Thursday 6th June 2019

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract was up 21 points.

U.S. stocks continued to gain on hopes the Fed could cut rates at its July meeting.

 

Oil prices hit bear-market territory on global growth concerns paired with rising U.S. inventories.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

The Australian share market is expected to open higher after a
positive lead from overseas.
The SPI200 futures contract was up 21 points, or 0.33 per cent, at 6,383.0 at 0700
AEST, suggesting a rise for the benchmark S&P/ASX200 on Thursday.
On Wall Street overnight, the Dow Jones Industrial Average closed up 0.82 per cent,
the S&P 500 was up 0.82 per cent and the tech-heavy Nasdaq Composite was up 0.64 per
cent.
The Aussie dollar is buying 69.69 US cents from 69.98 US cents on Wednesday.

US Markets

Stocks climbed as investors further embraced the possibility that the Federal Reserve
might cut interest rates to boost the economy.
The Dow Jones Industrial Average gained 207.39 points, or 0.8%, to 25539.57 while the
S&P 500 added 22.88 points, or 0.8%, to 2826.15 and the Nasdaq Composite rose 48.36
points, or 0.6%, to 7575.48.
The gains for stocks in the Dow industrials and S&P 500 followed the two indexes’ best
day in five months Tuesday, when they climbed more than 2% after supportive commentary
from Federal Reserve officials buoyed investor confidence, which has been hit by concerns
over Washington’s trade disputes in recent months.
Also Tuesday, Senate Republicans warned they may block the White House’s planned
tariffs on Mexico. President Trump’s threat of imposing escalating tariffs on all Mexican
imports rattled investors last week, sending stock and bond yields around the world
sharply lower.

Mr. Trump proposed to introduce progressively higher tariffs on Mexican exports if the
country doesn’t restrict the flow of migrants passing through its borders. Duties would
start at 5% before ratcheting up to 25% by October.
Technology stocks have bounced back after suffering a brutal start to the week. On
Monday, tech giants Facebook and Alphabet tumbled more than 6% after a report that the
Federal Trade Commission had secured rights to begin a potential antitrust investigation
into the social-media company and on a report that the Justice Department had been given
chief oversight over a Google probe. On Wednesday, the S&P 500’s tech sector rose 1.4%.
Shares of ride-hailing company Uber Technologies temporarily rose above their initial
public offering price for the first time ever following weeks of wallowing after the
company’s disappointing debut. They closed up 5.3% at $45, matching the IPO price.

Matières premières

Gold climbed with the prospect of an interest-rate reduction by the Federal Reserve,
amid signs of economic weakness in the U.S., lifting the metal’s price to its highest
finish in 3½ months.
Futures prices touched highs near $1,349 an ounce after a report early Wednesday on
private-sector employment for May from payroll processor ADP said employers hired 27,000
people in the month – marking the lowest growth since March of 2010.
Gold for August delivery on Comex rose $4.90, or 0.4%, to settle at $1,333.60 an ounce.
Most-active contract prices haven’t settled at a level this high since Feb. 20, according
to FactSet data.
However, prices pared earlier gains to finish off the day’s high of $1,348.90 as U.S.
benchmark stock indexes moved higher in Wednesday dealings, dulling some of the demand
for gold.
The precious metal posted a sixth consecutive gain-the longest win streak since an
11-day rally ended Jan. 5, 2018. Gold has seen a more than 4% year-to-date advance, and a
1.7% rise so far this month.
Meanwhile, July silver added 2.2 cents, or 0.2%, to $14.791 an ounce.
The rise for precious metals comes as trade tensions between the U.S. and its
international counterparts have prompted Federal Reserve Chairman Jerome Powell to
suggest that an interest-rate reduction may be appropriate if tariff disputes weaken
economic growth.

Oil Futures

The U.S. oil price sank into a bear market, falling more than 20% below its April peak,
as the global-growth worries gripping financial markets were compounded by fears of a
supply glut.
U.S. crude futures closed down 3.4% at $51.68 a barrel Wednesday, falling below the
$53.04 level needed to push oil into another bear market after government data showed a
surge in domestic stockpiles. The declines highlight investors’ fears that trade tensions
will further undermine economic expansion around the world.
Investors track oil prices to gauge both supply and demand in energy markets as well as
momentum in the world economy. Because crude is critical to the transportation and
shipping industries, expectations for global growth often swing prices.
Oil’s swift fall comes just weeks after prices crested above $66 a barrel on April 23,
when economic data were generally mixed and many expected a U.S.-China trade deal to spur
growth later in the year. Since then, escalating tariffs have also sent stocks around the
world sliding along with bond yields, with analysts worrying that further protectionism
will make longer-term economic damage inevitable.
Many analysts worry the recent market declines will cause U.S. businesses and consumers
to grow more cautious, after spending growth already slowed in the first quarter.

The decline marks the third bear market for U.S. oil since the start of 2017,
highlighting the continuing volatility of energy prices after a sharp rise earlier this
year caught many traders by surprise. Futures settled Wednesday at their lowest level
since mid-January.

Forex

The WSJ Dollar Index pared early losses and swung 0.2% higher to 90.46. The U.S. dollar
rose after the Federal Reserve’s latest beige-book report suggested the renewal of trade
tensions with China hasn’t had a significant effect on American manufacturers.
The yield on the 10-year Treasury note also gave back some of its losses from earlier
in the day. Higher Treasury yields can make the dollar more attractive to income-seeking
investors around the world.

European Markets
Asian Markets

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