Wednesday 19 December 2018

OPENING CALL: The Australian market looks to open unchanged.

Australia’s stock benchmark, pressured by oil’s latest slump, was unable to avoid a one-percent-plus decline similar to those seen this session in some other Asia-Pacific markets after the overnight skid on Wall Street.
An accelerating decline in the price of oil dragged energy companies deeper into the red for the year, and in late afternoon trading dragged major indexes lower.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australia’s stock benchmark, pressured by oil’s latest slump, was unable to avoid a one-percent-plus decline similar to those seen this session in some other Asia Pacific markets after the overnight skid on Wall Street. The ASX 200 ended down 1.2% at 5589.5, with the energy sector sliding 2.7%, notching a 14-month low, while financials lost 1.5%, hitting the lowest in 34 months. But the materials sector eased just 0.2%, keeping nearly all of yesterday’s bounce, and telecoms were flat.

US Markets

U.S. stocks bobbled, as a slide in the price of oil stymied an attempted bounceback by major indexes. An accelerating decline in the price of oil dragged energy companies deeper into the red for the year, and in late afternoon trading dragged major indexes lower. The Dow Jones Industrial Average turned negative in recent trading, after earlier rising as many as 334 points. Besides the selloff in energy stocks and oil futures, it was a relatively subdued day in the stock market Tuesday, as many traders said they were looking ahead to the Federal Reserve’s policy decision Wednesday and any announcements that come with it as the next catalyst for stock swings. The Dow industrials slipped 13 points, or 0.1%, on Tuesday, and the S&P 500 declined 0.4%. The drop in oil prices due to persistent fears of growing supply also spooked some investors. U.S.-traded crude oil fell another 7.3% Tuesday to $46.24 a barrel, putting its losses since Oct. 1 at more than 35%. Energy stocks in the S&P 500 lost 2.4%. Both the Dow industrials and the S&P 500 are down more than 7.5% in December, on pace for their worst month since May of 2010 in the midst of the European debt crisis. The Nasdaq Composite shed 0.1%.

Commodities
Oil Futures

U.S. oil prices fell more than 7% Tuesday to their lowest in nearly 16 months as investors worried about rising output from major oil producers and the possibility of a drop in demand if the global economy sputters. West Texas Intermediate futures, the U.S. oil standard, closed 7.3% lower at $46.24 a barrel on the New York Mercantile Exchange. It was the lowest closing level since Aug. 30, 2017. By tacking on Tuesday’s 7.3% fall to declines Friday and Monday, the oil market has seen the largest three-day decline in percentage terms – a 12.1% drop – in nearly three years. Brent crude, the global oil benchmark, ended 5.6% down at $56.26 a barrel on London’s Intercontinental Exchange. Global markets: Oil began to decline overnight as European and Asian stocks fell Tuesday following a sharp drop Monday on Wall Street, with investors nervous about the outlook for global economic growth. And although U.S. stock markets rebounded some Tuesday, oil prices kept falling throughout the New York session.

Forex

The U.S. dollar was struggling for direction, ahead of the impending Federal Reserve policy decision and as global stocks staged a tepid rebound from a multisession skid. While the dollar benefited from haven flows during times of market stress before, this week doesn’t show the same pattern. Market participants are also awaiting Wednesday’s Federal Reserve monetary policy decision, at which a 25 basis point interest rate increase is expected. Nonetheless, President Donald Trump once more reiterated that he wouldn’t agree with a rate hike in a tweet Tuesday morning. The ICE U.S. Dollar Index was last little changed at 97.124.

European Markets

The Stoxx Europe 600 index closed down 0.8% at 340.46 on caution ahead of a likely U.S. interest rate increase on Wednesday and concerns about the global economic outlook. Oil companies and miners were among the biggest fallers as oil and metals prices drop. Utility companies also lost ground, with Electricite de France the biggest pan-European faller, down 4.9%. Retailers rebound after Monday’s sharp fell, with Zalando up 5.5%. The FTSE 100 slid by 1.1% due to its relatively high weighting of miners and oil companies. Germany’s DAX outperformed, falling 0.3%, France’s CAC 40 ended down 0.95%, Italy’s FTSE MIB down 0.3% and Spain’s Ibex 35 down 1.3%.

Asian Markets

Stocks sold off more heavily in Asia, where Japan’s Nikkei fell 1.8% and Hong Kong’s Hang Seng traded 1.1% lower. Most other indexes fell by slightly less. “The selloff has continued to be orderly and when I see moves like this, I think it’s not aggressive sellers as much as it’s a lack of buyers,” said JJ Kinahan, chief market strategist at TD Ameritrade. Stubborn worries that global growth is slowing and a lack of detail behind warmer trade rhetoric between Washington and Beijing mean investors will begin 2019 on an uncertain footing, with businesses currently stymied by a lack of information.

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