Wednesday 21st November 2018

OPENING CALL: The Australian market looks to open lower with SPI Futures down 65 points.

After days of underperformance, Australia’s stock index has held up better than nearly every other benchmark in Asia Pacific today following America’s latest equities slide.
U.S. stocks fell sharply, extending a pre-Thanksgiving rout that has been fueled mostly by a selling in shares of technology and internet-related companies. Sharp declines in Target and Lowe’s after disappointing earnings also contributed to the tone.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

After days of underperformance, Australia’s stock index has held up better than nearly every other benchmark in Asia Pacific today following America’s latest equities slide. The S&P/ASX 200 finished down 0.4% at 5671.8, near the day’s best level. While the energy sector fell a further 1.1%, materials lost just 0.1% and the heavily weighted financials rose 0.5%. But health care skidded a further 2.5% as drugmaker CSL dropped 3.6% more.

US Markets

U.S. stocks fell sharply, extending a pre-Thanksgiving rout that has been fueled mostly by a selling in shares of technology and internet-related companies. Sharp declines in Target and Lowe’s after disappointing earnings also contributed to the tone. The Dow Jones Industrial Average fell 500 points, or 2%, at 24,516, and tumbled by as many as 596 points or 2.3% at the session’s lows. The S&P 500 index was down 45 points, or 1.7%, at 2,644, while the Nasdaq Composite Index was off by 114 points to 6,913, a drop of about 1.6%. The drop erased year-to-date gains for both the Dow and S&P 500, while the Nasdaq was clinging to a narrow gain for 2018. Monday’s decline resulted in the S&P 500 and the Dow’s worst start to a Thanksgiving week since 2011, while the Nasdaq registered its worst such start since 2000, according to Dow Jones Market Data. U.S. investors continue to be plagued by doubts surrounding slowing global growth, U.S.-China trade relations, and the steady rise in interest rates that can be expected to continue into next year. These doubts have accumulated to induce fears that we are growing nearer to the end of the current economic expansion, strategists say.

Commodities

Gold prices edged down as the U.S. dollar shook out of its recent torpor to tick higher. Gold for December delivery fell 0.3% to $1,221.20 a troy ounce on the Comex division of the New York Mercantile Exchange. The WSJ Dollar Index, which gauges the dollar against a basket of other currencies, was up 0.5% at 90.40. Metals like gold and copper are priced in dollars and become more expensive to other currency holders when the dollar rises. Meanwhile, copper for December delivery fell 1.2% at $2.7665 a pound. Base metals have also been hurt by concerns over economic growth, particularly in China.

IRON ORE: 70.41 – 2.09 (December contract)

Oil Futures

U.S. oil prices plunged to their lowest level in more than a year after President Trump emphasized strong ties with the Saudi Arabian government. West Texas Intermediate for January delivery fell 6.6% to $53.43 a barrel on the New York Mercantile Exchange, its lowest settle price since October 2017. Brent, the international benchmark, slid 6.4% to $62.53.

Forex

The dollar rose intraday as stocks and oil prices extended recent declines, bolstering demand for safer assets. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.5% at 90.40. The dollar’s climb came as stocks once again tumbled, threatening to wipe out yearly gains for major U.S. indexes. Oil prices were also sharply lower, weighing on the currencies of commodity-producing countries such as Canada and Norway. In recent trading, the U.S. dollar was up 1.1% against the Canadian dollar at 1.331 loonies per U.S. dollar and 1.3% against the Norwegian krone at 8.5887 krone per dollar. Relative to other currencies, the Japanese yen, a traditional safe-haven asset, was holding its ground against the dollar. It was recently down 0.2% at 112.734 yen per dollar.

European Markets

The Stoxx Europe 600 closed down 1.1% at 351.06, tracking falls in equities globally on growing worries about political uncertainty. Oil and mining stocks lose ground as oil and metals prices fall. Shares in the U.K.’s Indivior plummet 46% after a U.S. court overturned an injunction against Dr. Reddy’s Laboratories Ltd. preventing sales of a generic version of Indivior’s Suboxone opioid-addiction treatment. U.K. banking group CYBG drops 16.9% after it posted a full-year loss. Germany’s DAX ends 1.6% lower, France’s CAC 40 down 1.2% and the U.K.’s FTSE 100 down 0.8%. Italian stocks underperform, with the FTSE MIB ending down 1.9% while Spain’s Ibex 35 closes 1.6% lower.

Asian Markets

Falling automotive stocks combined with the pressure on Asia-Pacific technology equities to send share prices across the region tumbling. Japan’s Nikkei index was down 1.1%, while the Shanghai Composite Index and Hong Kong’s Hang Seng both fell around 2%. The tech-heavy Shenzhen A-Share dropped 2.7%. Lower-than-expected demand for Apple’s new iPhones and the company’s expansion of its product offerings have put a strain on its supply chain, making it harder for the company to forecast the number of necessary components. Shares in screen manufacturer Japan Display–one of the Apple suppliers to have recently cut its quarterly profit estimates–were down 10.3% Tuesday. Adding to the downbeat mood in the tech sector, Chinese officials said they had found widespread evidence of anticompetitive behavior. Beijing investigators cited a price-fixing probe into South Korean firms Samsung Electronics, down 2%, and SK Hynix, down 3.3%. U.S.-based Micron Technology was also implicated in the reports, and its shares fell 2.3% in premarket trade.

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