Australian market expected to open lower 18/07/19

Australian market expected to open lower 18/07/19

OPENING CALL: The Australian share market is expected to open lower. The SPI200 futures contract expected to open down 15 points.

 

U.S. consumers propelled Bank of America’s profit in the latest quarter, though the bank warned it could take a hit from any Federal Reserve rate cuts.

 

Libra, Facebook’s planned cryptocurrency, is facing skepticism from potential consumers, regulators and even some financial backers.

 

Overnight Summary

 

 

Each Market in Focus

 

 

Australian shares snapped a three-session losing streak to outperform most markets in Asia-Pacific, with broad gains across most sectors. Finishing near the day’s high, the S&P/ASX 200 rose 0.5% to 6673.6. That narrows the index’s decline so far this week to 0.4%.
Financial stocks recovered from weakness in the early part of the week, but it was the consumer staples, industrials and telecom sectors that gained the most today. However, the energy subindex fell 0.3% with a slide in oil prices. Oil Search dropped another 3.1% after yesterday’s weaker-than-expected quarterly output figures. BHP logged a 1.4% gain on the back of a solid fourth-quarter production report.

U.S. stocks fell as the start of earnings season exposed some weakness in companies, potentially damping investors’ outlook for economic growth.
The S&P 500 declined 0.4%, the Dow Jones Industrial Average slipped 0.2% and the Nasdaq Composite fell 0.1%.


Companies reporting earnings have voiced concern about their growth prospects, as they face a muddy economic outlook and a high-profile trade dispute between the U.S. and China.
Major benchmarks had rallied to record heights since Federal Reserve Chairman Jerome Powell signaled last week that the central bank would likely cut interest rates as early as this month. He strengthened those expectations this week when he told an audience in Paris that the central bank is “carefully monitoring” the risks to U.S. growth.


But the market has already priced in the Fed’s move and investors are now focused on the financial outlook for U.S. companies, said Peter Cecchini, chief market strategist at Cantor Fitzgerald & Co.
On Wednesday, the industrial sector was one of the biggest drags on the S&P 500. Shares of railroad company CSX fell 9.6% after it cut its annual outlook late Tuesday, citing economic uncertainty and a recent shutdown of a major oil refinery it served. The fall pulled down other railroad companies, sometimes viewed as an economic bellwether, with Norfolk Southern down 6.1% and Union Pacific slipping 5.8%.


Bank of America, the second-largest bank by assets, reported solid consumer activity helped boost profit in the latest quarter, but warned that it could take a hit from expected Fed interest-rate cuts. Its shares advanced 2% to $29.57. The bank’s profit climbed in consumer banking and wealth management, but was down in the parts of its business that cater to corporate clients. Other lenders, including JPMorgan Chase and Citigroup, posted earnings this week that followed the same pattern.

Gold futures finished sharply higher, sending prices to a fresh six-year high, as the U.S. dollar weakened and traders weighed expectations for a U.S. interest-rate cut.
Prices climbed further in electronic trading Wednesday afternoon, following the release of the Federal Reserve’s Beige Book–the central bank’s periodic examination of the U.S. economy. The report said the economy is expanding at roughly the same “modest” pace as indicated in the last survey.
The report followed news Tuesday that Fed Chairman Jerome Powell reiterated a speech in Paris that the economic outlook hasn’t improved since the last Federal Open Market Committee meeting in June, setting the stage for an interest-rate cut.

Oil futures ended with a loss, with U.S. prices at their lowest in about two weeks, as U.S. crude supplies posted a smaller-than-expected weekly decline and stockpiles of gasoline and distillates saw sizable gains.
August West Texas Intermediate oil lost 84 cents, or 1.5%, to settle at $56.78 a barrel on the New York Mercantile Exchange. That was the lowest front-month contract finish since July 2, according to FactSet data.

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, edged lower as investors await signs from major central banks about the extent to which they intend to ease monetary policy. Officials at the Federal Reserve and the European Central Bank have indicated that they expect to cut interest rates later this year. The central banks would be joining policymakers in Australia and New Zealand in easing policy. Because policy in most countries is supporting growth and inflation, that has helped dampen market volatility.

The Stoxx Europe 600 fell 0.4% after a mixed session in Asia. Telecommunications equipment maker Ericsson slid 12% on concerns about higher costs that led to a narrower-than-expected operating margin, according to Citigroup analysts.
Drugmaker Swedish Orphan Biovitrum had one of the strongest showings in the region, with its stock soaring as much as 13% after the company boosted its full-year forecast.
Telecommunications equipment maker Ericsson suffered one of the biggest falls, with a drop of more than 6% on concerns about higher costs that led to a narrower-than-expected operating margin, according to Citigroup analysts.

The Hang Seng Index ended 0.1% lower at 28593.17 in another day of mixed trading, with automobiles rising and consumer and pharmaceutical stocks falling. Geely Automobile closed 3.0% higher, while CSPC Pharma and Sino Biopharma shed 1.5% and 0.7%, respectively. Today’s decline ended CSPC’s two-day winning streak after a report that China’s centralized drug procurement program may not hurt pharma companies much. Among outliers not on the index, IVD Medical jumped 15% after the company said it expects a net profit bump in 1H.
Indian shares logged three straight sessions of gains, helped by technology and banking stocks. The BSE Sensex closed up 0.2% at 39215.64, with Tech Mahindra rising 2.3% and HCL Technologies closing 2.1% higher; Wipro ended down 0.1% ahead of its fiscal 1Q report.
Singapore shares close with a minuscule gain despite worse-than-expected June trade data. The weaker exports numbers raised expectations of monetary easing by the central bank. The Straits Times Index closed 0.1% higher at 3364.87.


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