Friday 14th June 2019

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract was up 9 points.

Volkswagen Follows Tesla Into Battery Business, the German auto giant is investing $1 billion in battery projects with a Swedish startup founded by two of Elon Musk’s former hires.

 

Most economic forecasters are pessimistic the Trump administration’s trade-tariff policy will reap long-term benefits for the economy, according to The Wall Street Journal’s latest monthly survey.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Morning stock gains faded in Australia as the country’s benchmark was capped by the
latest swoon overnight in oil prices.
The ASX 200 fell 1.3 points to 6542.4 as energy skidded 2.4%, erasing this week’s
gains.
Consumer-discretionary stocks slid the same. But health care rebounded 1.7% and the
heavily weighted financials rose 0.5%.

US Markets

Rising shares of energy companies led the S&P 500 higher intraday, putting the broad
index on pace for its first gain in three days.
Shares of Exxon Mobil, Hess, Phillips 66 and other energy companies all rose in the
aftermath of an attack on two oil tankers on one of the world’s busiest energy-shipping
routes. The incident sent oil prices sharply higher on fears of a possible trade
disruption, making energy stocks, which have struggled this quarter, look attractive.
The S&P 500 was up 0.3% in recent trading, as energy stocks rose 1.1%, leading the
broad index higher after two back-to-back sessions of losses. Modest gains from
technology, consumer discretionary and financial stocks added further support, offsetting
losses among the market’s more defensive corners, including consumer staples and
health-care stocks.

U.S. government-bond prices rose intraday, as fears of a military standoff in the
Persian Gulf sent investors into assets perceived as safe.
The yield on the benchmark 10-year Treasury recently traded at 2.102%, according to
Tradeweb, compared with 2.129% Wednesday. Yields fall as bond prices rise.
The yield declines came after two oil tankers were damaged in attacks off the coast of
Iran early, stoking concerns over trade disruptions in the Strait of Hormuz and raising
demand for Treasurys and other so-called haven assets.
Signs of muted inflation, together with worries over slowing global growth, have buoyed
Treasurys in recent months, driving the 10-year yield down from multiyear highs reached
late last year. Muted inflation helps preserve the purchasing power of bonds’ fixed
payments.

Matières premières

Gold prices advanced, on track to notch a third straight session gain, as demand for
the metal rose on expectations for an interest-rate cut by the Federal Reserve this
summer.
Nagging trade tensions between the world’s top two economies and intensifying Middle
East unease also lured investors into the haven asset, analysts said. U.S. stocks climbed
as gold futures settled after back-to-back losses and oil prices surged after two oil
tankers were reportedly attacked in the Gulf of Oman, leaving one with a damaged hull and
the other on fire and adrift.
Against this backdrop, gold for August delivery on Comex rose $6.90, or 0.5%, to settle
at $1,343.70 an ounce. Futures prices, which have now tallied their 11th gain out of 12
sessions, are up more than 2% month to date. The SPDR Gold Shares exchange-traded fund
was trading up 0.5%.
In other commodity markets, July wheat prices rose 9 1/4 cents to $5.35 1/2 cents.

Oil Futures

Oil futures rallied, as an attack on two oil tankers near the Strait of Hormuz raised
fears of a potential disruption to the global flow of oil, but failed to recoup the
previous days losses by the close.

West Texas Intermediate crude for July delivery rose $1.14, or 2.2%, to end at $52.28 a
barrel after tapping an intraday high of $53.45. The gains contrasted with a 4% drop that
took the U.S. benchmark down to $51.14 Wednesday, the lowest front-month contract finish
since Jan. 14, according to Dow Jones Market Data.

Forex

The pound turned slightly higher intraday after Boris Johnson easily won the first
round of voting for the next Conservative Party leader.
Gains are limited, however, with GBP/USD last up 0.1% at 1.2699 and EUR/GBP down 0.1%
at 0.8887.

European Markets

In Europe, stocks were modestly higher with the Stoxx Europe 600 edging up 0.2% to to
380.33.
The FTSE 100 edged up. Sterling moved only slightly after Boris Johnson emerged as the
strongest candidate in the first round of voting for the next Conservative Party leader.

The German DAX was up 53.37 points, or 0.44%, to 12169.05 while the French CAC was up
0.71 point, or 0.01%, to 5375.63. The index now is up seven of the past nine trading
days.

Asian Markets

Early weakness in Asian equities eased as the day progressed, leaving many stock
indexes modestly lower after Wednesday’s global pause.
Declines were generally less than 0.5%, though Hong Kong’s stocks were the region’s
weakest market for a second day.
Meanwhile, Indian equities were also down more than 0.5%.
China equities ended nearly flat, with Shanghai Composite finishing up about 1 point at
2,910.74, while Shenzhen Composite and ChiNext edged 0.3% and 0.4% higher, respectively.

Hong Kong’s Hang Seng slipped 0.1% as protests in the city against unpopular
legislation turned violent. Japan’s Nikkei fell 0.5%.
Malaysia’s stock index closed lower, tracking a broadly weaker Southeast Asian market.
Market breadth, however, was positive with gainers beating losers by 397 to 379. The
Kuala Lumpur Composite Index ended 0.43% lower at 1,643.74. A late bounce nearly erased a
drop for Indonesian stocks. As many in Asia fell, the Jakarta Composite Index eased 3.10
points to 6273.08.

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