Friday: 6th July 2018

OPENING CALL: The Australian market looks to open higher with SPI Futures up 28 points.

Australian shares are expected to open higher on Friday, after Wall Street gained overnight on reports the U.S. and the European Union may agree to withdraw auto tariffs.
U.S. stocks climbed ahead of a looming tariff deadline as investors weighed economic data and a potential de-escalation of some trade tensions with Europe.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian shares are expected to open higher on Friday, after Wall Street gained overnight on reports the U.S. and the European Union may agree to withdraw auto tariffs.

US Markets

U.S. stocks climbed ahead of a looming tariff deadline as investors weighed economic data and a potential de-escalation of some trade tensions with Europe. Worries about trade have roiled financial markets for months as the U.S. and China — the world’s two biggest economies — remain locked in a trade dispute. The U.S. is scheduled to impose a first round of tariffs on $34 billion of Chinese imports, and China is expected to counter with corresponding tariffs on U.S. imports. The Dow Jones Industrial Average gained 182 points, or 0.8%, to 24357. The S&P 500 rose 0.9% and the Nasdaq Composite added 1.1%.

Commodities

Gold futures settled with a gain, finding support from some weakness in the U.S. dollar, but prices for the metal then eased back following the release of minutes from the Federal Reserve’s June meeting. August gold rose $5.30, or 0.4%, to settle at $1,258.80 an ounce – the highest finish since June 26, according to FactSet data. The move follows a 1% rebound that helped the yellow metal claw back some losses that drove futures to the lowest levels of 2018. For the week, bullion prices traded 0.6% higher. The most popular fund tracking gold, the SPDR Gold Shares, meanwhile, was up about 0.3% this week. Minutes from the Federal Reserve’s June meeting, released after the Comex settlement, offered no inclination to pause plans for further interest-rate hikes, and gold edged down from its settlement level to around $1,257 in electronic trading.

IRON ORE: $63.10s – 1.14 (August contract)

Oil Futures

Oil prices fell after data showed U.S. inventories increased unexpectedly last week. Light, sweet crude for August delivery declined 1% to $73.42 a barrel on the New York Mercantile Exchange. Prices have stayed near their highest level since 2014 recently, with the prospect of major supply disruptions and figures showing steady demand limiting losses despite trade threats between the U.S. and China. Brent crude, the global benchmark, edged down 0.1% to $78.14 a barrel. The Energy Information Administration report showed stockpiles rose by 1.2 million barrels during the week ended June 29, compared with the 3.9 million-barrel decrease analysts surveyed by The Wall Street Journal had expected. Recent declines in stockpiles have lifted U.S. prices even with the Organization of the Petroleum Exporting Countries in late June agreeing to boost output, though by less than some analysts had anticipated.

Forex

The U.S. dollar fell, pushed lower by gains in the euro after strong German manufacturing data offered a sign that economic activity in the 19-nation currency union could be poised to rebound. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, declined for a third consecutive trading session, dropping 0.1% to 87.94. The greenback slipped 0.3% against the euro to $1.1693. The euro rose after Germany’s economics ministry said that that total manufacturing orders rose 2.6% in May compared with April, ending a four-month streak of falling orders. Economists polled by The Wall Street Journal had forecast a 1.1% gain. Many investors had entered 2018 placing bets that the euro would continue to gain against the dollar after its 14% rise last year. Instead, the euro has fallen 2.9% against the U.S. currency as sluggish growth in the region has set back expectations that the European Central Bank would be able to move to shift its monetary policy toward precrisis norms by signalling when it could be able to raise interest rates.

European Markets

Stock investors took solace in word that tensions may be easing in Europe. Shares of car makers rose after a German press report said the U.S. proposed to stop its threats to impose tariffs on cars imported from the European Union if the EU lifts duties on U.S. car imports. Shares of General Motors gained 1.3% and Ford Motor rose 0.6%.

Asian Markets

Stocks in Asia were under pressure as investors braced for the implementation of trade restrictions between the U.S. and China. A Chinese official warned that planned U.S. tariffs on Chinese products will hurt companies around the globe as many of the goods targeted by the U.S. administration are made by foreign companies in China. The U.S. is scheduled to impose tariffs on $34 billion of Chinese imports and China is expected to counter with corresponding tariffs on U.S. imports as the world’s two biggest economies remain locked in a trade dispute that has roiled financial markets for months.  In Asia, Japan’s Nikkei Stock Average finished down 0.8% while Hong Kong’s Hang Seng Index shed 1.1%. Meanwhile, Indian shares edged lower amid weakness in other regional markets. The S&P BSE Sensex closed 0.2% lower at 35,574.55. Investors are also awaiting cues from corporate earnings that start next week.

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