Wednesday 7th November 2018

OPENING CALL: The Australian market looks to open higher with SPI futures up 11 points.

Australian stocks rose steadily throughout trading and finished just off session highs as the country’s equities outperformed the rebounds seen in most Asia-Pacific markets.
U.S. stocks climbed intraday as investors awaited the results of midterm elections that could change control of Congress and put a brake on much of the White House’s agenda for the next two years.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian stocks rose steadily throughout trading and finished just off session highs as the country’s equities outperformed the rebounds seen in most Asia-Pacific markets. The ASX 200 climbed 1% to 5875.2, a two-week closing high. Energy stocks bounced 1.6% despite ongoing oil price softness and materials advanced 1.7%. But healthcare, a market sore point after surging in the first half, eased 0.2%.

US Markets

U.S. stocks climbed intraday as investors awaited the results of midterm elections that could change control of Congress and put a brake on much of the White House’s agenda for the next two years. Although the stock market remained fairly quiet at midafternoon, some corners were busier as traders placed bets on how the election may reshape the legislative branch of the U.S. government. Gun makers, whose shares tend to jump along with gun sales when Democrats win office, rose sharply on fears that lawmakers could pass firearm legislation. Sturm Ruger gained 3.1%, American Outdoor Brands added 5.4% and Vista Outdoor rose 2.1%. Meanwhile, shares of some coal companies, which have jumped since 2016 as President Trump has repeatedly promised to support the industry and roll back restrictions, dropped. Arch Coal ‘s stock slumped 1.4% and Cloud Peak Energy declined 2.7%. The S&P 500 and the Dow Jones Industrial Average added about 0.5%. The Nasdaq Composite gained 0.6%. Technology shares were among the biggest gainers, with Apple shares up 0.7%. Even with the gains, the company’s shares are off 8.6% since reporting disappointing fourth-quarter guidance Thursday after the market closed.

Commodities

Gold futures ended with a loss, at their lowest settlement in nearly a week, with traders focused on the outcome of the midterm elections that will determine control of Congress.

IRON ORE: 71.50 – 0.74 (December contract)

Oil Futures

Oil prices declined, a day after the Trump administration granted waivers to allow eight nations to continue buying Iranian crude despite U.S.-driven economic sanctions against the Islamic Republic. News reports said President Donald Trump on Monday told reporters that he wants to “go a little bit slower” when it comes to sanctions on Iranian oil because he doesn’t walk to drive up oil prices. That also helped to ease worries about tighter global supplies. The rollercoaster for the oil market “has decelerated not halted, as U.S. grants waivers to eight jurisdictions with some amount of obscurity to continue importing oil from Iran,” Ashray Ohri, an analyst at ICICI Bank, wrote in a note. At the same time, however, the Joint OPEC-Non-OPEC Ministerial Monitoring Committee “grows wary of demand at a time the three largest crude producers in the world are boosting their output to record highs,” Ohri said. JMMC officials monitor implementation of crude output agreement that began on Jan. 1, 2017 between members and nonmembers. West Texas Intermediate crude for December fell 85 cents, or nearly 1.4%, to $62.25 a barrel on the New York Mercantile Exchange. Prices were on track to log a seventh straight decline. January Brent crude, the global benchmark, fell $1.24, or 1.7%, to $71.93 a barrel on ICE Futures Europe.

Forex

The U.S. dollar was little changed intraday ahead of elections that will determine whether Republicans can maintain control of both houses of Congress. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was unchanged at 90.10. The dollar’s moves against other currencies were modest, falling 0.1% against the euro while rising 0.2% against the yen. “The enormity of the election has most people holding tight, sitting on their hands,” said Joe Manimbo, senior market analyst at Western Union Business Solutions. Investors are looking to the outcome for signals about whether President Trump will have the latitude to pursue policies that build on the fiscal stimulus of the $1.5 trillion tax cut passed at the end of 2017. Analysts forecast that if Democrats win either house of Congress, it may impede Mr. Trump’s ability to spend more or cut taxes further. This could weigh on the dollar, which has risen 4.8% this year through Monday, supported by strong economic growth.

European Markets

The Stoxx Europe 600 index closed down 0.3% at 362.55 as investors turned nervous ahead of U.S. midterm elections, where a good performance for the opposition Democrats could spark uncertainty and upset markets. Zalando topped the pan-European fallers, down 8.5% after the Berlin-based online retailer posted a third-quarter net loss. Shares in Spain-based wind-turbine maker Siemens Gamesa Renewable Energy jumped 14.5% after it swung to a fourth-quarter profit and increased orders. Germany’s DAX closed down 0.1%, France’s CAC 40 down 0.5% and the U.K.’s FTSE 100 down 0.9%. Spain’s Ibex 35 was down 0.2% and Italy’s FTSE MIB fell 0.1%.

Asian Markets

Japanese stocks were strong throughout trading, while shares elsewhere needed an afternoon pick me up and others sold off into the close. It was a session all over the map for Asian equities on light volume ahead of the U.S. elections, results of which will arrive during Wednesday’s Asia-Pacific trading. The lack of action could be due to investors’ memory of two years ago, when equities initially plunged on Trump’s win before a big reversal in overseas trading. The benchmark in Japan rose about 1%. Mainland markets bounced after lunch, leaving indexes there modestly lower for the day. The Japanese Nikkei rose 1.1%, partly buoyed by its banks, while China’s Shanghai Composite Index and Shenzhen A-Share lost 0.2% and 0.4%, respectively. Elsewhere in Asia, Taiwan’s tech dominated Taiex benchmark slipped 0.7% after the sector sold off in U.S. hours. Indian shares took a breather ahead of a two-day holiday as investors awaited fresh cues. The S&P BSE Sensex closed 0.1% higher at 34,991.91, ahead of the holidays for a religious festival.

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