Tuesday 9th July 2019

OPENING CALL: The Australian share market is expected to open flat. The SPI200 futures contract expected to open up 1 points.

The Federal Reserve Bank of New York says expected inflation was at 2.7% over the next one and three years.

Deutsche Bank AG was quick to start firing staff from its investment bank on Monday, but its investors will need to wait much longer to discover how the German lender’s radical restructuring will affect them.

Overnight Summary

Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian shares fell as global investors debated whether a strong U.S. jobs report on
Friday would stall the U.S. Fed’s previously expected move to lower interest rates.
The benchmark S&P/ASX 200 fell nearly 1.2% to 6672.2, snapping a five-day winning
streak and posting its worst performance since early June.
Real-estate investment trusts fared poorly, with the sector tumbling 2.4%.
Consumer-discretionary companies fared relatively better, but still fell some 0.3%.

US Markets

Stocks fell as investors backed away from hopes that the Federal Reserve would
aggressively cut interest rates to boost the economy.
Major U.S. stock indexes hit record highs last week prior to the Fourth of July
holiday, but they tumbled after strong jobs data on Friday weakened the case for the Fed
to cut rates at its next meeting.
The Dow Jones Industrial Average dropped 0.5% intraday, while the S&P 500 fell 0.6% and
the tech-heavy Nasdaq Composite slid 0.9%.
Apple fell 2.1%, weighing on the Dow, after Rosenblatt Securities downgraded the iPhone
maker to sell from neutral and predicted its outlook would deteriorate over the next six
to 12 months.
Investors are awaiting Fed Chairman Jerome Powell’s testimony on Capitol Hill on
Wednesday and Thursday for hints of how he views the U.S. economy. Mr. Powell has been
under pressure from President Donald Trump to cut rates.
Futures traders see a 93% chance of a 0.25% rate cut at the U.S. central bank’s July 31
meeting and a 7% chance of a 0.5% cut, according to Fed-funds futures traded on CME Group
. Last month, traders put the odds of the bigger rate cut as high as 40%, but they have
dialed back on such expectations amid signs of continued U.S. economic strength.

The Labor Department is also to release monthly core-inflation data on Thursday, a
report that could help show whether the U.S. economy is slowing. Inflation has generally
stayed below the Fed’s 2% target during the past several years, but expectations for
price increases picked up last month, according to a survey released Monday by the
Federal Reserve Bank of New York.

Matières premières

Gold futures inched lower, holding at $1,400 an ounce, as traders weighed the scope for
rate cuts by the Federal Reserve following last week’s stronger-than-expected round of
June jobs data.
Traders look to testimony from Fed Chairman Jerome Powell’s to Congress later this week
to provide a catalyst for the next big move for the precious metal.

Gold for August delivery on Comex fell by 10 cents, or 0.01%, to settle at $1,400 an
ounce, after trading between a high of $1,409.90 and high of $1,395. September silver
rose 4.9 cent, or 0.3%, to $15.05 an ounce.

Oil Futures

U.S. oil prices pushed higher as crude continued to dig out from a nearly 5% loss
suffered last Tuesday.
Monday’s move higher comes ahead of a busy week of potentially market-moving reports
that could answer questions about global demand and production both from U.S. shale
producers and the Organization of the Petroleum Exporting Countries.
West Texas Intermediate futures for August delivery gained 0.3% to $57.66 a barrel
Monday on the New York Mercantile Exchange. Brent crude, the global benchmark, declined
0.2% to $64.11 a barrel on London’s ICE Futures exchange.
The U.S. Energy Information Administration’s short-term energy outlook is scheduled to
be published on Tuesday, OPEC’s monthly report is planned for Thursday, and traders await
the International Energy Agency’s monthly oil report on Friday.


The dollar added to its big gains from Friday as traders continued to react to
better-than-expected jobs numbers, which eased pressure on the Federal Reserve to move
aggressively to cut interest rates.
The euro, which has been hurt recently by signs that the European Central Bank could
lower interest rates deeper into negative territory, was recently down another 0.1% after
declining 1.3% against the dollar last week.
The WSJ Dollar index was up 0.1% intraday at 90.37.

European Markets

European stocks were lower, with the Stoxx Europe 600 down less than 0.1%. Deutsche
Bank fell 5.4%–its biggest one-day drop since February-following the launch of yet
another restructuring plan, which will see the German lender cut nearly 20,000 jobs,
slash its balance sheet and significantly shrink its investment bank.

Asian Markets

Asia markets posted steep declines, with the benchmark equity gauge in Shanghai
dropping 2.6%.
Chinese bluechip stocks broadly fell, a normal correction after previous gains, says
Zhou Hao, an Commerzbank analyst. He expects the market to be volatile throughout this
week but could take on a clearer course next week when China releases a bunch of economic
data on Monday.
Indian shares logged their biggest drop in nearly nine months amid broad losses
elsewhere in Asia as investors dialed back on Fed rate cut expectations. The BSE Sensex
closed 2.0% lower at 38720.57.
Singapore’s FTSE Straits Times Index ended 1.0% lower at 3334.23 on Monday, driven by
losses in telecommunication stocks and real estate investments trusts. The telecom sector
fell 2.25%, with Singtel finishing 2.25% lower and Starhub ending flat at S$1.55.
Malaysian stocks fell for the fourth consecutive day, tracking broad weakness in
Southeast Asian markets. The Kuala Lumpur Composite Index closed 0.3% lower at 1677.64.

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