Australian market expected to open down 10/09/19

Australian market expected to open down 10/09/19

OPENING CALL: The Australian share market is expected to open down. The SPI200 futures contract expected to open down 9 points.

 

Saudi Arabia isn't planning to change its oil production policy, the country's newly appointed energy minister said. But the abrupt leadership change from OPEC's kingpin could complicate the cartel's response to a global crude glut.  

 

 German exports unexpectedly rose 0.7% in July, offering some relief following a string of negative economic data from Europe's biggest economy.  

 

Overnight Summary

 

 

Each Market in Focus

 

 

Australia's S&P/ASX 200 index closed flat at 6648, supported by financial and property developers' stocks after data suggested the housing market is stabilizing.  
 The number of owner-occupier loans rose 4.2% in July, versus expectations of 1.5%. 
The value of investor loans also jumped, helping National Australia Bank shares rise 1.0% to A$28.03 and Westpac 0.8% to A$28.85. Residential REITs Mirvac and Stockland added 0.7% to A$3.09 and 0.9% to A$4.47 respectively. 

Elsewhere, Suncorp rose 0.2% to A$13.77 after making company veteran Steve Johnston CEO, while Coca-Cola Amatil gained 1.3% to A$11.01 on news it is restructuring to drive earnings growth.   

U.S. stocks leaped to records after Federal Reserve Chairman Jerome Major U.S. stock indexes swung between small gains and losses as investors looked ahead to meetings later this month where central bankers are expected to cut interest rates.  The Dow Jones Industrial Average rose 18 points, or 0.1%. The S&P 500 was recently down about 0.2%, while the Nasdaq Composite fell 0.5%.  

 Monday's move puts a pause on major indexes' advance after two consecutive weeks of gains for stocks. Analysts said there was little new information to drive shares Monday.

Last week's weaker-than-expected August jobs report reinforced expectations that the Fed would cut interest rates by at least a quarter of a percentage point next week. Lower interest rates tend to spur investors to buy riskier assets, such as stocks, over bonds, gold and other havens. This time is no different, with expectations of looser monetary policy contributing to most of the stock market's gains this year, analysts have said.  

Still, there is disagreement over how much the Fed should cut rates, leaving the stock market potentially vulnerable if the Fed fails to enact a more aggressive pace of rate cuts.   

Rising yields helped lift the S&P 500's financials sector, which was one of the biggest gainers Monday, rising 1.4%.  Shares of Citigroup added 4.4%, while Synchrony Financial added 2.4%.  

The precious-metals market-which was listless for much of last year-has come roaring back in 2019. Prices have outperformed, as uncertainty from the U.S.-China trade war, political unrest in Hong Kong and Britain's exit from the European Union has pushed investors into assets deemed to be havens. And with the U.S. in the midst of the longest economic expansion on record, recession worries have escalated, boosting demand for metals such as gold and silver.   

The enthusiasm for gold has spilled over into silver, as investors seek less crowded markets for safety. They made similar extreme bullish bets on the iShares Silver Trust exchange-traded fund, known as SLV.  

Oil futures rose after Saudi Arabia's new energy minister signaled a continued commitment to production curbs.  

West Texas Intermediate crude for October delivery rose 93 cents, or 1.7%, to $57.45 a barrel on the New York Mercantile Exchange. while November Brent crude, the global benchmark, was up 45 cents, or 0.7%, to $61.99 a barrel on ICE Futures Europe. 

Saudi Arabia's King Salman on Sunday named one of his sons, Prince Abdulaziz bin Salman, as energy minister, replacing Khalid al-Falih, who had served as the kingdom's top energy official since 2016.   

The dollar has continued to weaken, extending its move from last week as investors turn to riskier assets on hopes of progress in U.S.-China trade talks and an overall improvement in the economic outlook.  
 
A Reuters report that Germany is considering ways to increase government spending has further boosted the euro against the dollar, while the British pound has also climbed on hopes that a no-deal Brexit can be avoided.  

The WSJ Dollar Index was recently down roughly 0.1% at 91.28.   

The Stoxx Europe 600 slipped 0.3%. Data released showed German exports unexpectedly rose in July, a bright spot following a string of negative economic data from Europe's biggest economy, though analysts said concerns remained that U.S.-China trade tensions could affect the German economy.  
 
The U.K. economy also steadied in the three months through July, as its dominant services sector continued to expand, although Brexit uncertainty continued to weigh on manufacturing and construction.   

Asian equities moved higher after China's central bank on Friday cut lenders' reserve requirement ratios, a move that could free up 900 billion yuan ($126 billion) to finance projects that might spur construction and sustain employment.  

The gains in mainland Chinese stocks were capped, however, as the weak trade data offset the stimulus measures. The Shanghai Composite Index closed up 0.8%.  

Elsewhere in the region, Japan's Nikkei 225 rose about 0.5%.  Hong Kong stocks closed flat with the Hang Seng Index off 0.04% at 26681.40, which KGI Securities attributes partly to profit-taking after markets rebounded last week from several positive developments that included Hong Kong's withdrawal of the China extradition bill that catalyzed the city's protests.  

Singapore's FTSE Straits Times Index ended flat at 3146.33, as investors were still taking time to digest weaker China trade figures while keeping an eye on the U.S.-China trade talks scheduled for early October.  


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