Thursday 25th October 2018

OPENING CALL: The Australian market looks to follow the US stock crash.

A punishing stretch for markets continued intraday, with technology stocks leading major indexes lower yet again as worries about global economic growth and corporate earnings continued to spook investors.

Overnight Summary

Market Quotes by TradingView

Each Market In Focus

Australian Market

Australia’s stock benchmark logged another six-month closing low as the energy sector continued to pressure the country’s market. The ASX 200 fell 0.2% to 5829 as energy skidded 2.1% more on the overnight oil slump, extending October’s skid to 10%. The sector hasn’t logged a full-month double-digit drop in 3 years. Meanwhile, materials stocks lost 1% today. But financials rose slightly, REITs gained 0.5% and the beaten down health-care sector climbed 0.7%. Stocks Down Under haven’t rebounded today as most other equities in the region have. New Zealand’s market was held back by continuing milk production growth that is pressuring prices. The NZX 50 finished down 0.4% at 8642.24, another 4 1/2-month closing low. Synlait Milk slid 5% and infant-formula firm a2 lost 1.5%, while Fletcher Building dropped 2.9% and retirement village operator MetlifeCare fell 1.7%. However, Auckland International Airport climbed 1.3% after oil’s overnight plunge.

US Markets

A punishing stretch for markets continued intraday, with technology stocks leading major indexes lower yet again as worries about global economic growth and corporate earnings continued to spook investors. The tech-heavy Nasdaq Composite slumped 2.6% and was on track to close in correction territory, defined as a drop of 10% from a recent peak. Semiconductor stocks dragged the technology sector lower following weaker-than-expected sales targets from Texas Instruments, and downbeat earnings from AT&T hurt communications shares. The S&P 500 slid 1.6% and was on pace for a sixth consecutive decline and 13th drop in the past 15 sessions. The Dow Jones Industrial Average fell 241 points, or 1%, to 24950 after opening slightly higher. Like the S&P, the blue-chip index is more than 7% off its recent all-time high and has been recording bigger-than-normal intraday swings. Anxiety about weakness in the global economy and a slowdown in corporate profitability have swung global stocks and commodities lately. The declines in tandem across asset classes have raised concerns that the worst could still be ahead for investors, who are also grappling with the impact of higher interest rates. Analysts have been weighing whether the recent selloff heralds the end of a prolonged period of strength in the U.S. or is simply a temporary adjustment. While some investors expect another steady quarter of earnings growth to help the market stabilize, others are worried about pockets of weakness and that revenue gains might be peaking.


Gold prices fell, pressured by a rise in the dollar. Gold for December delivery fell 0.45% at $1,227.80 a troy ounce on the Comex division of the New York Mercantile Exchange. Weaker-than-expected eurozone manufacturing data hit the euro and boosted the dollar. A stronger dollar tends to weigh on gold, which is denominated in the U.S. currency and becomes more expensive to foreign buyers when the dollar rises. Prices for gold are still up around 2.8% since the end of last month, buoyed by volatility in global stock markets. Some investors buy gold in turbulent times, believing it will hold its value better than other assets when markets turn rocky. In base metals, copper for December delivery was up 0.1% to $2.76 a pound.

IRON ORE: 74.20s + 1.90 (November contract)

Oil Futures

U.S. oil prices rose, recouping some of their huge losses from a day earlier after government data showed an increase in U.S. fuel demand and an accompanying drop in inventories of gasoline and diesel. Light, sweet crude for December delivery ended 39 cents, or 0.6%, higher at $66.82 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, ended 0.4% lower at $76.17 a barrel. Oil prices had fallen by 4.2% on Tuesday, their biggest one-day drop in more than three months, caused by volatility in broader financial markets that steered investors away from riskier assets. Also pushing prices lower were assurances from top Saudi Arabia officials that it can and will produce as much oil as the global market needs as Iran exports decline due to U.S. sanctions. But oil prices were able to rebound some Wednesday despite continued stock-market losses, after the Energy Information Administration said U.S. stockpiles of gasoline and distillate fuels fell by a combined 7.1 million barrels last week, and that demand rose by 141,000 barrels a day, to 9.3 million barrels a day. U.S. oil production stayed flat last week at 10.9 million barrels a day. The EIA data wasn’t all bullish, as it also showed crude oil inventories climbed for a fifth straight week, rising 6.3 million barrels to 423 million, the highest total in more than four months. But analysts said investors positioned for a price-rebound focused instead on the less-bearish parts of the report.


The U.S. dollar rose intraday as investors continued to seek safety amid heightened concerns that global trade tensions could slow economic growth. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, rose 0.3% to 90.39. The currency rose 0.7% against the euro and 0.2% versus the Chinese yuan. Dour earnings guidance from industrial giants 3M and Caterpillar Tuesday combined with economic stimulus measures employed by policy makers in China have boosted concerns that trade tensions already could be slowing the pace of expansion. Trade tensions “generally boost the dollar” against “currencies that tend to depend on trade and exports,” such as the euro and the yuan, said Shahab Jalinoos, head of global currency strategy at Credit Suisse Group. The dollar rose even as President Trump criticized Federal Reserve Chairman Jerome Powell for the central bank’s interest-rate increases this year. Policy makers have raised interest rates three times this year and have penciled in four more increases by the end of next year. In an interview Tuesday with The Wall Street Journal, Mr. Trump acknowledged the independence the Fed has long enjoyed in setting economic policy, while also making clear he was intentionally sending a direct message to Mr. Powell that he wanted lower interest rates.

European Markets

The Stoxx Europe 600 index closed down 0.2%, hurt by falling U.S. equity markets and ongoing concerns about Italy, with Italian stocks falling sharply. “What started out as a good morning for Europe has fizzled out again, and it is the U.S. session that is to blame,” said IG analyst Chris Beauchamp. Technology stocks are among the biggest fallers, with STMicroelectronics down 10.2% after results, and Swiss semi conductor group ams AG falling 12.2%. Earnings season is in full swing and drives many stocks. Disappointing 3Q results cause U.K. challenger bank Metro Bank to slide 12.3%, while Italian oil-and-gas contractor Saipem rises 6.4% and Finnish pharma stock Orion Oyj increases 9.7%, both after results. Germany’s DAX ends down 0.7% and France’s CAC-40 down 0.3%. The U.K.’s FTSE 100 outperforms, up 0.1%. Italy’s FTSE MIB closes down 1.7% and Spain’s Ibex 35 down 0.6%.

Asian Markets

After initially struggling to find a direction in early trading, the broad gains logged by midday in Asian stocks widely evaporated by day’s end as this month’s selling shows little sign of dissipating. Hong Kong’s Hang Seng and South Korea’s Kospi both dropped 0.4%, while China’s Shenzhen A Share index fell 0.2%. Japan’s Nikkei Stock Average closed up 0.4%. Thailand was the outlier with its stock benchmark down 1.2% after that market missed out on yesterday’s swoon because of a holiday.

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