Friday 9th August 2019

OPENING CALL: The Australian share market is expected to open higher. The SPI Futures is expected to be up 39 points.

Germany’s Adidas reported higher quarterly earnings on strong sales in China and predicted continued growth, but warned that a protracted trade and currency war could derail the global economy and hurt business.

Mexico’s inflation rate eased in July as lower energy costs partially offset moderate increases in prices of other goods and services.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Despite disappointing earnings from AGL Energy and Insurance Australia Group,
Australian shares recovered from early weakness to log a second straight day of gains.
The S&P/ASX 200 closed up 0.75% to 6568.1, the strongest advance for the index in two
weeks.
Gains were fairly broad, though financial stocks lagged as Insurance Australia dropped
5% after its annual numbers and utilities weakened under the weight of a 4.6% retreat by
AGL following its full-year results.
The heavily-weighted big banks were mixed, with ANZ closing down 0.5%, but Commonwealth
recovering 0.3% as it snapped a six-session run lower.

US Markets

The Dow Jones Industrial Average climbed more than 300 points intraday, and investors
sold safe-haven assets such as bonds and gold after China’s latest currency move eased
concerns that the trade fight between the two countries was about to move into an all-out
currency war.
Stocks in the U.S. and around the world advanced after China’s central bank decided to
fix the midpoint for onshore yuan trading at a rate just above 7 a dollar, slightly
higher than analysts had been expecting and a sign the country is avoiding escalating
tensions with the U.S., at least for now. Shares in Europe rose sharply, while major
indexes in Asia snapped multiday losing streaks.
The Dow industrials rose 304 points, or 1.2%, to 26312, as 29 of the 30 stocks in the
blue-chip index notched gains, including aerospace giant Boeing and software firm
Microsoft. The S&P 500 also rose, adding 1.7%, and the Nasdaq Composite added 2%.

Commodities

Gold settled lower after rallying, along with silver, to multiyear highs a day ago.
However, investors remain on edge over trade relations between the U.S. and China, with
that conflict serving as a key longer-term support for a climb in precious metals.
December gold on Comex declined $10.10, or 0.7%, to $1,509.50 an ounce, after marking
the highest level for the precious metal since 2013 based on most-active contracts,
according to Dow Jones Market Data.
Meanwhile, September silver gave up 26 cents, or 1.5%, to finish at $16.936 an ounce,
following the metal’s sharpest one-day gain on a point basis since Sept. 6, 2016 and July
2016 on a percentage basis, according to FactSet data.
In other commodity markets, September wheat prices were up 10 1/4 cents at $4.98 1/2
cents.

Oil Futures

Crude prices rallied from near their lows for the year as investors’ anxiety about
global growth prospects showed signs of easing.
U.S. crude futures advanced 2.8% to $52.54 a barrel on the New York Mercantile
Exchange, snapping a three-session losing streak and trimming some of their August drop
following their lowest close since mid-January a day earlier.
Brent crude, the global price gauge, added 2% to $57.38 a barrel on the
Intercontinental Exchange.
The uptick left Brent down 7.3% on the week, with U.S. crude down 5.6%. Those losses
were larger before a Bloomberg News report late Wednesday said Saudi Arabia was
considering taking action to halt heavy selling.
The world’s largest oil exporter had contacted other crude-producing nations to discuss
policy responses to dropping prices, according to Bloomberg.

Forex

Sterling extended declines intraday as Brexit uncertainty encouraged investors to sell
the currency, taking EUR/GBP to a two-year high of 0.9267, according to FactSet.

Sterling selling has been exacerbated by reports U.K. Prime Minister Boris Johnson would wait until after Brexit
before holding an election following any successful no-confidence vote in his leadership.

European Markets

European stocks closed firmly in positive territory as jitters around the U.S.-China
trade row eased and Chinese exports rose.
Trade numbers out of Beijing showed exports gaining 3.3% in July as the falling yuan
made them more competitive. The FTSE 100 Index climbed 1.2%, the DAX was up 1.7% and the
CAC-40 advanced 2.3%.
The pan-European Stoxx Europe 600 lifted 1.7% to 374.

Asian Markets

The benchmark Shanghai Composite index climbed 0.9%, while Hong Kong’s Hang Seng gauge
rose 0.5%.
Most other major Asian indexes also ticked up.
The Nikkei closed up 0.4% at 20593.35, lifted by electronics and consumer stocks.
Investors remain on the lookout for signs of further easing by central banks, while being
reluctant to build big positions ahead of Japan’s summer holiday season next week.
South Korea’s Kospi rose 0.6% to close at 1920.61, snapping its six-session losing
streak. Construction stocks were among the gainers thanks to bargain hunting after recent
weakness. Markets may get some relief on the Korea-Japan trade-dispute front as Tokyo
imposed no additional export curbs in its action plan announced, said Seoul-based NH
Investment & Securities analyst No Dong-kil. Renewed hopes for more Fed rate cuts also
helped boost sentiment.
Hong Kong’s Hang Seng Index closed 0.5% higher at 26120.77, past the
psychologically-important 26000 after breaching that level earlier this week. The market
was lifted by broad gains for technology and property companies. The HSI have been rising
for two days, but Guosen Securities said downward pressure may persist because of worries
about U.S.-China trade tensions as well as social unrest in Hong Kong.
Meanwhile, Malaysian stocks closed higher, helped by the broadly positive sentiment in
Asia. The Kuala Lumpur Composite Index closed 0.7% higher at 1616.02, just off the
session’s high.
And Singapore shares fell again as trade tensions and global growth worries persist.
The Straits Times Index closed 0.5% lower at 3168.94, giving up its gains from Wednesday,
the only day in the last 7 sessions when the benchmark rose.

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