Australian market expected to open lower 22/07/19

Australian market expected to open lower 22/07/19

OPENING CALL: The Australian share market is expected to open lower. The SPI200 futures contract expected to open down 26 points.

 

The S&P 500 ended the day down 18.50 points, or 0.6%, to 2976.61, while the Dow Jones Industrial Average lost 68.77 points, or 0.3%, to 27154.20.

 

The 2-year Treasury note yield, sensitive to expectations for Fed policy, picked up 3.7 basis points to 1.813%, limiting its weeklong drop to 2.1 basis points.

 

Overnight Summary

 

 

Each Market in Focus

 

 

Australian stocks logged their biggest single-day advance in four weeks, swinging the benchmark index into positive territory for the week. The heavily-weighted big banks and gold producers led broad gains, driving the S&P/ASX 200 up 0.8% to 6700.3. That left it up by less than 0.1% for the week, after last week’s 0.8% retreat.
The mining, financial and utilities sectors each put on gains of more than 1%. National Australia Bank outpaced its peers, climbing 2.2% after it landed Royal Bank of Scotland’s outgoing chief as its next CEO. But Woodside Petroleum fell another 1.2% after yesterday’s weak production numbers, stretching its fall for the week to 6.2%.

U.S. stocks wavered in the past week, torn between mixed corporate earnings reports and shifting expectations of Federal Reserve intervention later this month.
On Friday, the Fed appeared to play down chances of a large interest-rate cut, sending stocks lower. The clarification from the central bank came a day after New York Fed President John Williams said central banks must take swift action when faced with adverse economic conditions, which some investors interpreted as signaling a half-percentage-point rate cut in July. Mr. Williams’s statement sparked a rise in major indexes on Thursday.


But Fed officials are set to cut interest rates by a quarter-percentage-point at their coming meeting, and aren’t prepared for bolder action by making a half-point cut, as analysts and traders have speculated in recent days, The Wall Street Journal reported Friday.
The S&P 500 ended the day down 18.50 points, or 0.6%, to 2976.61, while the Dow Jones Industrial Average lost 68.77 points, or 0.3%, to 27154.20. The Nasdaq Composite dropped 60.75 points, or 0.7%, to 8146.49. All three indexes ended the week lower, though they are still up more than 1% in July following big rises in June.


The yield on the 10-year Treasury note declined this week to 2.048%, while the 2-year-note yield, sensitive to shifting expectations for Fed policy, fell to 1.813%.
Second-quarter earnings also swung individual companies, as the first big week of firms reporting results came to a close with many exceeding beaten-down expectations. Companies that have fallen short of estimates have been swiftly punished by traders, but their losses haven’t been enough to make a big dent in the broader market’s recent gains.


Since July 4, the largest drop in the S&P 500 has been a 1.7% decline from an intraday trading high on June 21 to an intraday low on June 26, according to Dow Jones Market Data.
Among the biggest stocks moving on Friday were Microsoft, whose shares rose slightly after reporting its profits beat expectations and that its cloud-computing business drove revenue to a record, and American Express, whose shares fell $3.58, or 2.8%, to $124.82, after the credit-card company reported a rise in expenses.


With about 15% of companies in the S&P 500 reporting results, earnings are on track to contract 2.1% in the second quarter from a year earlier, according to FactSet. At the end of June, analysts had predicted second-quarter earnings would contract 3% from a year earlier.

The gold futures price fell by US$1.40 an ounce or 0.1% to US$1,426.70 an ounce. The spot gold price was trading near US$1,425 an ounce in late US trade. Over the week gold rose US$14.50 an ounce or 1%. Iron ore rose by US$2.35 on Friday or 2.0% to US$121.85 a tonne. Over the week iron ore rose US$3.30 or 2.8%.

Oil prices edged higher but still logged their worst week since May, the latest turn lower for crude in 2019 as fears of excess supply buffet prices.
West Texas Intermediate futures, the U.S. crude benchmark, inched up 0.6% to $55.63 a barrel on the New York Mercantile Exchange to snap a four-session losing streak. Prices still slid 7.6% for the week, their largest weekly decline since the week ended May 31.
Brent crude, the global price gauge, added 0.9% to $62.50 a barrel on London’s Intercontinental Exchange, trimming its weekly slide to roughly 6%.

The U.S. dollar rallied, retracing much of Thursday’s decline as investors assessed the potential for a large interest-rate cut by the Federal Reserve later this month.
The WSJ Dollar Index fell Thursday by the most in four weeks after New York Fed President John Williams said policymakers needed to confront potential weaknesses more quickly given the prospect that a historically low-interest rate could fall to zero sooner, leaving less room to stimulate growth in a downturn. Officials later issued a
statement that the comments weren’t meant to imply a large rate cut later this month.
The WSJ Dollar Index closed 0.4% higher to 90.01.

In Europe, the pan-continental Stoxx Europe 600 index rose 0.1% following a two-day losing streak. The index eked out a small weekly gain.
France’s Publicis Groupe dropped 6.3% after the advertising giant cut its outlook, prompting a downgrade from analysts at Liberum.
Brewer Anheuser-Busch InBev was among Europe’s biggest gainers, rising 4.8% after the Budweiser maker agreed to sell its Australian subsidiary to Japan’s Asahi Group Holdings in an $11.3 billion deal in an effort to pare its debt load.

In Asia, most benchmark gauges traded higher. Hong Kong’s Hang Seng Index rose more than 1%, buoyed by consumer-goods companies. Japan’s Nikkei 225 index climbed 2%.
Indian shares close lower for the second consecutive day as the ongoing earnings season has failed to inspire confidence so far. The BSE Sensex closed 1.4% lower at 38337.01.


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