Monday 26th November 2018

OPENING CALL: The Australian market looks to open lower with SPI Futures down 37 points.

Shaking off early weakness, Australian shares held modest gains through the afternoon to finish among the better performers in the region.
U.S. stocks slipped as oil prices tumbled to their lowest levels in more than a year, dragging shares of energy companies lower.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Shaking off early weakness, Australian shares held modest gains through the afternoon to finish among the better performers in the region. Rising for a second straight session, the S&P/ASX settled the day 0.4% higher at 5716.2 and narrowed the week’s losses to 0.25%. The major banks helped buoy the index, rising for a fourth day in a row even as several top executives testified before the ongoing probe into financial-industry misconduct. ANZ led with a rise of 2.3%, and the Big Four banks each gained at least 3% over the week. For the day, retail companies also logged solid gains, helped by a 13% rally by Kathmandu following a positive trading update and a 1.8% recovery in Wesfarmers after spinning off its Coles business this week.

US Markets

U.S. stocks slipped as oil prices tumbled to their lowest levels in more than a year, dragging shares of energy companies lower. The latest rout in oil prices added to the downbeat mood in markets, increasing concerns about the pace of economic growth and sending shares of energy firms such as Concho Resources, Devon Energy and EOG Resources down at least 5% apiece. Oil’s fall is the latest obstacle for major indexes struggling to break a stretch of shaky trading. Investors are grappling with concerns including the course of Federal Reserve policy, tepid economic data and a slide in technology stocks that had helped lead the bull market earlier in the year. Some of the swings were likely exacerbated by relatively low trading volumes heading into the weekend, with the U.S. stock market closing early after Thanksgiving and Japanese markets shut for a public holiday, analysts said. Still, the decline in oil prices-which analysts have attributed to worries about an impending glut of oil and fears of an economic slowdown-has deepend investors’ unease. Major indexes remain well off the highs they hit earlier in the year. The Nasdaq Composite posted a 4.3% weekly decline, its worst since March. The S&P 500 was down 3.8%, while the Dow Jones Industrial Average fell 4.4%. For the day, the blue-chip index lost 178.74 points, or 0.7%, to 24285.95. The S&P 500 lost 17.37 points, or 0.7%, to 2632.56 and the Nasdaq Composite declined 33.27 points, or 0.5%, to 6938.98.

Commodities

Gold futures eased in a shortened session, pulling back from Wednesday’s, pre-Thanksgiving two-week high. Still, the loss was slim enough to leave the precious metal just in the green for the week. Market focus remained fixated on Federal Reserve interest-rate plans over coming months, the dollar’s response to said rate moves, and what looming China-U.S. trade discussions could indicate for the economy’s fortunes. Stock volatility, with major averages pushed into negative for the year earlier this week, is underpinning the appetite for haven gold as well. Gold for December delivery on Comex fell $4.80, or 0.4%, to settle at $1,223.20 an ounce. Gold settled at 12:30 Eastern time, about an hour early for Black Friday. It rose less than 0.1% for the week.

IRON ORE: 67.51s – 3.12 (December contract)

Oil Futures

The broad selloff in oil accelerated as investors grew increasingly concerned about a surge in supplies and fears of a slowdown in global economic growth. Light sweet crude for January delivery fell 7.7% to $50.42 a barrel on the New York Mercantile Exchange. Prices notched the biggest one-day percentage decline since July 2015, and closed at the lowest level since October 2017. Brent, the global benchmark, was recently down 5.8% at $58.98 a barrel, breaking below $60 for the first time in over a year. After a rally to multi-year highs in early October that sparked predictions of $100 oil, prices have staged a sharp reversal. The vertiginous moves were sparked by a cocktail of geopolitics, weak data on the global economy and mounting supply-and-demand concerns. The market largely ignored a report from The Wall Street Journal that the global oil cartel is considering a production cut, in which Saudi Arabia would pull back on about 1 million barrels a day of overproduction. Some analysts were skeptical that such a deal would be enough to curb oversupply, particularly as U.S. production growth has exceeded expectations. Economic growth outside the U.S. has flagged, raising fears that demand for crude will also decline. The latest sign was in export dependent Germany, where a purchasing managers index hit a four-year low, well below the level economists were expecting. A trade dispute between the U.S. and China and a slew of weaker economic data also have darkened the outlook for global growth. As a result, oil watchers, including OPEC itself, have recently lowered their forecasts for crude-oil demand. On the supply side of the equation, U.S. producers have been ramping up, with output reaching record highs. U.S. oil production topped 11 million barrels a day this year, and is projected to surpass 12 million barrels daily next year, according to the Energy Information Administration. That’s led to increasing U.S. stockpiles, as crude inventories rose for the ninth week in a row in the week ended Nov. 16. Russia and Saudi Arabia are also producing at near-record pace.

