its losses from the prior day when U.K. lawmakers rejected Prime Minister Theresa May’s Brexit divorce deal for a second time. The pound gained about 1.1% against the dollar to 1.3224 in recent trading, according to FactSet. Though the defeat intensified political and business uncertainty in the country, analysts said it appeared unlikely that the U.K. would exit the European Union without a formal pact, spurring a rally in the pound. British lawmakers unexpectedly ruled out a no-deal exit from the EU, likely eliminating the prospect of a chaotic U.K. departure from the bloc that many businesses have depicted as a worst-case scenario for the country’s economy. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, fell 0.2% to 89.82 intraday. The euro gained about 0.2% against the dollar in recent trading, according to FactSet.

European Markets

The Stoxx Europe 600 rose 0.1%, or 0.53 points, to 373.78 as corporate results boost financial stocks and Spain’s Banco Santander gets a broker upgrade. The U.K.’s Standard Life Aberdeen topped the pan-European index, up 2.8% after the pension provider reported in-line results and boosted its dividend. Santander rose 2.2% after RBC Capital Markets upgraded it to outperform from sector perform. Austria’s Raiffeisen Bank International gained 1.7% after it pledged to distribute up to half of its annual profit to shareholders. However, Spanish fashion group Inditex dropped 3.5% after reporting worse-than-expected fourth-quarter results.

Asian Markets

After yesterday’s wide strength, many Asian stock markets have seen declines, with the Shanghai Stock Exchange down 1.1%, Hong Kong’s Hang Seng Index dipping 0.4% and Japan’s Nikkei dropping 1%. Indian shares bucked broad regional weakness to gain for the third straight session on hopes of another rate cut by the central bank. The S&P BSE Sensex closed 0.6% higher at 37,752.17 taking this month’s gains to 4.7%. Singapore shares slipped along with several other markets in Asia amid renewed growth concerns. The Straits Times Index closed 0.5% lower at 3195.59, with nearly two shares down for each that was up. Malaysian stocks index ended higher, boosted by late session gains in select blue chips. The Kuala Lumpur Composite Index closed 0.42% higher at 1,678.24.

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