Wednesday 5th June 2019

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract was up 53 points.

Renault said it is going to take more time to weigh a merger proposal from Fiat Chrysler Automobiles, a deal that would create the world’s third-largest auto maker by production.

Economists are projecting that uncertainty created by the Trump administration’s actions on tariffs will prompt the Fed to cut rates later this year.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian stocks rebounded some after Monday’s commodities-fueled decline, hitting
session highs after the country’s central bank cut its policy rate for the 1st time in
three years as expected.
As most markets in Asia Pacific were down, the ASX 200 rose 0.2% to 6332.4.
Financials also notched their best level of the day following the rate cut, even as
lower rates are liable to compress lenders’ margins. The sector climbed 0.3%.
Yield plays in REITs and utilities rose more than 0.5%. The materials sector rebounded
0.7%, while energy slipped an additional 0.6%. Health care dropped 1% and IT slid 2.4%.

US Markets

U.S. stocks surged intraday, rebounding sharply from recent declines after Federal
Reserve officials hinted the central bank could lower interest rates if the economy slows
in response to escalating tariffs and economic uncertainty.
The Dow Jones Industrial Average advanced 431 points, or 1.7%, to 25250. The S&P 500
climbed 1.7%. The broad equity gauge has been sliding recently and ended Monday at its
lowest level since March 8, 6.8% below its April 30 record. It was on track for its
largest one-day advance since January.
Shares of technology companies also rose, a day after fears about heightened regulation
pushed the tech-laden Nasdaq Composite into correction territory, down more than 10% from
last month’s all-time high. The Nasdaq was up 2.1%.
After anxiety about higher tariffs and slowing economic growth sent stocks and bond
yields tumbling in recent weeks, this week’s central-bank signals fueled bets that the
Fed will lower rates to keep the U.S. economy on solid footing.

Commodities

Gold futures finished with a modest gain to tally a fifth straight session climb, as a
broad rise in benchmark U.S. stock indexes failed to knock prices for the haven metal
lower.
Gold has climbed this week, largely on the back of more tension between the U.S. and
other countries over trade and tariffs along with expectations for lower interest rates
as bond yields have fallen sharply.
Gold for August delivery on Comex rose 80 cents, or nearly 0.1%, to settle at $1,328.70
an ounce after spending much of the session struggling for direction. The settlement was
the highest since Feb. 25, according to FactSet data. Futures for the yellow metal have
now posted gains for five consecutive sessions, the longest since a similar streak ended
on Jan. 31.
In other commodity markets, July wheat prices fell 12 1/2 cents to $5.07 1/4 cents.

Oil Futures

Oil prices dipped into bear-market territory before recovering amid jitters over the
stability of the global economy.
Light, sweet crude for July delivery settled up 0.4% at $53.48 a barrel on the New York
Mercantile Exchange, bouncing off a three-month low. Oil prices traded in bear market
earlier in the session, defined as a 20% pullback from recent highs.
Brent, the global benchmark, rose 1.1% to $61.97 a barrel.
Oil prices, along with other risky assets like stocks and commodities, have been hit
recently by rising concerns that the global economy is slowing, as economic data have
come in weaker than expected and trade tensions between the U.S. and China continue.

Forex

The dollar was little changed in choppy trading intraday after Federal Reserve Chairman
Jerome Powell said the central bank was monitoring trade developments and would respond
as necessary to support the economy.
The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others,
was recently down less than 0.1% at 90.40.

European Markets

Europe closed higher, with the Stoxx Europe 600 up 0.6%, or 2.18 points, to 372.67.
With the gain, the index posted its largest one-day point-and-percentage gain since May
16.
The U.K. FTSE 100 finished the day higher for the second day in a row, closing up 0.4%,
following a positive trend in Germany and France. Stocks worldwide were helped by
indications that the Federal Reserve may cut interest rates if the economy slows due to
trade tensions and economic uncertainty.
The French CAC-40 index was up 26.80 points, or 0.51%, 5268.26 — up for two
consecutive trading days.
And the German DAX was up 178.36 points, or 1.51%, to 11971.17.

Asian Markets

Asian stocks, after starting quietly, turned lower in morning trade and maintained
their weakness through the close.
Hong Kong’s Hang Seng Index was down 0.7%, China’s Shanghai Stock Exchange was down 1%
and Korea’s Kospi was largely flat.
Japan and South Korea finished essentially flat.
Japanese stocks briefly found their way back to positive territory in the afternoon,
but it wasn’t enough to prevent the Nikkei from logging a fifth-straight drop. The
benchmark lost 2.34 points to 20408.54 in logging another near four month closing low.
Likely preventing the Nikkei from ending its losing streak was the yen continuing to
strengthen.
A 1.5-point end-of-session adjustment lower for South Korea’s stock benchmark was
enough to keep it from being one of Asia’s few gainers. After the Kospi posted the
largest gain in the neighborhood Monday, it eased 0.88 point to 2066.97 after staying
close to Monday’s closing level most of the day. The index only moved in an 11-point
range.
Meanwhile, India’s Sensex pared gains on profit-booking after the benchmark stock index
hit an all-time high in the previous trading session. The Sensex closed 0.5% lower at
40083.54, with some of the recent top-performers coming under mild selling pressure.
Much of Southeast Asia will be on holiday Wednesday as Ramadan ends.

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