Tuesday 4th June 2019

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract was up 18 points.

The Nasdaq entered correction territory as tech stocks tumbled, stung by worries regulators will re-evaluate tech giants.

Expectations that the Fed could cut rates this year sent the dollar and bond yields lower.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

The Australian share market is expected to open higher despite a
mixed lead from Wall Street.
The SPI200 futures contract was up 18 points, or 0.29 per cent, at 6,332.0 at 0700
AEST, suggesting a positive start for the benchmark S&P/ASX200 on Tuesday.
On Wall Street overnight, the Dow Jones Industrial Average closed up 0.02 per cent,
the S&P 500 was down 0.28 per cent and the tech-heavy Nasdaq Composite was down 1.61
per cent.
The Aussie dollar is buying 69.77 US cents from 69.14 US cents on Monday.

US Markets

The Nasdaq Composite tumbled into correction territory, hit by fears that regulators
might take a fresh shot at technology giants such as Alphabet and Facebook.
Stocks began the day little changed, but then gave up their gains for the day as a
report that the Federal Trade Commission had secured rights to begin a potential
antitrust investigation into Facebook sent technology shares skidding.
The Nasdaq Composite slid 120.13 points, or 1.6%, to 7333.02, dropping 10% below its
May record. Broader stock indexes’ declines weren’t as deep, as the S&P 500 lost 7.61
points, or 0.3%, to 2744.45 and the Dow Jones Industrial Average fell 4.74 points, or
less than 0.1%, to 24819.78.
Many technology stocks had soared in 2019 as investors piled into fast-growing
companies. But the group has been stung lately by a myriad of issues ranging from worries
about escalating trade tensions to heightened scrutiny by regulators.
Even with the Nasdaq falling into correction territory, the tech-heavy index remains up
more than other major indexes: The Nasdaq is up 11% for the year, while the S&P 500 is up
9.5%.
Facebook slid $13.32, or 7.5%, to $164.15, while Amazon.com lost $82.38, or 4.6%, to
$1,692.69 and Alphabet fell $67.76, or 6.1%, to $1,038.74, erasing its gains for the
year.
Alphabet shares had also been under pressure earlier in the day on a report that the
Justice Department had been given chief oversight over an investigation into how Google
handles its search business.
Traders placed bets on the volatility continuing, sending the Cboe Nasdaq Volatility
Index-which tracks expectations for swings in the Nasdaq-100 over the next month-up 4.3%.

Technology shares slumped in March 2018,
when Facebook came under fire over its privacy and data-use standards. Shares of the
so-called FAANG group-which includes Facebook, Amazon, Apple, Netflix and Alphabet-wiped
out hundreds of billions of dollars in market value in less than two weeks.
Tech shares also slumped at the start of the year after Apple warned that its quarterly
sales in China would likely clock in well below its initial expectations. In the months
that followed, though, much of the tech group rebounded-supported by earnings that have
largely proven to be better than investors had feared.
The bounce higher has allowed much of the tech sector to continue to outperform the
broader market, notwithstanding Monday’s drawdown. Facebook, Netflix, and Advanced Micro
Devices are each up at least 25% apiece for the year, for example.
Technology stocks have also remained popular bets among hedge funds, according to RBC
Capital Markets, which found in an analysis last month that companies in the
communication-services, software and IT-services groups accounted for the majority of
shares that are most held by hedge funds.

Rohstoffe

Gold prices climbed to the highest level in more than three months, lifted by ongoing
trade tensions and concerns about the global economy.
Gold for August delivery rose 1.3% to $1,327.90 a troy ounce on the Comex division of
the New York Mercantile Exchange, its highest settle price since Feb. 26.
Worries that tariffs on China and Mexico could hit economic growth have hit riskier
assets as investors have turned to haven investments like gold and bonds. However, both
countries signaled a willingness to negotiate with Washington over the weekend.
The Dow Jones Industrial Average was up about 0.2% and the S&P 500 was near flat on
Monday.
The WSJ Dollar Index fell 0.3%. Gold is priced in dollars and becomes cheaper for other
currency holders when the greenback weakens.
Meanwhile, copper for July delivery rose 0.4% to $2.6500 a pound in New York.

Oil Futures

Oil prices closed lower following a volatile session, edging closer to bear-market
territory after downbeat U.S. manufacturing data stoked fresh worries about the health of
the world economy.
West Texas Intermediate futures, the U.S. crude benchmark, closed down 0.5% at $53.25 a
barrel on the New York Mercantile Exchange. Prices are 19.7% below their April peaks and
will enter a bear market if they close below $53.04. They were trading at their lowest
level since Feb. 12 and have fallen in seven of the past nine sessions. Still, the market
is up 18% for the year.
Brent crude, the global price gauge, fell 1.1% to $61.28 a barrel on London’s
Intercontinental Exchange.
Oil continued moving largely in tandem with stocks and bond yields Monday as
developments in trade talks and worries about the world economy swung markets in both
directions. An index of U.S. factory activity produced by the Institute for Supply
Management fell to 52.1 in May, the lowest reading since October 2016. Readings above 50
indicate activity is expanding, while those below 50 are a sign of contraction.

Forex

The dollar fell, pressured by expectations that the Federal Reserve is increasingly
likely to lower interest rates amid threats to growth.
The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others,
was down 0.4% at 90.42 in late afternoon New York trading.
Federal Reserve Bank of St. Louis President James Bullard said on Monday that a rate
cut “may be warranted soon” to support the economy. Expectations of lower rates tend to
weigh on the dollar by making the U.S. currency less attractive to investors seeking
yield.
At the same time, the Mexican peso fell against the dollar Monday, pressured by flaring
trade worries between Mexico and the U.S.
The dollar was up 0.8% against the peso, after touching its highest levels since late
last year earlier in the session.
Mexico’s currency has slid in recent days, after the Trump administration’s threat last
week to impose tariffs on all Mexican goods entering the U.S. if the country’s government
fails to stem the flow of illegal immigrants entering the U.S. through its territory.
Mexican officials said Monday they are weighing responses to the threat, but would
rather convince the White House that a negotiated solution is in the best interest of
both countries.

European Markets
Asian Markets

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