Friday 19th October 2018

OPENING CALL: The Australian market looks to open lower with SPI futures down 51 points.

Australian stocks turned higher late in the session, capping an afternoon-long rebound from early weakness and regional declines, as the energy sector rebounded strongly to shrug off the overnight slide in oil prices.
Investors punished U.S shares of fast-growing tech companies anew intraday as concerns about geopolitical tensions and the state of the global expansion weighed on stock prices around the world.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian stocks turned higher late in the session, capping an afternoon-long rebound from early weakness and regional declines, as the energy sector rebounded strongly to
shrug off the overnight slide in oil prices. The S&P/ASX 200 rose 0.06% to 5942.4 as energy finished down 0.1%. It had fallen as much as 1.5% in the morning. Materials didn’t bounce similarly, though its decline did shrink to 0.7% by day’s end. Health care slid 1.5%. But the heavily weighted financials climbed 0.4% and REITs advanced 0.8%. Individually, Afterpay bounced 14% after the record 19% swoon Wednesday as fintechs were battered by a Senate inquiry into the sector.

US Markets

Investors punished shares of fast-growing tech companies anew intraday as concerns about geopolitical tensions and the state of the global expansion weighed on stock prices around the world. The Dow Jones Industrial Average was down 372 points shortly after 2 p.m. Eastern time. It had recovered a bit after being down roughly 470 points earlier in the afternoon. The declines, which put the Dow industrials and S&P 500 on pace to end lower for a fourth straight week, hit formerly highflying tech stocks particularly hard, sending the Nasdaq Composite down more than 2% while Netflix lost 4.3% and Facebook slipped 3.5%. Caterpillar, often considered a proxy investors’ views on the state of global trade, shed more than 3%. U.S. declines accelerated midday after Treasury Secretary Steven Mnuchin said that he wouldn’t be participating in an investment conference in Saudi Arabia amid mounting concern that the kingdom may be complicit in the disappearance and suspected death of a dissident journalist.

Commodities

IRON ORE: 72.07s
-0.67 (November contract)

Oil Futures

Brent crude oil fell below the $80-a-barrel threshold for the first time in nearly a month due to a further slump on Wall Street and an unexpectedly large rise in U.S. inventories. Light, sweet crude for November delivery ended 1.6% lower at $68.65 a barrel on the New
York Mercantile Exchange. Brent crude, the global benchmark, ended 0.9% lower at $79.29 a barrel, its lowest settle value since Sept. 21. Earlier in October, Brent temporarily breached the $85-a-barrel level for the first time in roughly four years. But prices have come under pressure over the past week amid global stock market turmoil and signs of weakening oil demand. Both the International Energy Agency and OPEC last week lowered their oil demand growth forecasts for this year and next, in part due to a gloomier macroeconomic outlook.

Forex

The dollar extended gains, as investors sought safe harbor assets amid a sharp decline in U.S. stocks. The WSJ Dollar Index, which tracks the greenback against 16 other currencies, was recently up 0.2% to 90.01. Major U.S. stock indices recorded steep declines as market volatility jumped, sending investors into traditionally safe assets like gold and the Japanese yen. Front-month gold for delivery rose 0.2% to $1226.50 per troy ounce on the Comex division of the New York Mercantile Exchange. The dollar slipped 0.5% against the yen to Y112.18. Robust U.S. economic numbers also lifted the dollar. Data from the Federal Reserve Bank of Philadelphia’s Manufacturing Business Outlook Survey’s index of business activity showed that manufacturing activity continued to grow in the mid-Atlantic region in October. Firms reported increases in both employment and the average workweek. The dollar has also edged higher after minutes released Wednesday from the Federal Reserve’s latest meeting suggested officials intend to keep raising rates at the current pace.

European Markets

The Stoxx Europe 600 index closed down 0.42% at 362.03 as equities edge lower, driven by losses in HeidelbergCement and Elisa Oyj, down by 8.6% and 7.4%, respectively, on the day. Regionally, Germany fared worse, with the DAX 30 down nearly 1%, Italy’s FTSE MIB down 1.9%, and Spain’s Ibex 35 down 1.1%. France, however, showed a slightly better performance with the CAC 40 down 0.5%. The U.K.’s FTSE 100 also closed down 0.4%, despite a weaker sterling. The U.K. and EU haven’t made much progress on Brexit negotiations during the EU summit this week. “Comments from Juncker that he expects a deal seems to chime with the recent rhetoric from both sides, yet the inability to break the deadlock this time has certainly raised the chances of a no-deal,” said Joshua Mahony, market analyst at IG.

Asian Markets

Selling deepened in a number of Asia-Pacific markets in the afternoon, leaving them near session lows. Indexes in Japan and South Korea fell nearly 1% each, and those in Indonesia and Hong Kong followed suit. But the biggest story again was China, where investors continued to bail from equities. Benchmarks there fell more than 2% as the dollar moved closer to CNY7, a level not seen in nearly two years. The Philippines rose, while India was closed for a holiday. The Shanghai Composite Index closes down 2.9% at 2486.42 while the Shenzhen Composite Index was down 2.7% at 1232.01. An uptick in the yen during Asian trading helped add to pressure for Japanese stocks after two good days, finishing near the day’s worst levels. The Nikkei dropped 0.8% to 22658.16, with energy stocks joined to the downside by factory-automation stocks.

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