Monday 1st July 2019

OPENING CALL: The Australian share market is expected to open lower. The SPI200 futures contract expected to open up 18 points.

Deutsche Bank is weighing whether to cut 15,000 to 20,000 jobs, or more than one in six full-time positions globally, the latest sign of the once-mighty bank’s retreat from global prominence.

U.S. government-bond yields fell for a third straight quarter, reflecting how worries over slowing growth and global trade have boosted investor demand for haven assets.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

The S&P/ASX 200 declined 0.71%, or 47,50, to 6,618.80.

US Markets

Stocks notched solid gains during a second quarter defined by an escalation in the
U.S.-China trade fight and a perceived shift in the Federal Reserve’s appetite for
interest-rate cuts.
With equities edging higher, the S&P 500 closed up 6.9% for the month and 3.8% for the
quarter. That marks its best June performance since 1955, when it gained 8.2%. The rise
marks a reversal from the previous month, when the S&P 500 lost 6.6% in its worst May
since 2010. Halfway through 2019, the S&P 500 has risen 17%, its best first half of the
year since 1997.
Nearly all the S&P’s quarterly gains were notched in April, as first-quarter earnings
topped beaten-down expectations and investors embraced the belief that the U.S. and China
were close to reaching a detente in trade negotiations. But that optimism vanished in May
after President Trump said he would drastically ramp up U.S. tariffs on Chinese imports
as talks fell apart. China and the U.S. took turns ratcheting up their rhetoric and
threatening higher tariffs. Stocks and investor confidence tumbled in response.

Commodities

August gold rose $1.70, or 0.1%, to settle at $1,413.70 an ounce. Prices had settled at
$1,418.70 Tuesday before pulling back. That was the highest settlement for a most-active
contract since Aug. 28, 2013, according to FactSet data.

Oil Futures

U.S. oil prices settled lower, but gained more than 9% for the month of June, as
traders awaited the outcome of Sino-U.S. trade talks in Japan Saturday and meetings early
next week between key oil producers.
Traders are eager to hear of any progress in Sino-U.S. trade discussions at the Group
of 20 meetings, which could help to support expectations for oil consumption by the two
largest economies in the world.
Also in focus was next week’s gathering of the Organization of Petroleum Exporting
Countries, which should include a production update and potential commentary on tensions
between the U.S. and Iran, friction that is seen posing a risk to oil production and
shipping.
August West Texas Intermediate crude lost 96 cents, or 1.6%, to settle at $58.47 a
barrel. Prices on the New York Mercantile Exchange settled at the highest for a
front-month contract since May 22. Month to date, prices climbed 9.3%, according to Dow
Jones Market Data.

Forex

The WSJ Dollar Index was recently down 0.2% to 89.58, as investors geared up for trade
talks between President Trump and Chinese President Xi Jinping at the Group of 20 meeting
in Osaka, Japan.
A failure to reach an agreement at the summit would likely boost haven currencies like
the Japanese yen and Swiss franc while weighing on the dollar and risk-sensitive emerging
market currencies, some investors believe.
Ten-year Treasury yields are down to 2.005% from 2.007%.

European Markets

The Stoxx Europe 600 index was up 2.66 points, or 0.70%, to 384.87.
The index now is up 1.52% for the quarter.
The FTSE 100 closed up as hopes grew of an easing of U.S.-China trade tension, with
world leaders meeting at the G20 summit. Housebuilders were boosted after Boris Johnson,
frontrunner for the leadership of the Conservative Party, said he would consider cutting
taxes on property deals in the case of a no-deal Brexit.
The German Dax was up 127.77 points, or 1.04%, to 12398.80 and was up 7.57% for the
quarter, while the French CAC was up 45.36 points, or 0.83%, and was up 188.44 points, or
3.52%, on the quarter to 5538.97.

Asian Markets

Asian stocks slipped as investors awaited a meeting between presidents Donald Trump and
Xi Jinping at the Group of 20 summit, where trade negotiations will be top of the agenda.

South Korean stocks edged lower, allowing the market to rise while a number of others
in Asia logged weekly declines. The Kospi fell 0.2% to 2130.62, leaving it 0.2% higher
for the week, a fourth-straight gain. It also rebounded 4.35% this month, slashing the
second quarter’s decline to 0.5%.
Japanese stocks were down all day amid a rebounding yen, but an end-of-day jump
narrowed the Nikkei’s decline to 0.3%, finishing at 21275.92. That allowed for a 0.08%
weekly gain, a fourth-straight advance. It also rose 0.3% for the second quarter and 3.3%
this month. Just 1/3 of the Topix’s 33 sectors rose, but they included the export-heavy
precision-instruments sector at 0.8%. Meanwhile, commodities stocks also fell in Japan,
which fell more than 1% along with financials.
While falling on the day and for the week, Chinese equities still reverse a bit of
May’s skid in rising 2%-3% for June. But that wasn’t enough to offset quarterly drops for
the market, with the Shanghai Composite shedding 3.6% and the Shenzhen Composite skidding
7.8%. They respectively fell 0.6% and 1% to pace the pullback for Asian stocks as the
G-20 begins. Shanghai- and Hainan-related stocks surged on the latest policy to expand
free-trade zones while blockchain and 5G stocks were pressured.

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