Wednesday 24th October 2018

OPENING CALL: The Australian market looks to open unchanged.

Australian stocks held up better than most Asia-Pacific markets, despite finishing at session lows.
US stocks slid intraday as worries about global economic growth and downbeat earnings outlooks from bellwether U.S. companies rippled across markets from New York to China.

Overnight Summary

Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian stocks held up better than most Asia-Pacific markets, despite finishing at session lows. The ASX 200 fell 1% to close at 5843.1, while a number of regional counterparts are down more than 1.5%. The Australian market’s energy sector slumped 3.2% as it continues to release quarterly production numbers, while utilities slid 1.9%. The ASX 200 is now down 8.3% for the month, on course for the biggest decline in three years if current levels are maintained through Halloween.

US Markets

Stocks slid intraday as worries about global economic growth and downbeat earnings outlooks from bellwether U.S. companies rippled across markets from New York to China. Major indexes slumped right after the opening bell, sending the Dow Jones Industrial Average sliding nearly 550 points and putting the Nasdaq Composite on track to close in correction territory. Stocks then pared declines around midday, although the Dow industrials remained off 244 points, or 1%, to 25062, and the S&P 500 and Nasdaq shed 1.1% apiece. The back-and-forth in markets added to what has been a volatile streak for global stocks. Major indexes in Shanghai, Japan and Hong Kong tumbled after Chinese officials moved to ramp up financing for private firms, the latest step they have taken to try to stabilize the country’s financial markets and reverse a slowdown of growth. Tepid outlooks from industrial giants 3M and Caterpillar added to the dark mood, although major indexes bounced off their lows after Caterpillar officials said tariffs would have a “quite minor” impact on their results. Earlier, the company had said it would have to raise prices for most of its machines and engines next year to offset rising materials costs, as well as tariffs.


Gold futures rose to score their highest finish in more than three months, with global equity markets suffering from sharp losses, partly sparked by the resurgence of global growth fears as China halted a two-session rally. December gold rose $12.20, or 1%, to settle at $1,236.80 an ounce, lifting bullion to the highest settlement for a most-active contract since July 16, according to FactSet data. A flight to the safety of traditional havens, like gold, came after the Shanghai Composite Index, gave back part of a two-day rally, falling 2.3%. In the U.S., benchmark stock indexes traded broadly lower, with the Dow Jones Industrial Average down more than 200 points as gold futures settled. In other commodity markets, December wheat was 1 cent higher to $5.09.

IRON ORE: 72.30s – 0.55 (November contract)

Oil Futures

The U.S. oil benchmark dropped to finish at its lowest in about two months, as comments from Khalid al-Falih, Saudi Arabia’s energy minister, continued to calm market concerns over a potential supply shortfall with U.S. sanctions on Iranian oil set to begin early next month. Al-Falih recently told Russia news agency TASS that the Saudis want to sign a new cooperation agreement that is “open-ended,” with no fixed term, which would allow OPEC and non-OPEC to lift or lower production as needed to balance the market. December West Texas Intermediate oil fell $2.93, or 4.2%, to settle at $66.43 a barrel on the New York Mercantile Exchange. That was the lowest finish for a front-month contract since Aug. 20, FactSet data show.


The U.S. dollar edged lower intraday as a broad shift away from riskier assets boosted the Japanese yen against other currencies. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently down less than 0.1% to 90.16. As investors sold stocks around the world, the dollar fell 0.7% against the yen to Y111.990, while the euro fell 0.8% to Y128.34. The dollar’s losses against the yen were partially offset by gains against emerging-market currencies. It was recently up 2.3% against the Turkish lira and 0.7% against the South African rand. Heavy selling of stocks kicked off in Asia, where investors reversed a two-day rally. Chinese officials have recently tried to reassure investors that the country’s economy is on solid footing, despite slowing growth and recent stock-market declines.

European Markets

The Stoxx Europe 600 index closed down 1.6% at 354.06, having reached an intraday low of 353.25, its lowest since December 2016. Stocks were pounded by concerns about Italy due to a continued standoff with the European Commission over its budget. Germany’s DAX tumbled 2.2% and France’s CAC 40 lost 1.7%, both reaching their lowest since late 2016. The FTSE 100 fell to its lowest since March, down 1.2%. Italy’s FTSE MIB ended down 0.9% and Spain’s Ibex 35 was down 0.9%. Semiconductor firm AMS was the biggest faller, dropping 26% after fourth quarter guidance missed expectations.

Asian Markets

Stocks sold off in Asia, with technology shares plunging amid resurgent fears about the health of China’s economy and a slew of geopolitical concerns. There was heavy selling in Asia-Pacific, where investors reversed the broader market rally that came on Friday and Monday amid anxieties about Chinese economic growth. Index heavyweight Tencent Holdings fell 4.6%. In China, the Shanghai Composite Index and the Shenzhen A Share closed down 2.3% and 1.9%, respectively. Sinking financial stocks dragged Hong Kong’s Hang Seng down 3.1%. Indexes across the rest of the region suffered heavy losses, with the main benchmarks in Japan, South Korea and Taiwan slumping 2% or more. Investors were keeping a close watch on rising tensions between the U.S. and Saudi Arabia following the death of Saudi dissident journalist Jamal Khashoggi. The steep fall in Chinese stocks marked a U-turn from the Shanghai index’s sharpest two-day rise since 2015, which came as investors parsed reassuring comments by key government and central bank officials about the health of Chinese economic growth. The People’s Bank of China late Monday moved to support financing for private firms, but the central bank’s measures “are far from sufficient to solve [those companies’] broad financing difficulties,” Citi economists said in a note. Coming after government proposals to cut income tax, analysts are uncertain whether such moves will prevent Chinese growth from decelerating further. “We’re asking whether China is doing stimulus by a thousand cuts but I’m still very skeptical,” said Ian Samson, markets research analyst at Fidelity International. “The ongoing slowdown is quite natural but it will continue to weigh on global growth.”

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