Thursday 06 December 2018

OPENING CALL: The Australian market looks to open higher with SPI Futures up 13 points.

The ASX 200 finished 0.8% lower at 5668.4, dropping for a 3rd day in 4 days. The materials sector eased just 0.1% and utilities climbed 1.4%. But financials fell 1.25% and IT lost 2.8%.
U.S. markets were closed for a day of mourning for former President George H.W. Bush.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian stocks slowly trended higher following the initial skid on the U.S. market’s swoon, erasing more than half of their early declines by day’s end. The ASX 200 finished 0.8% lower at 5668.4, dropping for a 3rd day in 4 days. The materials sector eased just 0.1% and utilities climbed 1.4%. But financials fell 1.25% and IT lost 2.8%.

US Markets

U.S. markets were closed for a day of mourning for former President George H.W. Bush.

Commodities

Gold prices edged lower, as investors awaited U.S. employment data due out at the end of the week. Gold for February delivery was recently down 0.2% at $1,244.20 a troy ounce on the Comex division of the New York Mercantile Exchange. U.S. employment data due out Friday would give market participants a view on how robustly the economy is growing. A strong number could bolster the case for the Federal Reserve to raise interest rates more aggressively and dent prices for gold, an asset that struggles to compete with yield-bearing investments when rates rise. In base metals, copper was up 0.5% at $2.7740 a pound, supported by a rise in oil prices. Swings in oil tend to sway copper because many investors trade the two commodities as part of a single basket, with a greater share devoted to oil.

IRON ORE: 65.91 + 0.37 (December contract)

Oil Futures

Oil prices declined, reversing an early rally, as investors awaited a meeting between major oil producers to discuss cutting output. Light, sweet crude for January delivery ended 0.7% lower at $52.89 a barrel on the New York Mercantile Exchange. Prices earlier rose to as high as $54.44 after gaining 4.6% over the previous two sessions, the biggest two-day gain since June 27. Brent, the global crude-oil benchmark, ended 0.8% lower at $61.56 Wednesday. U.S. oil prices have fallen about 30% from the multiyear highs of around $76 a barrel in early October. The tumble has prompted the Organization of the Petroleum Exporting Countries and other top producers, including Russia, to consider cutting production levels at a meeting in Vienna set for Thursday. Some type of decision from OPEC to cut production seemed the most likely outcome after Oman oil minister Mohammed Al Rumhi told reporters that participants in a Wednesday technical meeting, including Russia, “recommended there is a need for reductions.” The official, however, refused to say what volumes were being considered. A production-cut deal could help decrease rising global inventories, allowing U.S. oil prices to rebound from the lows reached last month of under $50 a barrel. President Trump has voiced opposition to a deal that would reduce crude production, saying on Twitter Wednesday, “Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!” While some OPEC officials said in recent days that investors shouldn’t assume there will be an output cut, many analysts are confident a deal will be reached. “OPEC has a long history of playing a bit of smoke and mirrors in situations like this,” said Dominick Chirichella, an analyst at Energy Management Institute. “There will be a significant cut of at least 1 million barrels a day, or more.” Ahead of the OPEC meeting, the American Petroleum Institute posted Tuesday an across-the-board bearish report that showed U.S. inventories of crude oil, gasoline and distillates rose by a combined 13 million barrels last week. The official inventory report from the Energy Information Administration won’t be released until Thursday, but some analysts said the bearish API data may oddly be bullish for oil prices if it helps convince OPEC to act aggressively.

Forex

The U.S. dollar rose intraday as stocks in Europe and Asia slid in the wake of Tuesday’s steep declines the Dow industrials and S&P 500. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, rose 0.2% to 90.43. Investors have driven the dollar higher in recent months, betting that trade frictions will hurt the U.S. less than it will other economies world-wide. The euro was recently down 0.1% to $1.1325, according to FactSet. The dollar inched up 0.4% against the yen to ¥113.20.

European Markets

The Stoxx Europe 600 index closed down 1.2% at 354.27 after Wall Street racked up heavy losses for a second day on Tuesday. With U.S. markets closed, European markets have continued the downbeat tone, analysts said. “The closure of U.S. markets today has left Europe bereft of any real direction, although the bearish tone persists,” said Chris Beauchamp, analyst at IG. Technology stocks were among the biggest fallers, with Altran Technologies falling 8% and ams AG down 6.1%. The U.K.’s FTSE 100 and France’s CAC 40 both lost 1.4%, while Germany’s DAX was down 1.2%. Falls in peripheral stocks were less severe, with Italy’s FTSE MIB down just 0.1% and Spain’s IBEX 35 down 0.6%.

Asian Markets

Asian stocks fell, tracking a brutal session on Wall Street, but optimism over the trade front after comments from the Chinese government helped stem the losses. Fresh comment on the trade front from China appeared to help keep a lid on selling. A spokesman for China’s Ministry of Commerce said in a statement Wednesday that it will begin implementing measures agreed with the U.S. “immediately,” acknowledging the 90-day timetable for trade talks referenced by U.S. President Donald Trump on Tuesday. Hong Kong’s Hang Seng Index closed down 1.6%, with tech stocks seeing pressure – Tencent shedding 2.3% and smartphone-component firms AAC and Sunny Optical off 3.7% and 7.3%, respectively. Banks also fell, with HSBC down 2% and China Construction Bank off 2.7%. In mainland China, the Shanghai Composite finished off 0.6% while the smaller-cap Shenzhen\ Composite ended with a 0.2% rise. Japan’s Nikkei closed 0.5% lower, with financial stocks faring poorly – insurer Dai-Ichi Life and Nomura fell around 3% each. Robotics maker Fanuc dropped more than 3%.

South Korea’s Kospi dropped 0.7%, with Samsung down 1.7%. Benchmarks in Taiwan and
Singapore fell 1.7% and 0.5%, respectively.

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