Australian market expected to open lower

Australian market expected to open lower

OPENING CALL: The Australian share market is expected to open lower. The SPI200 futures contract expected to open down 12 points.

Yields on U.S. government bonds surged after a solid jobs report eased some of the pressure on the Federal Reserve to move aggressively to cut interest rates.

Huawei has disputed the findings that said its gear is far more likely to contain flaws than equipment from rival companies, characterizing the analysis as incomplete and inaccurate.

Overnight Summary

Each Market in Focus

Australian Market

Australia’s S&P/ASX 200 index shrugged off a poor performance by materials stocks to close up 0.5% at 6751.3, logging an around 2% weekly gain.

Equities have been supported by the central bank cutting interest rates twice in as many months, and the federal government’s tax-cut package, which is expected to boost consumer spending.

Pharma giant CSL advanced 1.6% to A$224.65, while Telstra led telecoms stocks higher with a 0.5% rise to A$3.88. Commonwealth Bank was strongest among the big 4 retail banks, lifting 0.9% to A$82.26.

The pull back in iron-ore prices impacted mining stocks, with BHP falling 1.3% to A$41.29 and Fortescue declining by 4.4% to A$8.80.
In a note, CBA says it expects the fall in iron-ore prices to accelerate from August due to stronger supply and weakening steel demand in China.

US Markets

U.S. stocks stumbled and Treasury yields jumped after a better-than-expected June jobs report clouded expectations of an imminent interest-rate cut by the Federal Reserve.

All three major indexes fell from their records after new data showed U.S. employers hired at a robust pace in June, somewhat dashing investors’ expectations of an interest-rate cut at the Fed’s policy meeting later this month. A sustained slowdown in job growth could potentially nudge the central bank into taking steps that would have
stoked further economic growth.

Instead, U.S. employers added 224,000 jobs last month, according to the Labor Department’s latest data. That topped analysts’ expectations and sent stocks lower after the opening bell.

The Dow Jones Industrial Average fell 43.88 points, or 0.2%, to 26922.12, while the S&P 500 declined 5.41 points, or 0.2%, to 2990.41. The Nasdaq Composite also fell, shedding 8.44 points, or 0.1%, to 8161.79.

Commodities

Gold prices slid following an upbeat June jobs report, logging the largest weekly decline since mid-April as traders dialed back bets that the Federal Reserve will lower interest rates.

Front-month gold contracts for July delivery shed 1.5% to $1,396.70 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices ended the week down 0.9%, their biggest weekly decline since April 18.

The reversal came after anticipation that the Fed will aggressively cut rates later this year had pushed the safe-haven metal to roughly six-year highs earlier in the week.

In other commodity markets, July wheat prices rose 1 1/4 cents to $5.19 1/4 cents.

Oil Futures

Oil futures climbed as tensions in the Middle East grew, but prices suffered their first weekly loss in three weeks as energy-demand worries persist.

A jump in the U.S. dollar, following strong U.S. jobs data, capped the session’s gains for West Texas Intermediate crude prices.

August West Texas Intermediate crude rose 17 cents, or 0.3%, to settle at $57.51 a barrel on the New York Mercantile Exchange. Despite a 1.9% rise on Wednesday, before Thursday’s Independence Day holiday, the contract lost 1.6% for the week, according to Dow Jones Market data.

International benchmark September Brent climbed by 93 cents, or 1.5%, to $64.23 a barrel on ICE Futures Europe. Brent, which settled 0.8% lower on Thursday, declined by 0.8% for the week.

Forex

The U.S. dollar rose after higher-than-expected nonfarm payroll data, with EUR/USD falling early to 1.1233, a two-week low, according to FactSet.

The U.S. added 224,000 jobs in June compared with 72,000 added in May, and well above the 165,000 expected by economists polled by WSJ. The unemployment rate also rose unexpectedly to 3.7% during the same month from 3.6% in May. The payroll data is another set of data suggesting the U.S. economy is strong enough to prevent the Federal Reserve from cutting interest rates.

The WSJ Dollar Index was up 0.46 point, or 0.51%, and up 0.68 point, or 0.76% on the week.

European Markets

European stocks declined, with the Stoxx Europe 600 falling 0.7%.
The index was up 5.24 points, or 1.36%, this week to 390.11, and was up for five consecutive weeks.

The FTSE extended its losses in afternoon trading to close down 0.7%. In Germany, disappointing production data heightened worries of a cooling economy. The DAX was down 61.37 points, or 0.49%, on the day but up 169.73 points, or 1.37%, this week to 12568.53.

The French CAC was down 27.01 points, or 0.48%, on the day but up 54.75 points, or 0.99%, on the week to 5593.72.

Asian Markets

Asian stock markets were mixed.

Hong Kong’s Hang Seng slipped 0.1% while the Shanghai Composite and Japan’s Nikkei both gained 0.2%.

The Hang Seng Index closed down 0.1% at 28774.83, ending the week up 232 points. Geely Automobile extended early declines to end down 6.4% at HK$12.68 and Hengan International Group closed 2.5% lower at HK$57.25. But most other Hong Kong stocks ended roughly flat
today, signaling a cautious outlook for July.

Singapore’s stock benchmark closed lower, dragged by bank and electronics stocks. The Straits Times Index ended down 0.2% at 3366.81.

Malaysian stocks ended lower for the third consecutive day, but rose for the week. Market breadth was negative with losers beating gainers 480 to 350. The Kuala Lumpur Composite Index closed down 0.3% at 1682.53.

Meanwhile, Korean stocks edged up, erasing early tech-led losses to trade in a tight, choppy manner toward the end of the session. The Kospi ended up 0.1% at 2110.59. Tech stocks weighed the benchmark with Samsung Electronics and LG Electronics down 0.8%, and
5.2%, respectively, as their earnings guidance pointed to a sizable decline for their second quarter operating profits.

India shares snap a four-day winning streak after the federal budget didn’t meet street expectation of immediate stimulus that would boost consumption. The BSE Sensex ended 1.0% lower at 39513.39, after crossing the key 40000-level for the first time since June 11
during the day.


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