Thursday: 4th October 2018

OPENING CALL: The Australian market looks to open higher with SPI futures up 9 points.

U.S. stocks were higher, with the DJIA hitting a fresh high. Positive economic data sent bond yields soaring, boosted the dollar and pushed gold prices lower. Oil climbed on
supply concerns.

 

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market
US Markets

The Dow Jones Industrial Average climbed to a fresh record Wednesday, boosted by shares of manufacturing and financial firms. Stocks have gotten a lift this week after the U.S. and Canada reached a compromise on trade policy, leading some investors to anticipate further trade deals ahead with China. Despite worries that tariffs could slow the global economy, steady U.S. growth and earnings figures have boosted stock indexes throughout the year. A number of Federal Reserve officials also have delivered upbeat comments about the U.S. economy this week, reinforcing the view that inflation remains steady but not so strong that the central bank needs to hasten its pace of interest rate increases. Some investors expect that backdrop to continue lifting stocks in the fourth quarter. The Dow industrials added 54.45 points, or 0.2%, to 26828.39 in a fifth consecutive session of gains. The S&P 500 climbed 2.08 points, or less than 0.1%, to 2925.51 and is 0.2% from its most recent record. The tech-heavy Nasdaq Composite closed up 25.54 points, or 0.3%, at 8025.09, and is 1% below its Aug. 29 all-time high. Manufacturers also benefited from optimism about trade and domestic economic growth, with the S&P 500 industrials sector rising for a third straight session. Gains in those areas and in technology stocks neutralized losses in high-dividend-paying sectors that look less attractive when Treasury yields rise. The utilities, real-estate and consumer-staples groups each fell about 1%.

Commodities

Gold prices traded lower, weighed down by a stronger dollar and the prospect of fresh records for U.S. stocks. Gold for December delivery declined 0.3% to $1,202.90 a troy ounce on the Comex division of the New York Mercantile Exchange. Gold prices got a boost Tuesday along with other safe-haven assets on concerns of political instability in Italy, but pulled back Wednesday as some tensions eased, analysts said. Copper futures for December delivery rose 1% to $2.8340 a pound in New York, boosted by signs of falling supply. Aluminum prices also jumped Wednesday, climbing 4% to $2,245 a metric ton, after Norsk Hydro announced it plans to close its Alunorte alumina refinery in Brazil. While the plant had already been operating at 50% capacity, the operation’s closure means the loss of a further three million tons in annual production for the global aluminum market.

IRON ORE: 68.30s – 0.05 (November contract)

Oil Futures

Oil prices notched fresh multiyear highs as the market girded itself for the reimposition of U.S. economic sanctions on Iran’s oil industry. Light, sweet crude for November delivery rose 1.6% to $76.41 a barrel on the New York Mercantile Exchange, its highest close since November 2014. Brent, the global benchmark, also hit a new high, closing up 1.8% to $86.29. Oil prices have surged in recent months, largely on the back of a faster-than-expected decline in Iranian crude exports in the run to up to the enactment of U.S. oil sanctions on Nov. 4. Officials at the state-run National Iranian Oil Co. have said they provisionally expect crude shipments to have dropped to about 1.5 million barrels a day in September, compared with 2.3 million barrels a day in June, according to people familiar with the matter.

Forex

The U.S. dollar rose as strong economic data and the resolution of a trade deal with Canada and Mexico improved sentiment about the currency. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, rose 0.6% to 90.46. The dollar rose 0.6% against the euro to $1.1480 and 0.8% versus the Japanese yen, to ¥114.53. The dollar climbed after the Institute for Supply Management on Wednesday said its nonmanufacturing index rose to 61.6 in September. A reading above 50 indicates activity is expanding across service and other industries, while a number below 50 signals contraction. Economists surveyed by The Wall Street Journal had expected a 58 reading for September. The dollar was also supported by a report from according to payroll processor Automatic Data Processing Inc. and forecasting firm Moody’s Analytics that showed employers added 230,000 jobs in September, more than economists were expecting. Midsize businesses and the service sector continued to dominate those gains, according to a report. Economists polled by The Wall Street Journal were expecting the report to show the private sector added 185,000 jobs.

European Markets
Asian Markets

Declining Chinese steel profitability and a negative macro environment signals it’s time to be cautious on iron-ore-exposed stocks, said RBC. The investment bank notes that steel margins there have fallen more than 40% the past two months, which disincentivizes the building up of supplies in high-grade ores. They had seen robust demand in wake of pollution curbs in China. RBC is bearish on Brazilian miner Vale and Australia’s Rio Tinto.

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