Thursday 8th August 2019

OPENING CALL: The Australian share market is expected to open lower. The SPI Futures is expected to be down 11 points.

China’s abrupt devaluation of the yuan this week is an acknowledgment from Beijing that its economy needs help, a vulnerability Chinese policy makers have played down during the trade conflict with the U.S.

The White House will start implementing provisions of a law that bans the U.S. government from doing business with Huawei Technologies, moving ahead with restrictions despite Huawei’s court challenge.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

The S&P/ASX 200 advanced 0.6% to 6519.5, snapping a five-session losing streak and
tracking the recovery across much of the region, after China signaled it wouldn’t allow
the yuan to fall much further.
The rise, while broad, was led by property trusts and gold miners, often bought as safe
havens. Commonwealth Bank held back gains in the banking sector, falling 1.4% after
missing expectations with its full-year earnings. Suncorp jumped 4.8% with its own
results. Reporting season continues to build, with AGL Energy, Insurance Australia and
Mirvac’s annual reports due tomorrow.

US Markets

A flight to safety that drove down bond yields globally sparked renewed volatility in
the stock market intraday, highlighting continued uncertainty about how the trade and
currency battle between the U.S. and China will play out.
Major U.S. stock indexes fell sharply before clawing back some of their losses in
trading midday. The S&P 500 was recently down about 0.4%. The Dow Jones Industrial
Average recently fell about 142 points, or 0.6%, after dropping 589 points in early
trading. The Nasdaq Composite fell about 0.1%. The large swings come a day after stocks
rebounded to break a streak of declines amid trade tensions.
The prospect of lower interest rates around the world stoked investors’ anxiety about
the economy after trade tensions between two of the world’s biggest economies have
already rattled many. Policy makers in India, New Zealand and Thailand moved aggressively
to support growth and inflation, all cutting interest rates by more than investors had
expected.
That helped prompt investors to buy government bonds and gold-assets considered
relatively safe-while selling U.S. stocks and oil. Gold prices topped $1,500 a troy ounce
for the first time in six years. Meanwhile, U.S. crude futures headed for their lowest
close in seven months.
The Federal Reserve trimmed rates last week, and investors have recently ramped up
wagers that they will continue to cut rates. Investors are putting 60% odds that the Fed
will lower rates another 0.75 percentage point this year, up from 8% last week, according
to CME Group.

Commodities

Silver prices surged by the most in nearly three years and gold settled sharply above
an important psychological level at $1,500, amid a round of easy-money policies that
helped to stoke fresh appetite for the perceived safety of precious metals.
The 10-year U.S. Treasury note’s fall to new lows not seen since 2016 below 1.7%, also
helped to drive demand for bullion.
September silver surged 75.1 cents, or nearly 4.6%, to end at $17.196 an ounce, after
gaining or 0.3% on Tuesday, breaching its own psychologically important level above $17.
That marks silver’s highest level since 2018, and the firmest one-day gain for gold’s
sister metal one point basis since Sept. 6, 2016 and July 2016 on a percentage basis,
according to FactSet data.
Meanwhile, December gold on Comex added $35.40, or 2.4%, to finish at $1,519.60,
marking the highest level for the precious metal since 2013 based on most-active
contracts, according to Dow Jones Market Data. The gain also is the most-active
contract’s largest daily advance since June 20 when the precious metal surged $48.10 or
3.6%, according to FactSet data.
Elsewhere on Comex, October platinum added $17.80, or 2.1%, to $871 an ounce. September
palladium shed $26.70, or 1.9%, to settle at $1,410.30 an ounce.
September copper rose 1.35 cents, or 0.5%, to end at $2.571 a pound.

Oil Futures

U.S. oil prices ended 4.7% lower at $51.09 a barrel, the lowest closing price since
January, in a selloff fueled by worries of both oversupply and underdemand.
U.S.-China trade tensions continued to stir concerns of lower global economic growth
that will curb demand, while a weekly EIA report showed U.S. crude-oil and gasoline
inventories unexpectedly rose.

Forex

China’s central bank set its official yuan rate at the weakest since 2008, but still
kept it below the symbolic seven-yuan-a-dollar level, at 6.9996. The offshore yuan
Wednesday was down 0.4% against the U.S. dollar at 7.0784.
Elsewhere, the New Zealand dollar fell 1.4% against the U.S. dollar after its central
bank unexpectedly cut interest rates beyond economists’ forecasts. The Reserve Bank of
New Zealand lowered its official cash rate by 0.5 percentage point and signaled it could
soon adopt unorthodox policy amid a deteriorating global-growth outlook.

European Markets

The Stoxx Europe 600 ticked slightly higher, rising 0.2%.
UniCredit UCG cut its revenue guidance for the year due to an environment of low
interest rates. The bank’s second quarter net profit rose 81% to €1.85 billion ($2.07
billion) following its sale of online broker FinecoBank.
Glencore reported a 32% drop in core profit as falling copper prices hit the
commodities producer and trader. The Anglo-Swiss miner also revealed it would halt
production at the world’s largest cobalt mine. The economic viability of Mutanda, in the
DRC has been reduced due to lower cobalt prices.
Bayer and Lanxess both made considerable gains after agreeing to sell their stakes in
chemical site operator Currenta to Macquarie Infrastructure and Real Assets for €3.5
billion. Bayer, which held a 60% stake in Currenta, jumped 6% in early trading.

Asian Markets

he Shanghai Composite Index and Japan’s Nikkei both declined around 0.3% and Korea’s
Kospi dropped 0.4%.
China’s central bank on Wednesday set its official yuan rate at the weakest since 2008,
but still kept it below the symbolic seven-yuan-a-dollar level, at 6.9996.
Hong Kong stocks snapped a five-session losing streak that brought the Hang Seng Index
below 26000.00 for the first time since January. The HSI closed 0.1% higher at 25997.03.

Indian stocks fell after the Reserve Bank of India lowered its forecast for India’s GDP
growth this year and cut interest rates more than expected. The BSE Sensex closed 0.8%
lower at 36690.50, among the worst performers in the region as the central bank’s move
confirmed concerns about an economic slowdown.
Singapore shares closed higher, with the FTSE Straits Times Index up 0.5% at 3184.69,
supported by bank and commodity stocks.

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