Friday: 12th May 2017
Each Market In Focus
- The Australian market looks set to follow Wall Street’s negative lead to open modestly lower at the end of budget week.
- At 7.00 a.m. AEST on Friday, the share price futures index was down nine points, or 0.15 per cent, at 5,856.
- Locally, no major economic or equities news is expected on Friday.
- The Australian market on Thursday ended the day steady after early gains by the big four banks evaporated in afternoon trade, and miners fall on weaker iron ore futures.
- The benchmark S&P/ASX200 index rose 2.9 points, or 0.05 per cent, at 5,878.3 points.
- The broader All Ordinaries index was up 0.9 points, or 0.02 per cent, at 5,912 points.
- US stocks have fallen after worse-than-expected sales drops at Macy’s and Kohl’s sparked a selloff in shares of department stores and stirred fears that consumers are not spending enough to drive strong economic growth.
- Macy’s dismal quarterly performance sent its shares tumbling 17 per cent, taking a toll on the consumer discretionary sector, which fell 0.59 per cent. Kohl’s dropped 7.86 per cent after it reported a drop in quarterly sales, while shares of Nordstrom and J.C. Penney Co Inc each dropped more than 7 per cent.
- The weak corporate reports left investors looking to April retail sales data due out on Friday for signs of whether consumers are simply shifting their spending habits away
from department stores, or just aren’t spending.
- The Dow Jones Industrial Average fell 0.11 per cent to end at 20,919.42 points
- The S&P 500 lost or 0.22 per cent to 2,394.44
- The Nasdaq Composite also dropped 0.22
per cent to 6,115.96.
- Gold prices continued to edge higher, as investors turned cautious amid fresh worries of political turbulence in the U.S., after President Donald Trump
unexpectedly fired Federal Bureau of Investigation Director James Comey on Tuesday.
- Gold for June delivery closed up 0.4% at $1,224.20 a troy ounce.
- Copper prices rose, buoyed by a rally in oil and dropping warehouse stockpiles.
- Copper for July delivery closed up 0.5% at $2.5080 a pound on the Comex division of the New York Mercantile Exchange.
- IRON ORE: $65.91 -1.52% ( May contract )
- Oil prices rose as investors became more optimistic about the effects of production cuts from the world’s major oil exporters.
- Some are still buying based on U.S. government data from Wednesday showing falling storage levels, a trend some attribute to global output cuts. Others believe these
exporters, led by the Organization of the Petroleum Exporting Countries, are likely to keep cutting back.
- Light, sweet crude for June delivery recently gained 56 cents, or 1.2%, to $47.89 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 55 cents, or 1.1%, to $50.77 a barrel on ICE Futures Europe.
The U.S. dollar wavered as investors watch U.S. economic data for signs that inflation is firming.
The WSJ Dollar Index, which measures the U.S. currency against 16 others, slipped 0.1% to 90.42. The dollar rose against the British pound but fell against most emerging market currencies and the Japanese yen.
Investors are watching important economic data this week for signs that the U.S. economy continues to strengthen.
Data showed initial jobless claims, a proxy for layoffs across the U.S., decreased to a seasonally adjusted 236,000 in the week ended May 6, coming in below economists’ expectations.
Separately, a gauge of U.S. business prices rose more than expected in April, signaling that price pressures have firmed.
The data comes ahead of Friday’s inflation and retail-sales reports. Evidence that inflation is accelerating would bolster the Federal Reserve’s case for raising interestrates.
Higher rates typically boost the value of the dollar by making U.S. assets more attractive to yield-seeking investors.
The Australian dollar is higher against its US counterpart after being held in a tight range by risk aversion and falls in commodity prices.
At 7.00 a.m. AEDT on Friday, the Australian dollar was worth 73.83 US cents, up from 73.65 US cents on Thursday.
- European shares pulled back on Thursday with Spanish blue chips suffering their biggest one-day loss in six months, weighed down by losses among banks, while
Italian lender UniCredit shone after solid results.
- Traders said equities in the region looked set for a short-term correction after hitting fresh highs this month following the market-friendly outcome of the French presidential vote.
- Earnings and the economic outlook, however, remained strong, pointing to solid prospects for stocks in Europe.
- The DAX fell 0.36 per cent, slightly outperforming broader regional indexes, while Spain’s IBEX lagged with a fall of 1.6 per cent, its biggest daily loss since November 10.
- The pan-European STOXX 600 index fell 0.5 per cent, while eurozone blue chips dropped 0.6 per cent.
- Britain’s top-share index steadied at one-month highs after five straight sessions of gains as disappointing results and downgrades weighed, as well as a slump in Hikma’s
shares after a setback to one of its drugs.
- The blue chip FTSE 100 index ended flat at 7,386.63 points.
- The Bank of England’s inflation report that showed interest rates were unlikely to rise within the next two years and that its Monetary Policy Committee voted 7-1 in favour of keeping rates on hold this month had little impact on British stocks.
- Asian stocks rose, getting a lift from a record high close on MSCI’s global stocks benchmark as strong gains in oil prices buoyed energy shares.
- MSCI’s broadest index of Asia-Pacific shares outside Japan and Japan’s Nikkei both rose 0.3 per cent on Thursday.
- China stocks reversed earlier losses to end higher on Thursday, with sentiment helped by expectations that the central bank will inject funds via its medium-term lending
facility on Friday.
- The blue-chip CSI300 index rose 0.57 per cent to 3,356.65 points, while the Shanghai Composite Index rose 0.29 per cent to 3,061.50 points.
- The People’s Bank of China (PBOC) queried some commercial banks on their demand for medium-term lending facility (MLF) loans and is expected to inject the funds through the MLF on Friday.
- It was not known how much it would inject, via which tenors or whether rates would remain unchanged, but the expectations of a boost to liquidity encouraged investors.
- The S&P/NZX 50 added 0.9 per cent to 7489.710.
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