Friday: 20th July 2018

OPENING CALL: The Australian market looks to open lower with SPI Futures down 11 points.

Australian shares look set to open lower on the back of a fall on Wall Street overnight sparked by concerns the European Union could slap retaliatory tariffs on goods imported from the United States.
U.S. stocks declined intraday as a round of lukewarm corporate earnings reports and renewed trade tensions weighed on sentiment.

Overnight Summary

Market Quotes by TradingView

Each Market In Focus

Australian Market

Unlike other Asia Pacific stock markets which faded in the afternoon, Australia didn’t. Logging a second-straight gain, the S&P/ASX 200 advanced 0.3% to 6262.7 as mining-services firm Cimic surged 17% following its latest results. Meanwhile, the major banks logged a third consecutive advance. But the energy sector was capped by a 0.9% fall in Woodside and a 0.5% drop in Oil Search following its second quarter production reports the past day-plus. Metals firm South32, though, climbed 2% to outpace other materials stocks on record production by its Australian manganese operations.

US Markets

U.S. stocks declined intraday as a round of lukewarm corporate earnings reports and renewed trade tensions weighed on sentiment. The Dow Jones Industrial Average fell 96 points, or 0.4%, to 25104. The S&P 500 shed 0.2%, and the technology-heavy Nasdaq Composite dropped 0.2%. The S&P’s financial sector was the weakest of the 11 sectors in the broad index, falling 1.2%. Shares of big U.S. banks had risen over much of the past week after the firms posted results that generally beat market expectations. But reports from American Express, Bank of New York Mellon and Travelers weren’t received as favorably. American Express fell 2.8%, despite reporting strong card-member spending and loan growth. Bank of New York slumped 5.7% after posting weaker-than expected revenue, and Travelers dropped 3.5% as weather-related catastrophes dented its bottom line. Shares of Wells Fargo, meanwhile, were little changed after The Wall Street Journal reported the bank is in the process of refunding tens of millions of dollars in charges added to customers’ accounts without their full understanding.


Metals prices took a battering as a new volley of tariff threats prompted investors to dump hard commodities. Gold, which traded at the lowest point in a year, fell 0.3% to $1,222.40 a troy ounce.
That move came partly thanks to the continued rise in the U.S. dollar. Copper contracts for July fell 2.4% to $2.686 a pound at the Comex division of the New York Mercantile Exchange, closing at the lowest point since July 14 last year. Both industrial and precious metals were hit by widespread selling. Meanwhile, September wheat rose 9 3/4 cents to $5.04 1/8 a bushel.

IRON ORE: $64.68s + 0.74 (August contract)

Oil Futures

Oil futures saw mixed trading, with U.S. benchmark crude ending higher on the heels of news that Saudi Arabia’s OPEC governor expects the kingdom’s crude exports to fall next month in an effort to avoid oversupplying the market. Global benchmark crude prices, however, settled slightly lower following an end to an oil-workers’ strike in Norway that began more than a week ago. August West Texas Intermediate crude on the New York Mercantile Exchange rose 70 cents, or 1%, to settle at $69.46 a barrel after touching a low of $67.80. Prices often see volatile trading ahead of a contract expiration. The August contract expires at the end of Friday’s session. Global benchmark September Brent crude, however, declined by 32 cents, or 0.4%, to $72.58 a barrel on ICE Futures Europe after trading as high as $73.79.


The dollar fell intraday, erasing previous gains after President Donald Trump said he hoped the Federal Reserve would stop raising interest rates. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently down 0.02% at 88.70, after hitting its highest level since May 2017 earlier in the session following the Labor Department’s announcement that U.S. jobless claims last week were at their lowest level since December 1969. During an interview conducted by CNBC, Mr. Trump said of interest-rate increases, “I am not happy about it.” His comments depart from a convention in which the president has refrained from expressing views specifically on monetary policy. The dollar tends to benefit from expectations that the Fed will tighten monetary policy, as higher rates make the currency more attractive to yield-seeking investors. Earlier this week, Fed Chairman Jerome Powell gave an upbeat assessment of the U.S. economy to Congress, saying that strong growth and stable inflation should keep the central bank on track to gradually raise short-term interest rates.

European Markets

The Stoxx Europe 600 index closed down 0.2% at 386.18, pulled lower by a fall on Wall Street, with analysts noting simmering trade tensions between the U.S. and the EU. U.S. President Donald Trump said the EU’s $5 billion antitrust fine on Google is evidence that the bloc has “taken advantage of the U.S.,” while the EU has threatened to retaliate against U.S. plans for tariffs on EU car exports. Josh Mahony at IG said relations between the two “seem to be at an all-time low.” Germany’s DAX index and France’s CAC 40 both ended 0.6% lower, while Italy’s FTSE MIB and Spain’s IBEX 35 ended down 0.4% and 0.3% lower, respectively. The U.K.’s FTSE 100 index outperformed, however, ending up 0.1% following a sharp fall in the pound after weak U.K. retail sales data.

Asian Markets

On Wednesday, a few Asian stock markets faded in the afternoon to finish lower. There were more of them in the next session as early strength again failed to last. New inclusions were Japan — ending a four-day winning streak — and Taiwan. Meanwhile, the Shanghai Composite logged a fifth-straight drop as Chinese equities logged some of the region’s biggest declines, especially small caps. But Southeast Asia again was resolute, with gains absent the 0.85% drop in the just-closed Philippines. The Shanghai Composite dropped 0.5%, Hong Kong’s Hang Seng was down 0.4% and Japan’s Nikkei fell 0.1%.

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