Thursday 1st November 2018

OPENING CALL: The Australian market looks to open higher with SPI futures up 26 points.

A rally in the final minutes lifted Australian shares into positive territory for a fourth straight session, though it wasn’t sufficient to counter the sharpest monthly fall for the benchmark ASX 200 in three years.
A surge in technology shares following Facebook’s latest earnings lifted U.S. stocks Wednesday, helping major indexes trim some of their October declines following a punishing period for global investors.

Overnight Summary


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Each Market In Focus

Australian Market

A rally in the final minutes lifted Australian shares into positive territory for a fourth straight session, though it wasn’t sufficient to counter the sharpest monthly fall for the benchmark ASX 200 in three years. After a choppy session, the index finished up 0.4% at 5830.3 as the banks and energy companies led. Still, the ASX 200 was down for a second month running with a drop of 6.1%, dragged lower by financial and resources stocks. The index has fallen 3.9% so far this year, eating into solid advances the past two years. For the day, ANZ picked up 1.1% after its full-year earnings met subdued expectations. AMP rallied 6.9% after pledging to return most of the cash proceeds from the sale of its weal protection and mature businesses to shareholders, while insurer NIB gained 6.3% following an update to its earnings guidance. The banks will remain in focus tomorrow, when its NAB’s turn to release its full-year numbers.

US Markets

A surge in technology shares following Facebook’s latest earnings lifted U.S. stocks Wednesday, helping major indexes trim some of their October declines following a punishing period for global investors. The tech-heavy Nasdaq Composite climbed 2.7%, though it remained down about 8.5% for October and on track for its worst month since 2008. The S&P 500 added 1.9% and was on pace to climb in consecutive sessions for the first time since Sept. 20, but still post its largest one-month drop in more than six years. The Dow Jones Industrial Average climbed 406 points, or 1.6%, to 25281, paring its October drop to about 4.5%. Highflying technology stocks have been among the most sharply sold sectors so far in October, but a rise in Facebook shares after the social-media company’s third quarter earnings report lifted the group Wednesday. Facebook climbed 4.6%, and Netflix, Alphabet and Amazon.com each added at least 5% to pare some of their October drops. Investors have been weighing whether the slump in internet stocks that have long powered the market signals broader worries about the global economy or merely a shift by investors in companies that had generated outsize returns. Some analysts expect that debate, along with signals regarding global economic growth and central-bank policy, to spur further volatility in November.

Commodities

IRON ORE: 72.40s – 0.75 (December contract)

Oil Futures
Forex

The U.S. dollar edged higher as signs of continued labor-market growth helped support expectations for Federal Reserve interest-rate increases into next year. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, rose less than 0.1% to 90.91. The dollar rose 0.2% against the euro and chalked up a 1.1% advance versus the Mexican peso, while climbing against other emerging-market currencies. The dollar rose after two separate reports Wednesday highlighted the continued strength of the U.S. labor market. Analysts said they indicated that the closely watched nonfarm payrolls report, scheduled to be released by the Labor Department on Friday, is likely to show continued gains for the workforce. Federal-funds futures, which investors use to bet on the direction of central-bank policy, early Wednesday showed a 32% probability that policy makers will raise interest rates at least three times by the end of June, up from 28% Tuesday.

European Markets

European stocks gained 1.3% as positive sentiment following upbeat U.S. and Asia trading outweighs downbeat European economic data. The Stoxx Europe 600 rose 4.58 points to 360.11, with the DAX advancing 1.1% and the CAC 40 lifting 2%. “In Europe, markets have taken their cues from the Asia session with a strongly positive open despite some more disappointing economic data, this time from the German economy where retail sales in September rose 0.1% on the month, below expectations of 0.5%,” said Michael Hewson at CMC Markets. Austrian oil major OMV is among the biggest risers, up 5.8% after solid 3Q results.

Asian Markets

Asian stock markets gained Wednesday as Japan held the line on interest rates, and even China marked an advance despite weaker than-expected manufacturing data. Japan’s Nikkei was up 2.1% following robust earnings reports after Tuesday’s closing bell. Overnight gains in U.S. equities also helped the risk-on mood. Chinese equity benchmarks were higher, amid lack of negative surprises from the latest economic data. The official manufacturing PMI was 50.2 in October compared to consensus 50.6 and 50.8 in the prior month, marking the lowest reading since July 2016. Non manufacturing PMI showed similar weakness, at 53.1 versus 54.1 in September, its lowest in 14 months. Despite that, Chinese stocks rose, with the Shanghai Composite up about 1.3% and the smaller-cap Shenzhen Composite up 1.3%. Hong Kong’s Hang Seng Index also rose about 1.6%, with Sunny Optical up 5% and AAC rising 4.7%. Chinese energy stocks did well, too, with gains for China Shenhua and PetroChina. Among other major stocks, Tencent rebounded over 5%, AIA added 1.8% and Xiaomi rose 4%.

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