Friday: 21st September 2018

OPENING CALL: The Australian market looks to open higher with SPI futures up 22 points.

U.S. stocks were higher, with the Dow industrials setting a fresh record. U.S. government bonds were higher. The dollar was weaker. Crude oil prices fell after President Trump chided OPEC on prices. And gold prices rose to their highest finish in about three weeks.

 

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market
US Markets

The Dow Jones Industrial Average closed at a new high for the first time since late January, a sign of investors’ conviction in a booming U.S. economy. The blue chips surged more than 250 points to cap a three-day run of gains, the latest leg of a nine-year rally that hurtled the index to its first record close since Jan. 26. The stock market’s rise has coincided with a pause in the U.S. dollar’s rally and a recent spike in government-bond yields, a signal investors are viewing next week’s expected increase in interest rates from the Federal Reserve as a testament to the strength of the economy. Investors are now grappling with the idea that stocks could move beyond the range many Wall Street analysts had expected at the start of the year. The rally pushed the Dow up 7.8% for the year, while the S&P 500, which also set a new record, has gained nearly 10% to 2930.78 – putting it near the 2018 price targets of banks such as Goldman Sachs and Bank of America Merrill Lynch. A strengthening U.S. economy is expected to keep the rally going, analysts and money managers said, and has been a key factor in helping investors look past the trade sparring between the U.S., China and others. Even with the unemployment rate at its lowest level in nearly two decades and economic output growing at the fastest rate since 2014, the economic outlook got rosier: Initial jobless claims, a proxy for layoffs across the U.S., fell to the lowest level since 1969, the Labor Department said. The Dow industrials added 251.22 points, or 1%, to 26656.98. The S&P 500 added 0.8% and the Nasdaq Composite 1%.

Commodities

Gold prices edged up, with the December gold contract climbing $3, or nearly 0.3%, to settle at $1,211.30 an ounce, its highest since late August, as the dollar index dropped 0.6%. The dollar and gold, which is chiefly priced in the U.S. currency, tend to move inversely. The precious metal contract, accumulating a 0.3% gain this week so far, logged its eighth straight day above the $1,200 line that analysts have monitored as an indication that gold could strengthen its advance from here. The contracts trades down more than 9% so far in 2018. Gold prices have inched higher as the ‘big’ dollar softened amid easing [China-U.S.] trade tensions. Nevertheless, expect investors to remain cautious ahead of next week’s Fed meeting.

IRON ORE: 68.85s – 0.24 (October contract)

Oil Futures

Oil prices fell from two-month highs after President Trump said oil prices have been rising too much, and urged major oil producers in the Middle East to find a way to get them lower. Light, sweet crude for October delivery ended 0.4% lower at $70.80 a barrel on the New York Mercantile Exchange. On Wednesday, the U.S. benchmark had settled at $71.12 a barrel, its highest closing level since July 10. Brent crude, the global benchmark, fell 0.9% to $78.70 a barrel. Oil prices had been rising in the overnight session, but declined immediately after the
tweet was published, and remained lower during the New York session.

Forex

The U.S. dollar weakened, partly due to a buoyant British pound and New Zealand dollar, which were both trading higher on the back of better than-expected economic data. Trade headlines dominated North American trading, though much of investors’ attention was focused elsewhere. In the latest developments surrounding the North American Free Trade Agreement, a Bloomberg report quoted unnamed sources saying that a deal between Canada and the U.S. was unlikely this week. The ICE U.S. Dollar Index was down 0.6% at 93.926, hovering around a two-month low, despite reversing some earlier weakness against the Canadian dollar last buying C$1.2912, down 0.1% from Wednesday. The New Zealand dollar led developed-market currencies as one of the best performers early in the day, after a report on second-quarter real gross domestic product showed that the New Zealand economy expanded 2.8% year-over-year, beating the expectation of 2.2%. The kiwi dollar, as the antipodean currency is also known, last bought $0.6688, its highest in three weeks, up from $0.6617 late Wednesday in New York. In Salzburg, Austria, a European Union summit concerning Brexit is under way, adding the potential of volatility-inducing headlines to the day’s session.

European Markets
Asian Markets

Earlier in the day, Asian equities lacked direction, after posting broad gains or declines for much of this month. Investors who had shrugged off trade worries in recent days appeared to be taking stock of the latest developments and making preparations for next week’s Federal Reserve meeting, the looming end of the third quarter, and coming holidays. Most indexes moved no more than 0.3% from Wednesday’s closing levels. Outliers have included the Philippines’ benchmark, which dropped 1.2%, and Indonesia’s main index, which was 1% higher. South Korea’s Kospi rebounded 0.6% as Samsung climbed 2.4%. Japan’s Nikkei Stock Average finished flat while Hong Kong’s Hang Seng was up 0.3%.

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