Australian market expected to open higher 10/10/19

Australian market expected to open higher 10/10/19

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract expected to open up 41 points.


OxyContin maker Purdue Pharma’s plan to turn over its operations to creditors and see its owners, the Sacklers, exit the opioid business is contingent on first resolving Justice Department probes, court filings show.  


American Airlines expects Boeing’s 737 MAX will remain out of service until January in the latest example of how the grounded plane is creating additional costs and logistical burdens for carriers and passengers.  


Overnight Summary



Each Market in Focus



Australian stocks ended 0.7% lower, joining markets in the red elsewhere as concerns about the U.S.-China relationship flared once again.  

Among the ASX 200, the biggest loser of the day was travel company Flight Centre, which slumped 12% as it cautioned on tough market conditions. Miners BHP and Rio Tinto ended down 1.4% and 0.9% respectively, while the Big Four banks were also all lower. Gold miners again bucked the trend on expectations macro concerns will support precious metal prices. Newcrest, the country’s top listed gold miner, gained 1.0%.  

U.S. stocks rose intraday as investors awaited the resumption of U.S.-China trade talks and looked for fresh signals from the Federal Reserve on monetary easing.   The Dow Jones Industrial Average rose 0.7% and the S&P 500 climbed 0.9%. The gains were broad, with all 11 sectors of the S&P rising, led by technology stocks.  

Tensions between the U.S. and China appeared to ratchet up this week as the U.S. imposed export restrictions on more than two dozen Chinese firms and put visa restrictions on Chinese officials. But market observers pointed to optimism on the trade front as Bloomberg reported that China was open to reaching a partial deal.  

The U.S. central bank also released minutes from its September meeting, showing that officials worried slowing global growth and rising trade-policy uncertainty could exert a drag on hiring and the U.S. economy. The minutes didn’t provide a firm sign about upcoming policy moves, but a subsequent run of weak factory data and other signs of a slowdown have fueled market expectations of another rate cut in October.  

Among individual companies, Johnson & Johnson shares dropped 2.5% after a Philadelphia jury ordered the company to pay $8 billion in damages to a man who said that using antipsychotic drug Risperdal caused enlarged breasts. U.S. Steel shares fell 8.3% after the company said it would cut costs and replace its chief financial officer with another company executive.  

Gold futures ended higher to post their first gain in four sessions, as traders kept an eye on U.S.-China tariff negotiations, developments around Brexit and economic data.  
Gold for December delivery on Comex rose $8.90, or 0.6%, to settle at $1,512.80 an ounce, following losses in each of the last three sessions.  
In other metals trade, January platinum rose 0.7% to $886.70 an ounce, while December palladium gained 0.2% to $1,654.70 an ounce.  
December silver gained 0.6%, to $17.81 an ounce and December copper settled nearly flat, down 0.02% at $2.568 a pound.  
U.S. oil prices ended a tiny 0.1% lower at $52.59/bbl as investors were torn between a bullish improvement in sentiment regarding U.S.-China trade talks and a bearish weekly EIA report showing a fourth-straight rise in U.S. crude-oil inventories.  

Crude prices began the day stronger on chatter of the possibility the U.S. and China could agree to an interim trade deal. But a weekly EIA report that showed a 2.9 million barrel weekly rise in U.S. oil inventories and U.S. oil production of 12.6 million bpd — a record high — began to weigh on the market late in the session.  

WTI has now fallen three straight sessions and 11 of the past 12, though it’s 16% higher year-to-date.  

The WSJ Dollar Index rose less than 0.1% to a recent 91.93 after rising versus the Japanese yen and the British pound, while slipping against the euro.  
Sterling, which fell after U.K. leaders clashed with their European counterparts over Brexit, edged down 0.2% against the euro.  

 European stocks made solid gains as traders shrugged off U.S.-China trade tensions. The Stoxx Europe 600 rose 0.4% while the FTSE 100 advanced 0.3%, the DAX climbed 1% and the CAC-40 settled 0.8% higher.  

Japan’s benchmark Nikkei 225 index slipped 0.6% as data on machine-tool orders confirmed a bleak picture for the country’s manufacturing sector.  

Hong Kong’s Hang Seng dropped 0.8% amid tensions over protests in the city. Tech stocks lead the declines, with Sunny Optical Technology down 3.5%, AAC Technologies 2.4% lower and Techtronic Industries off 1.8%. Among bank stocks, Hang Seng Bank ends down 3.3% and BOC Hong Kong closes 2.1% lower.  
The Shanghai Composite gauge climbed 0.4%.  

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