Monday 29th October 2018

OPENING CALL: The Australian market looks to open lower with SPI futures down 17 points.

Late buying in financial and materials helped lift Australia’s equities benchmark just into positive territory today, snapping a five-session run lower to a 10-year low.
A tumultuous week for markets around the world ended with a rocky session, putting the S&P 500 on the cusp of correction territory as investors continued an October retreat from risky assets.

Overnight Summary


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Each Market In Focus

Australian Market

Late buying in financial and materials helped lift Australia’s equities benchmark just into positive territory today, snapping a five-session run lower to a 10-year low. The S&P/ASX 200 edged up 1.1 point to 5665.2, having spent most of the session in the red alongside markets across the region. Still, the index sank 4.6% for the week to keep it on track for its sharpest monthly decline in a decade.

US Markets

A tumultuous week for markets around the world ended with a rocky session, putting the S&P 500 on the cusp of correction territory as investors continued an October retreat from risky assets. As stocks tumbled in early trading, the benchmark stock index fell nearly 3% to breach the level that would place it 10% below last month’s record. But as was the case for much of a whirlwind week marked by intraday dips and sharp rebounds, stocks stabilized–before slipping again in the final hour of trading. Although stocks recovered some of their early declines, all three major U.S. stock indexes head into the last three sessions of October on track for their worst month in more than eight years. Worries about corporate revenue peaking and a slowdown in China and Europe potentially spilling over into the U.S. economy have sent stocks into a tailspin. Fast-growing internet firms have been some of the hardest hit during the turmoil, leading analysts to question whether companies that previously seemed immune to global growth fears can continue surging ahead. Quarterly sales from Amazon.com and Google parent Alphabet disappointed investors, sending the two stocks sharply lower Friday and pushing the tech-heavy Nasdaq Composite to its worst week since March.

Commodities

IRON ORE: 75.14s + 0.72 (November contract)

Oil Futures
Forex

The yuan has fallen against the dollar every day this week and keeps flirting with its lowest level in a decade. Haven currencies rose Friday as China’s yuan added to its weeklong fall against the U.S. dollar, amid a trade conflict with the U.S. that has amplified the nation’s economic slowdown. The Japanese yen which is attractive to investors during turbulent times, was stronger against the dollar, with one buck buying Yen111.76, down from Yen112.42 late Thursday in New York. It was the yen’s strongest day since the beginning of the month, according to FactSet. So-called havens remained strong throughout the day, but as the U.S. dollar slipped into the red after Friday morning’s economic data releases, the moves in the dollar-risk currency pairs petered out. Versus the Canadian dollar , the greenback was 0.1% stronger at C$1.3084. The Aussie dollar fetched $0.7096, up 0.2%, and the kiwi dollar bought $0.6526, up 0.1% from late Thursday in New York. Over the course of Friday’s session, both the Aussie and the kiwi moved more than 1%. The data earlier showed third quarter GDP growing at a pace of 3.5% year-over-year, beating the MarketWatch consensus expectation of 3.4% but underperforming the previous quarter’s 4.2% growth. The final reading of the consumer-sentiment index for October came in at 98.6, sightly below the expected 99 value. Meanwhile, the U.S. dollar, as gauged by the ICE U.S. Dollar Index , which measures the greenback against six rivals, was last down 0.3% at 96.351. For the week, the index is on track for a 0.7% gain, its best in four weeks. Earlier in the session, while it was still trading higher, the gauge was on track for as much as a 1.2% weekly jump. The yuan dropped to its weakest level since December 2016 in early Friday offshore trading, with one dollar buying 6.9769 at the session high. In Beijing, the yuan dropped to its weakest for the same period very late Thursday. The dollar last fetched 6.9435 yuan in Beijing, down 0.1%, and 6.9518 yuan in the offshore market, also down 0.1% from Thursday. The greenback has strengthened nearly 7% versus the Chinese currency this year, edging closer to a decade-high and teetering on the brink of the psychologically important 7.00 yuan per dollar level. Reach this could spark selling and weaken the yuan further. Market participants have been trying to assess how the People’s Bank of China would react to such a selloff given that the yuan’s exchange rate versus the buck is managed rather than free-floating. The currency weakness comes during a roller-coaster week for global markets. Chinese jumped early in the week but reversed course sharply, factoring into a selloff that hit the U.S. market particularly hard on Wednesday. The Shanghai Composite Index ended Friday’s session slightly lower, having gained 1.9% over the past week.

European Markets

The Stoxx Europe 600 closed down 0.8% at 352.34, pressured by losses in the U.S. as various issues weighed on sentiment, including lackluster U.S. technology earnings, as well as continuing concerns about Italy’s budget and global trade tensions. Technology companies are broadly lower, while French auto parts company Valeo’s shares slump 21% after it lowered its revenue and earnings target. U.K. bank RBS loses 4.1% after earnings disappointed. Germany’s Dax ends down 0.9%, France’s CAC 40 down 1.3%, the U.K.’s FTSE 100 down 0.9%. Italy’s FTSE MIB closes down 0.7% and Spain’s Ibex 35 down 0.6%.

Asian Markets

South Korea’s benchmark led Asian stocks’ decline on the last trading day of this week, weighed by concerns over global growth as well as weak currencies. Kospi, which entered into the bear territory Thursday, fell another 1.8% to the worst closing level since January 2017. That also put the index’s weekly loss at 6%–the worst weekly performance since February. Meanwhile, Hong Kong recorded its fifth weekly losing streak, as it fell 0.7% in late afternoon session, dragged by Tencent and insurer China Life. Nikkei fell 0.4% to a new 7-month low, led by precision instrument makers, putting the index’s decline at 6% this week. Tech-heavy Taiwan’s Taiex finished 0.3% lower to put the week’s decline to 4.3%.S&P 500 futures were down 0.4% in Asia.

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