Friday 8th February 2019

OPENING CALL: The Australian market looks to open lower with SPI Futures down 41 points.

Down Under equities shined as most Asia Pacific markets have risen to extend the start-of-2019 rebound.
The Dow Jones Industrial Average slumped more than 250 points intraday as U.S.-China trade tensions and a bleaker outlook from the Bank of England renewed fears of a slowdown in global growth.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Down Under equities shined as most Asia Pacific markets have risen to extend the start-of-2019 rebound Australia’s ASX 200 climbed a further 1.1% to another four-month high.

US Markets

The Dow Jones Industrial Average slumped more than 250 points intraday as U.S.-China
trade tensions and a bleaker outlook from the Bank of England renewed fears of a slowdown
in global growth. Investors have grappled with conflicting signals about the durability of the global economic expansion this year, something that has kept enthusiasm for risk-taking contained even after markets rallied in January. The losses accelerated after White House economic adviser Larry Kudlow said China and the U.S. were still far away on striking a trade deal in an interview with Fox Business Network. A White House official later said President Trump is “highly unlikely” to meet with Chinese President Xi Jinping ahead of the March 1 deadline for a resolution. Trade-sensitive stocks, including machinery giant Caterpillar , aerospace company Boeing and tool maker Stanley Black & Decker, each shed at least 1%. Those losses weighed on the Dow industrials, which slid 286 points, or 1.1%, to 25106, on pace for their biggest percentage drop since Jan. 22. The S&P 500 lost 1.4%, after snapping a five-day winning streak Wednesday. The Nasdaq Composite shed 1.4%.

Commodities

Gold futures suffered a fifth consecutive loss, with overall strength in the U.S. dollar prompting the metal to post its longest streak of declines since June 2017. However, risk-off sentiment, on the back of a selloff in U.S. and European stocks, capped losses for haven gold. Gold for April delivery fell 20 cents to settle at $1,314.20 an ounce. It was down a fifth straight session, logging the longest losing streak for a most-active contract in roughly 20 months, according to FactSet data. Prices marked their lowest settlement in just over a week and trade down by 0.6% week to date. In other commodity markets, March wheat prices fell 12 3/4 cents to $5.13 1/4.

Iron Ore: 90.31 + 3.06 (March Contract)

Oil Futures

Oil prices fell to their lowest level in more than a week due to renewed worries of a
global economic slowdown that could pinch demand for oil. West Texas Intermediate futures, the U.S. oil standard, ended 2.5% lower at $52.64 a barrel on the New York Mercantile Exchange. Prices have fallen three of the past four sessions, and the closing prices were the lowest since Jan. 28. Brent crude, the global oil benchmark, ended down 1.7% at $61.63 a barrel on London’s Intercontinental Exchange. Oil prices began to come under pressure overnight when policymakers at the Bank of England warned — like their counterparts elsewhere — of a global economic slowdown, and said it could be “sharper and possibly more persistent.” Crude prices tumbled even more after White House economic adviser Larry Kudlow said in an interview with Fox Business Network that China and the U.S. still have a ways to go before reaching any agreement on a trade deal.

Forex

The dollar pared its gains intraday, as concerns over a trade conflict between the U.S. and China pushed investors into haven currencies. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently unchanged at 89.57, from 89.72 earlier in the session. The dollar was down 0.2% against the Japanese yen, a popular destination for nervous investors. White House economic adviser Larry Kudlow said in an interview with Fox Business Network that China and the U.S. were still far from striking a trade deal. Hopes that the two countries were closer to reaching a trade agreement have helped push stocks and other risk assets higher in recent weeks. Meanwhile, concerns over global growth weighed on the euro. The European Union warned that the eurozone economy will grow by 1.3% in 2019 instead of the 1.9% forecast in November, pressured by flagging demand from China and political uncertainty.

European Markets

The Stoxx Europe 600 dropped 1.5%, or 5.44 points, to 360.08 after European
economic-growth forecasts were revised down, not helped by a profit warning from tour
operator TUI. The DAX dropped 2.7%, the CAC 40 was off 1.8% and the euro retreats 0.04% against the dollar to $1.1358. “With 2019 growth forecasts in both the eurozone — 1.3% from 1.9% — and Germany — 1.1% from 1.8% — taking a substantial hit, it comes as no surprise to see both stocks and the euro declining sharply in response,” said IG’s Joshua Mahony. Shares in TUI backtracked 19% after the tour operator cut its underlying earnings guidance for the year ahead.

Asian Markets

Stocks in Asia were mixed, though with exchanges in Shanghai and Hong Kong remaining closed in observance of holidays, trading volumes were relatively muted. Japan’s Nikkei Stock Average fell 0.6% — among the lone decliners most of the day — hurt by earnings news from Toyota. South Korean stocks ended barely changed after a choppy trading session following a three-day holiday break for the Lunar New Year. The Kospi closed down 0.04% at 2,203.42. The benchmark index initially started higher on positive sentiment about U.S. President Trump’s plan for a second peace summit with North Korean leaders later this month, but soon started oscillating between small gains and losses. Indonesian shares retreated amid mixed sentiment across regional markets. The JSX index fell 0.2% at 6536.458 with 226 losers and 199 gainers. Singapore’s benchmark share index closed at its highest in a week, as local shares catch up on gains in other world markets after a two-day holiday. The Straits Times Index gained 0.5% to close at 3200.64.

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