Wednesday 8th May 2019

OPENING CALL: The Australian market looks to open lower with SPI Futures down 60 points.

Australian stocks lost most of their gains after the country’s central bank declined to cut interest rates to help bolster a still-slowing domestic economy.
U.S. stock declines deepened intraday, with the Dow Jones Industrial Average falling more than 500 points, as investors reacted to a growing likelihood that the White House will follow through on threats to enact tariffs on Chinese goods later this week.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian stocks lost most of their gains after the country’s central bank declined to cut interest rates to help bolster a still-slowing domestic economy. It was roughly a 50-50 split on whether a reduction would happen, and the Aussie dollar was up some 0.5% versus major currencies on the RBA’s decision. But after rising as much as 0.9% earlier, the benchmark ASX 200 stock index ended with just a 0.2% gain, finishing at 6295.9. The heavily weighted financial sector dropped 0.3%. But materials were strong all day after a Brazilian court overturned a ruling which allowed miner Vale to resume some operations. The reversal sent iron-ore prices sharply higher and materials stocks up 1.3%.

US Markets

U.S. stock declines deepened intraday, with the Dow Jones Industrial Average falling more than 500 points, as investors reacted to a growing likelihood that the White House will follow through on threats to enact tariffs on Chinese goods later this week. The latest volatile reaction to the threats hit shares of trade-exposed companies, including chip makers and retailers that rely on sales from China, and concerns that new tariffs could weaken demand for oil sent energy prices and companies lower. The Dow industrials dropped nearly 550 points, or 2.1%, to 25889, while the S&P 500 fell 2% and the tech-heavy Nasdaq Composite lost 2.3%. Tech companies were among the biggest laggards, as they stand to be hurt by weakened sales in China, a country in which they do much of their business. Companies that manufacture products in China also stand to see their costs rise.

Rohstoffe

Gold futures ended higher, posting their third straight session gain, as U.S. benchmark stock indexes freshly retreated amid apparent challenges for U.S. China trade talks this week – negotiations that markets had generally believed to be all but signed on the dotted line. Gold for June delivery tacked on $1.80, or 0.1%, to settle at $1,285.60 an ounce after tapping a low of $1,279.10. Prices registered a slim 0.2% gain on Monday. In other commodity markets, May wheat prices rose 2 1/2 cents to $4.30 1/2 cents.

Iron Ore: 91.90s + 0.82 (May Contract)

Oil Futures

Crude-oil prices fell, but settled off the session’s worst levels as increasing
tensions between the U.S. and Iran and the threat of disruptions to supplies in the Middle East helped to offset worries that a protracted trade conflict between the U.S. and China will hurt energy demand. The U.S. will deploy four B-52 bombers to the Middle East, in response to what the Trump administration said are threats of a possible attack by Iran on American troops in the region, according to a report from CBS News. West Texas Intermediate crude for June delivery lost 85 cents, or 1.4%, to settle at $61.40 a barrel on the New York Mercantile Exchange, after touching an earlier low of $60.66. Prices posted the lowest front-month contract finish since March 29, according to Dow Jones Market Data.

Forex

The dollar ticked higher intraday, buoyed by gains against emerging-market currencies after U.S. officials accused China of backsliding on trade promises and vowed to implement President Trump’s latest tariff threats. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.1% at 90.76. As stocks fell, the dollar was recently up 0.3% against the Mexican peso and 0.5% against the Indian rupee, while also rising against a range of other emerging-market currencies. Investors tend to pull back from emerging markets during periods of global economic uncertainty. At such times, they also often buy the Japanese yen, which was recently up 0.4% against the dollar.

European Markets

In Europe, auto and oil-and-gas companies dragged the pan-continental Stoxx Europe 600 down 1.4%. The index finished down 5.31 points, or 1.37%, to 381.64, posting its largest one-day point-and-percentage decline since Feb. 7. The FTSE 100 index closed the day down 1.2% as investors returned from a holiday and played catch up to Monday’s losses on the continent. The French CAC was down 87.77 points, or 1.60%, to 5395.75 — its largest one-day point-and-percentage decline since March 22. And the German DAX was down 194.14 points, or 1.58%, to 12092.74 — its largest one-day point decline since Feb. 7.

Asian Markets

Asian equities reversed some of Monday’s noted selling, while the three markets which were closed Monday for a holiday — Japan, South Korea and Thailand — all logged declines. The Nikkei’s decline was the biggest at 1.5% as Japan’s market had been closed for a 10-day holiday. Meanwhile, Chinese stocks had a roller-coaster session following Monday’s plunge before finishing with gains of more than 0.5%. Southeast Asia performed better, with indexes there rising at least 0.5%. Most indexes rose after China’s Commerce Ministry said Vice Premier Liu He will visit Washington to continue trade talks on Thursday and Friday. The move comes after initial reports suggested the talks could be delayed or canceled altogether. The Shanghai Composite rose 0.7% while the Hang Seng gained 0.4%. Japan’s Nikkei fell 1.5%, however, as it played catch up with other indexes after reopening following an extended period of holiday closures. Indian shares were among key underperformers in Asia even as many equity markets in the region partly recovered from yesterday’s heavy selling. The S&P BSE Sensex ended down 0.8% at 38276.63 with only 7/30 constituents ending higher.

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