Tuesday 20th November 2018

OPENING CALL: The Australian market looks to open lower with SPI Futures down 16 points.

Ongoing struggles in energy stocks helped Australia’s equities benchmark continue to underperform the rest of the region.
U.S. stocks lurched lower intraday, deepening a fall rout that has shaken many investors’ confidence in the technology titans that had led the bull market higher for much of the past year.

Overnight Summary

Market Quotes by TradingView

Each Market In Focus

Australian Market

Ongoing struggles in energy stocks helped Australia’s equities benchmark continue to underperform the rest of the region. The ASX 200 finished down 0.6% at 5693.7, due in part to an 11-point end-of session adjustment lower. Energy lost 1.6%, putting November’s drop at 5.9%. But the sector was hardly alone with financial, healthcare, consumer and utility stocks all down about 1% during the course of today’s trading. REITs finished slightly higher.

US Markets

U.S. stocks lurched lower intraday, deepening a fall rout that has shaken many investors’ confidence in the technology titans that had led the bull market higher for much of the past year. The Dow Jones Industrial Average slid 384 points, or 1.5%, to 25029. The S&P 500 fell 1.5%, and the tech-heavy Nasdaq Composite lost 2.7%. Monday’s stock declines were accompanied by a broad retreat from risk across financial markets. At one point in afternoon trading, the Dow had fallen about 500 points on the day, before recovering somewhat. Meanwhile, bitcoin prices at one point crashed below $5,000 for the first time this year, while Brent crude and copper, two barometers for global growth, retreated. As the selling accelerated, investors flocked to assets that tend to do well during volatile stretches of trading. Treasurys strengthened, and the Japanese yen and the Swiss franc rose against the U.S. dollar. The drawdown was the latest setback for the stock market, which has suffered a series of punishing pullbacks this fall as investors have backed off from many of the technology companies that had powered major indexes’ gains earlier in the year. Downbeat forecasts from companies such as Apple and Facebook have intensified questions over whether the past year’s gains can be justified. Now, investors are grappling with whether the stock market can keep climbing without the support of former market leaders in the technology and communications-services sectors. That is especially true with investors already expecting a broader slowdown in corporate earnings growth as rising rates and a stronger dollar take a greater toll on profits.


Gold prices swung between small gains and losses before closing higher for the fourth consecutive session, boosted by a slightly weaker dollar. Front-month gold for November delivery closed up 0.2% at $1,223.10 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices are down 6.4% for the year, as a stronger dollar has made gold more expensive for overseas buyers and higher Treasury yields have made it less attractive as an investment because gold offers no yield. But on Monday, the WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, declined 0.1%. Investors widely expect another Federal Reserve interest-rate increase next month, and some are waiting to see the central bank’s projections for 2019 to see how monetary policy might impact financial markets. After broader market volatility during October renewed investors’ confidence in gold as a haven asset, the current trend for the precious metal “remains mixed”, without a clear direction. Elsewhere in precious metals, most-active silver futures climbed 0.1% to $14.403 a troy ounce. Platinum rose 1.3% to $857.60 and palladium fell 1.2% to $1,141.30. Among base metals, front-month copper for November delivery added less than 0.1% to $2.8045 a pound as investors monitored updates on U.S-China trade policy. Prices have risen in five consecutive sessions to their highest level since Oct. 3, though anxiety about slower global growth and weaker consumption of materials used in construction and manufacturing have hurt industrial metals throughout the year. On the London Metal Exchange, aluminum for delivery in three months edged down 0.3% to $1,934. Zinc dipped 0.3% to $2,600, tin was up 1.3% at $19,600, nickel fell 1.6% to $11,180 and lead rose 0.2% to $2,002.

IRON ORE: 72.50 + 0.56 (December contract)

Oil Futures

Oil prices edged higher, reversing earlier losses as traders weighed whether the Organization of the Petroleum Exporting Countries and Russia would cut production at their next meeting. Light, sweet crude for December delivery rose 0.5% to $56.76 a barrel on the New York Mercantile Exchange, after trading as low as $55.08 earlier in the trading day. Brent, the global benchmark, settled up 3 cents at $66.79 a barrel. The number of active oil-directed drilling rigs in the U.S. rose by two, taking the total to 888, weekly data published by Baker Hughes on Friday showed. Drilling activity is the highest level since March 2015, as the U.S. pumps record amounts of crude. Analysts said OPEC will have to cut crude production to support oil prices, after the U.S. allowed major buyers of Iranian oil to keep buying after sanctions. The global oil cartel will meet with its allies including Russia on Dec. 6 to discuss reducing output. Expectations that Saudi Arabia will want to cut have kept oil prices buoyed, but the prospect of a lesser deal has kept the market from rallying. Meanwhile, U.S. production has outpaced that of Saudi Arabia and Russia, adding supply to the market and leading to an influx of stockpiles in the U.S. That could put more pressure on OPEC to cut production, some analysts said, and weigh on the market in the longer term.


The U.S. dollar underperformed many of its major rivals following a slump in home-builder sentiment. Otherwise, major themes continued, with investors focusing on the global growth slowdown and European political developments. The National Association of Home Builders’ monthly confidence index dropped to 60 in November, compared with 68 in the previous month, leading the buck to extend its losses versus rivals. The greenback had already traded rather muted earlier in the day, adding on from Friday’s weakness that came on the coattails of comments by Federal Reserve Vice Chairman Richard Clarida. In an interview with CNBC, Clarida Friday offered a more dovish view on the Fed’s monetary policy normalization path, and warned of a slowing global economy. Dallas Fed President Robert Kaplan also acknowledged global slowing. Fed Chairman Jerome Powell also noted the headwinds abroad during a speech last week. The buck continued its modest slide, with the ICE U.S. Dollar Index down 0.3% at 96.198. The New Zealand dollar was the worst performer among developed market currencies, dropping to $0.6836 from $0.6877 late Friday in New York, as the currency retraced its rally from late last week that was helped by weakness in its U.S. rival. In Europe, lingering political tensions remained a factor, with traders focusing on developments surrounding Italy and Brexit news. One euro last bought $1.1452, little changed from $1.1418 late Friday in New York.

European Markets

The Stoxx Europe 600 closed down 0.7% at 355.11, driven by a sharp fall in French automaker Renault after the arrest of CEO Carlos Ghosn–who is also chairman of Nissan–on allegations of financial misconduct, including that he under-reported his salary. Renault shares fell by 8.4%, causing France’s CAC 40 to fall by 0.8%. Germany’s DAX also fell 0.85%, while the U.K.’s FTSE 100 drops a smaller 0.2%, aided by another volatile day for the pound, which remains weak on concerns about Brexit uncertainty. Spain’s IBEX 35 ended down 0.6%, while Italy’s FTSE MIB closed down 0.3%.

Asian Markets

Asian markets mostly rallied despite lingering trade tensions between the U.S. and China at the Asia-Pacific Economic Cooperation summit. An economic summit of world leaders ended Sunday without issuing a communiqué for the first time in its nearly three-decade history amid a fight over Chinese trade practices. Many investors remain hopeful however that U.S.-China trade tensions will cool when President Trump and Chinese President Xi Jinping meet in Buenos Aires in less than two weeks. The two sides are aiming for at least a trade cease-fire that would involve a new set of negotiations tied to a U.S. pledge to hold off on additional tariffs. In Asian trading, Japan’s Nikkei Stock Average rose 0.6%, while Hong Kong’s Hang Seng added 0.7% and the Shanghai Composite Index rose 0.9% as Chinese property companies climbed.

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