Wednesday 19th June 2019

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract has closed up 39 points.

U.S. stocks rallied intraday after President Donald Trump signaled that trade talks with China had taken a turn for the better.

 

European Central Bank President Mario Draghi signaled the bank could roll out fresh stimulus as soon as July, sending the euro lower against the dollar and prompting an unusual rebuke from President Trump.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Aussie stocks rose steadily amid the local dollar’s decline as the RBA’s June meeting
minutes signaled further central-bank policy easing ahead.
The S&P/ASX 200 notched another 11 1/2-year closing high, rebounding 0.6% to 6570.0.
Commodity stocks rose a little as prices cooled Monday but consumer stocks climbed
about 1% while health care and IT advanced more than that.

US Markets

U.S. stocks rallied intraday after President Donald Trump signaled that trade talks
with China had taken a turn for the better.
The Dow Jones Industrial Average gained 354.15 points, or 1.4%, in afternoon trading
while the S&P 500 added 1.1% and the Nasdaq Composite rose 1.6%.
Stocks opened moderately higher but jumped after Mr. Trump tweeted that he and his
Chinese counterpart Xi Jinping had a “very good telephone conversation” and would meet
later this month in Japan. The threat of a mounting trade conflict with China has weighed
on U.S. economic data and prompted uncertainty among investors.
Technology stocks with significant Chinese exposure were among the biggest gainers.
Apple climbed 2.5%, while chip makers Intel and NVIDIA were up 3% and 5.9%, respectively.
Industrials also outperformed. Equipment-maker Caterpillar, whose shares are often seen
as a bellwether for the global economy, rose 2.7%.

Commodities

Gold prices climbed to settle at their highest in 14 months, as comments made by
European Central Bank President Mario Draghi were seen as setting the stage for lower
interest rates.
Draghi’s comments came ahead of the Federal Reserve’s monetary policy statement due
Wednesday.
While Fawad Razaqzada, technical analyst at Forex.com, does not expect the central
bank to announce a cut to key interest rates Wednesday, “it is very likely to prepare the
markets for a July trim,” he said.
If so, Razaqzada sees no reason for the bond market rally to falter Wednesday “or at
any time soon,” reflecting expectations for U.S. and other developed economies to slow.
Lower bond yields and borrowing costs could be good news for stocks as well as
commodities which offer no yield assets such as gold and silver, he said.
August gold climbed $7.80, or 0.6%, to settle at $1,350.70, the highest most-active
contract settlement since April 18, 2018, according to FactSet data.
In other commodity markets, July wheat prices fell 8 cents to $5.31 1/2 cents.

Oil Futures

U.S. oil futures rallied as a tweet from President Donald Trump hinted at progress in
U.S.-China trade talks, easing the market’s worries about a potential slowdown in energy
demand.
The news also contributed to a sharp climb among benchmark U.S. stock indexes, lifting
risk-on sentiment in the market. July West Texas Intermediate oil rose $1.97, or 3.8%, to
settle at $53.90 a barrel on the New York Mercantile Exchange. That was the highest
front-month contract finish since June 7, according to FactSet data.

Forex

European Central Bank President Mario Draghi signaled the bank could roll out fresh
stimulus as soon as July, sending the euro lower against the dollar and prompting an
unusual rebuke from President Trump.
Mr. Draghi said that ECB policy makers would consider in the coming weeks how to adapt
their policy tools “commensurate to the severity of the risk” to the economic outlook.
The euro was off 0.2% at $1.1195 versus the U.S. dollar in recent trade, after sinking
to a two-week low at $1.1181.
The ICE U.S. Dollar Index, a measure of the currency against a basket of six major
rivals, was up 0.1% at 97.657. The index is up 1.5% so far this year and off 0.1% in
June.

European Markets

The Stoxx Europe 600 ended the day up 6.32 points, or 1.67%, to 384.78.
Europe’s main markets rallied after Mario Draghi’s dovish comments on the prospects of
using additional stimulus, David Madden of CMC Markets said. “The possibility of lower
interest rates, and/or, a return to the bond-buying scheme has acted as a green light to
the bulls,” Madden said.
Italy’s FTSE MIB led the pack, closing 2.5% higher. France’s CAC 40 closed up 2.2%,
Germany’s DAX ended 2% higher and Spain’s IBEX 35 rose 1.2%.

Asian Markets

Asian equities were able to maintain their gains after a rather middling global session
on Monday to start the week.
The region’s stocks saw wide buying activity, with the strongest being Hong Kong, with
its benchmark up more than 1%. The market ran to session highs in the afternoon after
news that Chief Executive Carrie Lam would hold another press conference in the next
hour. Singapore’s main index was strong throughout the day, almost sporting a 1% gain in
the afternoon trade. But most indexes closed with a sub-0.5% advance.
The noted laggard was Japan, with the Nikkei falling 0.7% despite moderate gains for
the yen.
Hong Kong stocks were among the day’s strongest performers, cementing its spot in the
afternoon after rallying to session highs on word that Chief Executive Carrie Lam would
meet the media at the close of trading, amid the protests that have gripped the city. She
offered an apology for her handling of the matter. Cooling a bit into the close, the Hang
Seng Index rose 1% to 27498.77 and the Hang Seng China Enterprises Index climbed 0.8%.
Hong Kong Exchanges and Sun Hung Kai Properties advanced some 2.5% each, while internet
heavyweight Tencent rose 1.5%. Meanwhile, beauty-products firm L’Occitane jumped 8.7%
after its F4Q report.
South Korean stocks were higher all day, ending a four-day losing streak, as the market
also got a lift from gains across the region. The Kospi rose 0.4% to 2098.71 as
electronic giant Samsung advanced 1%.
Meanwhile, morning strength in Indonesian equities was maintained in the afternoon,
leaving the market among Asia’s biggest gainers. The Jakarta Composite Index rose 1.1% to
6257.33 after a 16-point adjustment higher at day’s end–finishing at session highs and
ending a four-day losing streak.

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