Australian market expected to open higher 31/10/19

Australian market expected to open higher 31/10/19

OPENING CALL: The Australian share market is expected to open flat. The SPI200 futures contract expected to open up 6 points.

The Federal Reserve cut interest rates for the third time this year and began to downplay expectations of further cuts for now.  






Fiat Chrysler and Peugeot’s owner agreed to merge, said people familiar with the deal, which would create the world’s fourth-largest car maker.

 



 

Overnight Summary

 

 

Each Market in Focus

 

 

Australian shares snapped a seven-session run higher, retreating to underperform most equity markets in the region. Despite pulling off the day’s low in the final minutes of trade, the S&P/ASX 200 still settled 0.8% lower at 6689.5, its sharpest drop in four weeks.  

The major banks were down a third day in a row as investors prepare for earnings season and ANZ’s full-year results out Thursday, though the telecom and technology sectors logged the biggest pull back. Woolworths lost 1.4% after it said it had underpaid about 5,700 employees, overshadowing news of a rise in quarterly sales. In New Zealand, the
NZX-50 index edged down 4.21 points to 10789.54.  

 

U.S. stocks continued to bounce around the flatline intraday after the Federal Reserve lowered interest rates again and signaled it may hold off on further cuts this year.  

The S&P 500 was recently down less than 0.1%, while the Dow Jones Industrial Average added 5 points, or less than 0.1%, to 27079. The Nasdaq Composite, meanwhile, fell about 0.1%.  

The indexes failed to gain any traction after the Fed announced Wednesday afternoon that it would cut rates a third time this year.  
That’s likely because investors largely expected the central bank to cut rates again, analysts said. Investors had already factored in the additional rate cut in recent months, giving stocks little more upside on that alone.  

Now, the Fed and the market appear to remain largely aligned. The central bank signaled in its latest policy statement that it may hold off on further rate cuts this year. Most investors, meanwhile, were already expecting the Fed to hold off on cutting rates again in December. Those expectations held steady following the central bank’s decision.  

Underneath the muted index moves, corporate earnings continued to drive most of the bigger swings in individual stocks.

 Shares of Yum Brands declined 7% after the restaurant chain marked down the value of  its investment in online food delivery app GrubHub . Shares of Molson Coors Brewing also fell, shedding 3.8% after the maker of Coors Light and Miller Lite disclosed plans to cut hundreds of jobs.  

Meanwhile, General Electric jumped 9.2% after the company raised its cash-flow outlook for the year.  And shares of Johnson & Johnson rose 2.5% saying Tuesday that a test of its baby powder didn’t find traces of asbestos, rebutting U.S. regulators’ claims about the product.  
  A raft of major U.S. companies, including Apple and Facebook , are scheduled to report after Wednesday’s closing bell.  

  
 
 
Gold futures settled with a gain, following back-to-back declines, then moved lower after the U.S. Federal Reserve announced a quarter-point cut to its benchmark interest rate, as expected.  
 
December gold was at $1,494.10 an ounce in electronic trading, shortly after the Fed policy statement. The contract settled up $6, or 0.4%, at $1,496.70 on Comex, ahead of the Fed news.  
 
 
U.S. oil prices ended the session 0.9% lower at $55.06/bbl., marking a third-straight decline after EIA reported U.S. crude-oil stockpiles rose 5.7M bbls last week, topping forecasts in a WSJ survey for an 800k-bbl increase.  
 
 
The WSJ Dollar Index was up 0.3% as Fed Chairman Powell said it would take a material change to the outlook to alter the Fed’s policy stance.  

The euro was little changed against the dollar as traders weigh mixed eurozone data. The European Commission’s economic sentiment indicators showed business confidence in the eurozone improved by more than expected but consumers were more downbeat.  
 

European shares traded mixed as gains for car-makers offset losses for banks. The Stoxx Europe 600 dipped 0.1%, the FTSE 100 rose 0.09%, France’s CAC-40 gained 0.1% but Germany’s DAX settled 0.4% lower.  

Shares in Fiat Chrysler Automobiles and Peugeo rise after the two car makers confirmed they are in talks that could lead to a merger, after The Wall Street Journal reported the discussions Tuesday. Meanwhile, in a busy day for European corporate news, Deutsche Bank reported a loss and weak revenue in the third quarter. DB’s shares drop 7.5% and other
banking stocks fall in sympathy.

 
Hong Kong shares saw muted activity throughout the session, and the Hang Seng Index ended 0.4% lower at 26667.71. PetroChina was the largest loser on the index with a 2.0% dive, as analysts expect a profit decline for its 3Q results expected today. Other oil stocks also fell, as CNOOC lost 1.7% and China Petroleum & Chemical Corp. shed 1.5%. Property developers were broadly down as well, as Sino Land lost 1.9% and China Resources
Land dropped 1.5%. Electric car maker BYD, whose shares plummeted upon market opening due to lower 3Q profit, ended the session with a 5.6% slide.  
India’s benchmark share index closed 0.6% higher at 40051.87, closing above the psychologically-important 40,000 level for the first time in nearly five months. The BSE Sensex rose for the third consecutive day amid lower oil prices and expectations of more reform measures by the government. Banks were among the top gainers, with State Bank of India up 3.4% and Axis Bank rising 1.2%. Auto makers also continue their strength since
the beginning of the week, carried by upbeat earnings. Bajaj Auto advances 1.3% and Mahindra & Mahindra adds 1.1%.  

South Korea’s benchmark Kospi closed 0.6% lower at 2080.27, falling for a second consecutive session. Reports that a U.S.-China partial trade deal could be delayed dampened sentiment, as investors exercised caution ahead of the U.S. Fed’s policy meeting decision while digesting corporate earnings reports, Samsung Securities said. Technology stocks were largely down, with tech giant Samsung Electronics and chip maker SK Hynix
falling 1.4% and 1.8%, respectively. Cosmetics firm Amorepacific surged 14% as after 3Q net profit more than doubled on year. LG Electronics slid 0.7% as 3Q net profit plunged due to tough business conditions.  
 


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