Friday: 14th September 2018

OPENING CALL: The Australian market looks to open higher with SPI futures up 27 points.

U.S. stocks were higher, in part on prospects for U.S.-China trade talks. U.S. government bonds were little changed. The dollar was lower as inflation data came in weaker than expected. Crude oil prices were lower on signs that OPEC is ramping up production. And gold was lower.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market
US Markets

Apple and other technology companies led the S&P 500 higher, as renewed optimism at the prospect of fresh U.S.-China trade talks helped the broad index notch its strongest gain this month. Investors were hopeful that the U.S.’s latest overture to Beijing for further trade talks later this month marked a softening of the hostile rhetoric that had caused stocks to swing, and they bought shares of tech companies that had struggled in recent sessions. The gains brought the S&P 500 back into positive territory for the month and within half a percentage point of setting a record. But some investors say the index remains vulnerable to further flare-ups as the U.S. tries to hammer out new trade deals with China, the European Union and other countries. The S&P 500 rose 0.5%, its fourth consecutive session of gains, while the Dow Jones Industrial Average climbed 147 points, or 0.6%, to 26146. The Nasdaq Composite gained 0.8%.

Commodities

There were signals on Wednesday and early Thursday of “positive momentum regarding the U.S.-China trade dispute and possibility of a delay in the implementation of additional tariffs,” said Jeff Wright, executive vice president of GoldMining. However, President Donald Trump has now “indicated via a tweet there has not been any real progress” with regard to the dispute, he said. The Wall Street Journal on Wednesday had reported that the U.S. is reaching out to China for a new round of trade discussions, ahead of the Trump administration’s plans to place more tariffs on Chinese imports. “China, as a major importer of gold, has seen a slackening of physical demand in conjunction with the trade tensions and as their own equity markets have been under pressure,” said Wright. So Trump’s tweet “has stunted the impact of the CPI data … as well as the positive PPI data from Wednesday.” December gold lost $2.70, or 0.2%, to settle at $1,208.20 an ounce after climbing to a roughly two-week intraday high of $1,218. The contract settled at $1,210.90 Wednesday – the highest since Aug. 29.

IRON ORE: 68.38s + 0.88 (October contract)

Oil Futures

Oil prices had their worst day in almost a month, hurt by the latest signs that OPEC is ramping up production. Light, sweet crude for October delivery dropped $1.78, or 2.5%, to $68.59 a barrel on the New York Mercantile Exchange, its worst day since Aug. 15 after it closed at its highest level since July 20 a session earlier. Brent crude, the global benchmark, fell $1.56, or 2%, to $78.18 a barrel to end a four session winning streak. Brent touched $80 for the first time since May during Wednesday’s session. Global supply disruptions and a larger than-expected drop in U.S. inventories had pushed up prices Wednesday, but the latest data showing a supply increase from the Organization of the Petroleum Exporting Countries weighed on prices. OPEC production rose by 420,000 barrels a day last month, the largest increase in more than two years, to bring the supply from the group’s 15 producers to a nine-month high, the International Energy Agency said in a monthly report. Meanwhile, gold futures finished lower, pulling back a day after scoring their highest finish in two weeks even as a benchmark dollar index extended its losses for the week to date.

Forex

The U.S. dollar weakened against many of its major rivals following a lower-than-expected reading for consumer price inflation. The August consumer-price index rose 0.2%, compared with an expected 0.3% monthly rise. Core CPI for the same month came in 0.1% higher, versus the expectation of 0.2%. The ICE U.S. Dollar Index, which measures the buck against six of its main rivals, flipped into the red, on the back of the data and was last down 0.3% at 94.539, leaving it down 0.9% for the week. In addition to inflation data, first-time jobless claims for the week ended Sept. 9 came in at 204,000, slightly below expectations. The August budget deficit nearly doubled to $214 billion. Elsewhere, it was all about central banks. Both the Bank of England and the European Central Bank left their interest rates unchanged, in line with market expectations.

European Markets
Asian Markets

Earlier in the day, it was an up session for Asia stocks. That’s a been a rarity for many in the region this month, a historically a rough part of the calendar for equities. Hong Kong — among the worst performers lately — shined, with indexes gaining some 2.5% amid U.S.-China trade hopes. Mainland Chinese big caps rose about 1%, as did benchmarks in Japan and the Philippines while Indonesia is looking to do the same. But Taiwan and Korea barely rose amid some tech-stock softness. India’s market was closed. There was upbeat trading as Chinese banks helped push Hong Kong’s Hang Seng index 2.5% higher. The Japanese Nikkei also rose 1% and the Shanghai Composite Index was up 1.2%, although that index still remained down almost 19% so far this year after the release of subdued credit growth and new loans figures out of China.

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