Wednesday 7th August 2019

OPENING CALL: The Australian share market is expected to open higher. The SPI Futures is expected to be up 47 points.

Treasury yields moved a bit higher intraday after China’s central bank signaled it wouldn’t let the yuan fall further, encouraging investors to shift some money back to riskier assets like stocks.

Amazon’s PillPack mail-order pharmacy is accused by a health-technology company of improperly obtaining patient prescription data, in the latest sign that Amazon’s foray into healthcare is running up against industry incumbents.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian shares sank to a two-month low, caught in the global tide of selling on the
latest escalation in the U.S.-China trade dispute.
The S&P/ASX 200 closed down 2.4% to 6478.1, the steepest one-day fall since late
October. The index is now down five sessions running, pulling back by 5.4% on last
Tuesday’s record-high close.
Losses were led by drops of more than 3% in technology and health care subindexes.
Three of the four biggest banks were down by more than 2%, while Commonwealth Bank
slipped 1.7% ahead of its full-year report, due Wednesday. The materials sector fared
slightly better, easing just 1%, helped by a rebound in Fortescue’s shares after steep
falls in the last two sessions.

US Markets

Major U.S. stock indexes recouped some of their losses intraday after China’s central
bank signaled it wouldn’t let the yuan fall much further, steadying a stock market that
had been slammed by escalating trade tensions.
A lull in geopolitical tensions between the world’s two biggest economies helped put
major indexes on track to notch their first gain in several days after China’s central
bank signaled it wouldn’t let the yuan fall much further.
After a big move downward for stocks to open the week, the U.S. Treasury Department
late Monday labeled China as a currency manipulator. China’s signaling after that helped
push all three major indexes higher.
The Dow Jones Industrial Average climbed 244 points, or nearly 1%, to 25956 in recent
trading, trading near its highest point of the session. The S&P 500, meanwhile, added
1.1%, and the Nasdaq Composite rose 1.3%. If the gains hold, the Dow is on pace to snap a
five-day losing streak, while the S&P 500 and Nasdaq are poised to notch their first gain
in seven trading sessions.

Commodities

Gold prices finished regular trade modestly higher, marking a third straight gain a day
after the precious metal extended its rally toward fresh six-year highs, amid escalating
trade policy tensions between China and the U.S.
Gold for December delivery on Comex rose $7.70, or 0.5%, to settle at $1,484.20, after
ending 1.3% higher on Monday, extending its highest finish for a most-active contract
close since 2013, according to Dow Jones market data.
September silver added 5.2 cents, or 0.3%, to end at $16.445 an ounce, after booking an
0.8% gain in the prior session.
Bullion has been gaining traction on the back of worries that the U.S.-China tariff
conflict won’t subside soon. An environment with debt yields also hovering at ultralow
levels, and in many cases negative levels, also has supported buying of the yellow metal,
which tends to rise during times of global economic uncertainty.
In other commodity markets, September wheat prices were down 10 1/2 cents at $4.84
cents.

Oil Futures

Oil prices ended 1.9% lower at $53.63/bbl. after a monthly report pointed to another
decline in global oil-demand growth, and as U.S.-China trade tensions continue.
The EIA said in its monthly Short Term Energy Outlook that for a seventh straight month
it was reducing its forecast for 2019 world-wide oil consumption. It now sees this year’s
global oil consumption at 100.9M BPD, just 1M BPD more than 2018’s 99.9M, and down from a
2019 forecast of 101.5M BPD in its January outlook report.
Crude investors next will watch for API data at 4:30 p.m. ET on weekly U.S. oil
inventories, which could show another, bullish decline.

Forex

The U.S. dollar was up intraday against the Japanese yen and Swiss franc, flat against
the euro and down against the British pound and a broad range of emerging-market
currencies, as investors turn back to riskier assets after China’s central bank signaled
it wouldn’t let the yuan fall further.
Separately, the Australian dollar has also gained against the dollar after the Reserve
Bank of Australia left interest rates unchanged, pausing in its move toward lower rates.

The WSJ Dollar Index was recently up less than 0.1% at 90.82. c

European Markets

The Stoxx Europe 600 Index finished the day down 1.72 points, or 0.46%, to 367.71.
The FTSE 100 closed in the red as concerns over trade between the U.S. and China
continued. Rolls-Royce Holdings shares closed down 6.9% and was the biggest faller of the
session, while Royal Bank of Scotland Group led the index and finished up 1.7%.
Meanwhile, the French CAC-40 Index was down 6.90 points, or 0.13%, to 5234.65 while the
German DAX was down 90.55 points, or 0.78%, today to 11567.96.

Asian Markets

The Nikkei ended 0.7% lower at 20585.31, as investors grew increasingly concerned over
the escalating U.S.-China trade tensions.
Electronics maker Hitachi closed 1.2% lower and Nidec was off 1.8%. Lender Sumitomo
Mitsui Financial and Mitsubishi UFJ Financial each closed 0.5% lower.
Several of the region’s largest blue-chip stocks hit multiyear lows, including Hong
Kong-listed shares in Industrial & Commercial Bank of China and China Construction Bank,
and CK Hutchison Holdings, the flagship conglomerate of Hong Kong tycoon Li Ka-shing. In
Tokyo, they included Panasonic, Honda and Canon.
The Hang Seng’s decline set it on course to turn negative for the year, joining South
Korea’s Kospi.
For now, said Louisa Fok, China equity strategist at Bank of Singapore, investors
should look to cut their holdings of regional stocks, at least until there is more
clarity from the U.S. about additional tariffs. “We recommended investors to reduce
equities in Asia amid rising uncertainties surrounding trade and global growth,” she
said.
Hong Kong’s Hang Seng Index fell below 26000 for the first time since January, as
investors took flight on concerns over sluggish economic growth, a weakening yuan and
street protests. The HSI closed 0.7% lower at 25976.24, down for the fifth consecutive
session.
The FTSE Bursa Malaysia KLCI closed 0.1% higher at 1611.79 as value started to emerge
in some blue chips after surging U.S.-China trade tensions roiled global markets. The
benchmark index recovered after hitting a session low of 1588.98.
Meanwhile, Singapore shares settled 0.8% lower at 3170.47 as U.S.-China trade tensions
escalated, with the U.S. designating China as a currency manipulator. Banks and REITs led
the losers, with DBS down 1.6% and United Overseas Bank falling 1.0%.
And Indian stocks close higher, lifted by banks, which broadly reversed Monday’s
declines. The BSE Sensex gained 0.8% to close at 36976.85. Yes Bank was up 5.3% after
tumbling around 8% in the previous session.

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