Thursday 18th July 2019

OPENING CALL: The Australian share market is expected to open lower. The SPI200 futures contract expected to open down 15 points.

U.S. consumers propelled Bank of America’s profit in the latest quarter, though the bank warned it could take a hit from any Federal Reserve rate cuts.

Libra, Facebook’s planned crytocurrency, is facing skepticism from potential consumers, regulators and even some financial backers.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian shares snapped a three-session losing streak to outperform most markets in
Asia-Pacific, with broad gains across most sectors. Finishing near the day’s high, the
S&P/ASX 200 rose 0.5% to 6673.6. That narrows the index’s decline so far this week to
0.4%.
Financial stocks recovered from weakness in the early part of the week, but it was the
consumer staples, industrials and telecom sectors that gained the most today. However,
the energy subindex fell 0.3% with a slide in oil prices. Oil Search dropped another 3.1%
after yesterday’s weaker-than-expected quarterly output figures. BHP logged a 1.4% gain
on the back of a solid fourth-quarter production report.

US Markets

U.S. stocks fell as the start of earnings season exposed some weakness in companies,
potentially damping investors’ outlook for economic growth.
The S&P 500 declined 0.4%, the Dow Jones Industrial Average slipped 0.2% and the Nasdaq
Composite fell 0.1%.
Companies reporting earnings have voiced concern about their growth prospects, as they
face a muddy economic outlook and a high-profile trade dispute between the U.S. and
China.
Major benchmarks had rallied to record heights since Federal Reserve Chairman Jerome
Powell signaled last week that the central bank would likely cut interest rates as early
as this month. He strengthened those expectations this week when he told an audience in
Paris that the central bank is “carefully monitoring” the risks to U.S. growth.
But the market has already priced in the Fed’s move and investors are now focused on
the financial outlook for U.S. companies, said Peter Cecchini, chief market strategist at
Cantor Fitzgerald & Co.

On Wednesday, the industrial sector was one of the biggest drags on the S&P 500. Shares
of railroad company CSX fell 9.6% after it cut its annual outlook late Tuesday, citing
economic uncertainty and a recent shutdown of a major oil refinery it served. The fall
pulled down other railroad companies, sometimes viewed as an economic bellwether, with
Norfolk Southern down 6.1% and Union Pacific slipping 5.8%.

Bank of America, the second-largest bank by assets, reported solid consumer activity
helped boost profit in the latest quarter, but warned that it could take a hit from
expected Fed interest-rate cuts. Its shares advanced 2% to $29.57. The bank’s profit
climbed in consumer banking and wealth management, but was down in the parts of its
business that cater to corporate clients. Other lenders, including JPMorgan Chase and
Citigroup, posted earnings this week that followed the same pattern.

Commodities

Gold futures finished sharply higher, sending prices to a fresh six-year high, as the
U.S. dollar weakened and traders weighed expectations for a U.S. interest-rate cut.
Prices climbed further in electronic trading Wednesday afternoon, following the release
of the Federal Reserve’s Beige Book–the central bank’s periodic examination of the U.S.
economy. The report said the economy is expanding at roughly same “modest” pace as
indicated in the last survey.
The report followed news Tuesday that Fed Chariman Jerome Powell reiterated a speech in
Paris that the economic outlook hasn’t improved since the last Federal Open Market
Committee meeting in June, setting the stage for an interest-rate cut.

Oil Futures

Oil futures ended with a loss, with U.S. prices at their lowest in about two weeks, as
U.S. crude supplies posted a smaller-than-expected weekly decline and stockpiles of
gasoline and distillates saw sizable gains.
August West Texas Intermediate oil lost 84 cents, or 1.5%, to settle at $56.78 a barrel
on the New York Mercantile Exchange. That was the lowest front-month contract finish
since July 2, according to FactSet data.

Forex

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others,
edged lower as investors await signs from major central banks about the extent to which
they intend to ease monetary policy. Officials at the Federal Reserve and the European
Central Bank have indicated that they expect to cut interest rates later this year. The
central banks would be joining policy makers in Australia and New Zealand in easing
policy. Because policy in most countries is supporting growth and inflation, that has
helped dampen market volatility.

European Markets

The Stoxx Europe 600 fell 0.4% after a mixed session in Asia. Telecommunications
equipment maker Ericsson slid 12% on concerns about higher costs that led to a
narrower-than-expected operating margin, according to Citigroup analysts.
Drugmaker Swedish Orphan Biovitrum had one of the strongest showings in the region,
with its stock soaring as much as 13% after the company boosted its full-year forecast.
Telecommunications equipment maker Ericsson suffered one of the biggest falls, with a
drop of more than 6% on concerns about higher costs that led to a narrower-than-expected
operating margin, according to Citigroup analysts.

Asian Markets

The Hang Seng Index ended 0.1% lower at 28593.17 in another day of mixed trading, with
automobiles rising and consumer and pharmaceutical stocks falling. Geely Automobile
closed 3.0% higher, while CSPC Pharma and Sino Biopharma shed 1.5% and 0.7%,
respectively. Today’s decline ended CSPC’s two-day winning streak after a report that
China’s centralized drug procurement program may not hurt pharma companies much. Among
outliers not on the index, IVD Medical jumped 15% after the company said it expects a net
profit bump in 1H.
Indian shares logged three straight sessions of gains, helped by technology and banking
stocks. The BSE Sensex closed up 0.2% at 39215.64, with Tech Mahindra rising 2.3% and HCL
Technologies closing 2.1% higher; Wipro ended down 0.1% ahead of its fiscal 1Q report.
Singapore shares close with a minuscule gain despite worse-than-expected June trade
data. The weaker exports numbers raised expectations of monetary easing by the central
bank. The Straits Times Index closed 0.1% higher at 3364.87.

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