Thursday 7th February 2019

OPENING CALL: The Australian market looks to open higher with SPI Futures up 18 points.

Australia’s stock benchmark held its modest gain through the afternoon, despite a pullback by the big banks countering a push higher by resources and industrials shares.
U.S. stocks inched lower intraday, threatening to snap a five-session streak of gains for the S&P 500.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australia’s stock benchmark held its modest gain through the afternoon, despite a pullback by the big banks countering a push higher by resources and industrials shares. The S&P/ASX 200 settled 0.3% higher at 6026.1–a fresh near-four-month high. Each of the four biggest banks retreated more than 1%, eating into a rally yesterday following the release of the final report by a judicial probe into financial-industry misconduct. The big iron-ore miners continued to charge higher, though, with BHP and Rio Tinto adding more than 1% in the wake of the production hit being faced by Brazilian rival Vale. Insurance Australia jumped 4.3% following its 1H results.

US Markets

U.S. stocks inched lower intraday, threatening to snap a five-session streak of gains for the S&P 500. The broad stock-market index edged down 0.3%, while the Dow Jones Industrial Average slipped 16 points, or less than 0.1%, to 25395. Both benchmarks have added about 9% this year but were still 5.3% or more below last year’s records entering the session. The tech-heavy Nasdaq Composite dropped 0.4%, though it remained close to exiting bear-market territory, having risen almost 20% from its Christmas Eve lows. Stocks around the world have mostly bounced higher this week, buoyed by a number of stronger-than-expected earnings reports that have helped ease fears of a rapid slowdown in growth. General Motors, Snap and Capri Holdings, the parent company of Michael Kors and Versace, were among the companies rallying after their latest results. Still, investors have been weighing signs that corporate profits remain resilient against fears that the global economy will weaken faster than expected this year. Data showed German factory orders unexpectedly fell in December, the latest sign that Europe’s biggest economy is struggling for momentum. Despite weak results from China, General Motors shares added 1.3%. The auto maker said strong U.S. sales boosted quarterly revenue, the latest example of steady domestic consumption lifting a company’s outlook. Still, Mr. Lafferty said it could be challenging for stocks to extend their strong 2019 rebound without more positive developments on the earnings front. Profit growth is projected to flatten throughout 2019. Snap shares soared 25% after the company’s results, released late Tuesday, showed it was narrowing its losses as its online advertising revenue picked up. Shares of Capri Holdings rose 12% after the firm posted stronger-than-expected earnings. Semiconductor\ makers also surged following results from Skyworks Solutions and Microchip Technology. Among the laggards, Electronic Arts shares tumbled 12% following the videogame company’s report that revenue for the holiday quarter fell shy of its already reduced forecast. Peer Take-Two Interactive Software also offered disappointing guidance, pulling its shares down 15%. Activision Blizzard, meanwhile, fell 11%.

Commodities

Gold futures settle lower for a fourth straight session, but market bulls continue to expect global growth worries to keep a floor under the yellow metal. Gold for April delivery on Comex lost $4.80, or 0.4%, to settle at $1,314.40 an ounce, following modest losses in each of the past three sessions. Prices settled at their lowest in a week. March silver declined 13.5 cents, or 0.9%, to $15.701 an ounce. President Donald Trump’s State of the Union speech late Tuesday failed to offer any updates on developments linked to trade talks between the U.S. and China. The trade dispute has, at times, provided some haven support for gold. In other metals trade, April platinum lost $6.10, or 0.7%, to $813.80 an ounce, but March copper rose 2 cents, or 0.7%, to $2.837 a pound. March palladium added $10.40, or 0.8%, to finish at $1,351.60 an ounce, with prices logging another record settlement. The previous record was reached on Jan. 17 at $1,348.20. Among exchange-traded funds, the gold-backed SPDR Gold Shares fell 0.4%, while the VanEck Vectors Gold Miners shed 0.5%. Holdings in gold-backed exchange-traded funds and similar products logged a fourth straight month of inflows in January to reach the highest level since March 2013, according to a report from the World Gold Council released. January saw inflows of $3.1 billion, or 72 metric tons, to 2,513 metric tons.

Iron Ore: 87.81 + 1.78 (March Contract)

Oil Futures

Oil prices rose after two sessions of declines as weekly U.S. inventories of crude oil and gasoline increased by a smaller amount than expected amid stronger demand this year versus last. West Texas Intermediate futures, the U.S. oil standard, ended 0.7% higher at $54.01 a barrel on the New York Mercantile Exchange. Brent crude, the global oil benchmark, ended 1.1% higher at $62.69 a barrel on London’s Intercontinental Exchange.

Forex

The U.S. dollar strengthened following President Donald Trump’s State of the Union
address which left little to chew on for currency traders. Instead, market participants focused on the Australian dollar, which fell sharply. The Australian dollar was in focus after Reserve Bank of Australia Gov. Philip Lowe shifted to a neutral monetary policy guidance just one day after the central bank’s policy update was interpreted more hawkishly by the market. The Australian currency last bought $0.7114, versus $0.7235 late Tuesday in New York, a drop of 1.7%. The currency pair touched its lowest level since late January, according to FactSet data. The ICE U.S. Dollar Index traded higher throughout the day’s session, just as it has done each day of the week so far. The popular gauge was last up 0.3% to 96.381. Elsewhere in currencies, the euro was weaker after Germany reported lower-than expected manufacturing orders for December. The construction PMI for the eurozone’s biggest economy also slowed to 50.7 in January, compared with 53.3 prior. Any level above 50 denotes economic growth. The euro last fetched $1.1365, down from $1.1406 late Tuesday, having trended lower for the whole session. The British pound was, meanwhile, slightly weaker $1.2937 versus $1.2949. Sterling trading was quite rangebound for the whole of the day’s session. The Japanese yen was little changed against the dollar after it gave up some earlier gains. One dollar last bought Yen 109.97

European Markets

The Stoxx Europe 600 rose 0.15%, or 0.5 points to 365.5 as traders shrugged off news
that German manufacturing orders dropped again in December, particularly from outside the
eurozone. The DAX fell 0.4% and the CAC-40 is off 0.08% as the Dow Jones Industrial Average dropped 33 points in morning deals. Ubisoft Entertainment shares trade 9.5% lower after U.S. peer Electronic Arts missed expectations. AMS rises 10% after a couple of brokers raised their price targets on the Austrian semiconductor maker.

Asian Markets

Markets in in Hong Kong, Shanghai and Korea remained shut in observance of the Lunar New Year Holiday. Japan’s Nikkei Stock Average edged up 0.1%, with gains capped after Toyota Motor cut its full-year net profit forecast.

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