Forex

The U.S. dollar inched higher versus its main rivals, as U.S. traders returned from the Thanksgiving holiday, and investors closely tracked an intensifying decline in crude oil. The Norwegian krone led developed market losers, trading near its lowest level since May 2017, with one dollar fetching 8.5915 krone, up from 8.5349 late Thursday in New York. Canada’s dollar also weakened versus its U.S. rival, leaving the greenback to rise to C$1.3208, from C$1.3190. In emerging markets, oil-linked currencies, the Russian ruble drifted sharply down, recently at 66.224 ruble per one dollar, compared with 65.603 ruble late Thursday. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, gained 0.3% to 90.41. Elsewhere, European markets continued worrying about Brexit developments ahead of a key summit this weekend. The euro was down $1.1334, a five-day low, versus $1.1404 late Thursday in New York. Sterling last bought $1.2804, down from $1.2878.

European Markets

The Stoxx Europe 600 rose 0.4% to 353.98, recovering some of the previous day’s falls even as mining and oil stocks fell due to a slide in oil and metals prices. Airline stocks are mostly higher as FlyBe soared 72.3% on reports Virgin Atlantic is considering acquiring the struggling airline. Renault rose 2.3% as the French auto maker’s interim boss pledged to protect the company’s interests in its alliance with Japan’s Nissan. Germany’s DAX ended up 0.5%, France’s CAC 40 up 0.2% and Italy’s FTSE MIB up 0.6%. The U.K.’s FTSE 100 underperformed, however, due to the heavy weighting of mining and oil stocks, ending down 0.1%. Spain’s Ibex 35 ended up 0.1%. Sentiment is vulnerable to further knocks, however. Eurozone purchasing managers’ data raised concerns about the economic outlook, while uncertainty over Brexit and Italy’s budget situation remain.

Asian Markets

Chinese stocks tumbled, with the Shanghai Composite Index down 2.5% and the tech-heavy Shenzhen A-Share dropping 3.7%, after reports that the U.S. government had attempted to persuade foreign allies to avoid telecommunications equipment from China’s Huawei Technologies Co. due to what they see as cybersecurity risks. That marked the latest attempt by the Trump administration to tighten restrictions on Chinese telecom firms. The White House banned U.S. suppliers from selling components to ZTE, a sector-peer of Huawei, earlier this year. ZTE shares fell 2% Friday. The news of Washington’s campaign against Huawei followed the release of a report by U.S. Trade Representative Robert Lighthizer earlier in the week in which he accused Beijing of failing to change economic policies that threaten U.S. industry, such as cybertheft and espionage. China’s commerce ministry responded on Friday, calling Washington’s accusations groundless, according to media reports. However, investors have displayed growing optimism of warming relations between the world’s two largest economies, viewing this week’s developments as a part of the U.S.’s negotiating strategy. President Trump and China’s President Xi Jinping are due to meet at the Group of 20 summit in Buenos Aires later this month. The Shenzhen Composite has slid 1.4% and the larger-cap Shanghai Composite is off half that. Meanwhile, Hong Kong’s benchmark is 0.4% lower.

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