Friday: 27th July 2018

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

Australian shares look set to open higher on the back of a rise on Wall Street overnight as a plunge in Facebook shares has pushed the Nasdaq down more than one per cent.
U.S. stocks were mixed, with the DJIA higher but the S&P 500 lower on disappointing Facebook earnings.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Fairfax Media, the owner of Australia’s oldest newspaper, the Sydney Morning Herald, has agreed to be taken over by Nine Entertainment in a cash-and-stock deal valued at $1.61 billion.

US Markets

Tumbling shares of Facebook pulled the S&P 500 lower after disappointing earnings results rocked investor confidence in one of Wall Street’s most popular trades. Shares of Facebook suffered their steepest decline since the social-networking giant’s stock-market debut six years earlier. The losses erased about $100 billion in value from Facebook, as the firm suffered the biggest single-day decline in market cap ever. The selloff started after Facebook said late Wednesday that revenue grew slower than expected in the second quarter and warned that it expected growth to decline over the rest of the year. Shares closed down $41.24, or 19%, to $176.26. Investors say the lackluster results have renewed concerns that the massive growth in revenue and profits among some of tech’s stalwarts may not be sustainable – and that could put another hurdle in front of a stock market already grappling with trade tensions and concerns of a possible policy misstep by the Federal Reserve.

Commodities

Meanwhile, gold futures settled lower, continuing the choppy, mostly dollar-driven trading that has kept the precious metal pinned near its 2018 low. The dollar’s direction, and thus, gold’s, was expected to be affected, at least in the very near term, by European Central Bank’s monetary policy news conference. Gold for August delivery on Comex fell $6.10, or 0.5%, to finish at $1,225.70 an ounce. Prices had settled at $1,224 as recently as Thursday, the lowest for a most-active contract in about a year. September silver fell 9.4 cents, or 0.6%, to $15.560 an ounce.

IRON ORE: 65.73s – 0.42 (August contract)

Oil Futures

Crude prices rose after Saudi Arabia halted shipments through a Red Sea waterway, in the latest sign of flaring Middle East tensions disrupting oil flows. Light, sweet crude futures rose 0.5% to $69.61 a barrel at the New York Mercantile Exchange. Brent crude, the global oil benchmark, rose 0.8% to $74.54 a barrel on London’s ICE Futures exchange — the highest close in almost two weeks. The world’s top crude exporter stopped shipments through the Bab el-Mandeb strait Wednesday after Houthi rebels attacked two of its tankers. A Saudi-led Arab coalition in Yemen has been fighting the Houthis since 2015, which they see as proxies of their regional rival, Iran.

Forex

The euro sold off, making it one of the worst performing G-10 currencies on the day, following the European Central Bank’s latest policy update. The ECB policy statement, as expected, left interest rates unchanged and stuck to the plan laid out in June to wind down the asset purchasing program until year-end. The central bank also emphasized that it wouldn’t commence lifting interest rates until at least next summer. Even though expectations for the update had been muted in the market, some market participants had hoped on further clarity on the central bank’s monetary policy normalization path. During the new conference, ECB President Mario Draghi said the eurozone economy was proceeding on a “solid, broad-based” growth path and that progress in the EU-U.S. trade talks was a “good sign,” though it was too early to assess it in its entirety. The euro, extended its losses to $1.1647 from $1.1729 late Wednesday in New York, after spending most of the trading day in negative territory. On Wednesday, the shared currency bounced higher following a meeting between U.S. President Donald Trump and European Commission President Jean-Claude Juncker that resulted in a trade truce between the U.S. and EU. Other euro crosses, including euro-British pound and euro-Japanese yen were also weaker. The euro last fetched GBP0.8885, down 0.1% at a seven-day low, and Y129.50, down 0.5% and close to a three-week low, according to FactSet. The euro’s main rival, the U.S. dollar, flipped into positive territory. The ICE U.S. Dollar Index, which measures the greenback against six rivals, gained 0.4% to 94.740.

European Markets

While trade tensions eased on the European front, worsening U.S.-China trade relations hit another snag when Qualcomm said it would abandon its $44 billion purchase of Dutch chip maker NXP Semiconductors after failing to secure approval in China. The deal had been approved by eight other regulatory bodies, but was held up by China’s antitrust authority.

Asian Markets

Meanwhile, in Asia, it was a pretty quiet day on the whole absent the pullbacks in China and Hong Kong, where equities got off the mat in the past week after some indexes had fallen into bear-market territory. Declines topped 1% for some mainland benchmarks while they’re above 0.5% in Hong Kong. While the index in Japan barely fell, a number — especially Southeast Asia — have seen slight gains. But the Philippines’ PSEi jumped another 2%, Korea’s Kospi rose 0.7%, and India’s Sensex is on pace for another record high. In Asia, the Shanghai Composite Index was down 0.7%, Hong Kong’s Hang Seng fell 0.6% and Japan’s Nikkei was down 0.1%.

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