Friday: 7th September 2018

OPENING CALL: The Australian market looks to open lower with SPI futures down 25 points.

U.S. stocks were mixed, with technology stocks driving the S&P 500 and Nasdaq lower. U.S. government bonds rose on trade and emerging markets concerns. The dollar was slightly lower as markets await Friday’s jobs data. Crude oil prices were sharply lower as gasoline and distallates inventories rose. And gold settled higher.

Overnight Summary

Market Quotes by TradingView

Each Market In Focus

Australian Market
US Markets

Weakness in technology shares hurt the S&P 500 for the third straight session, with worries about regulation and trade continuing to hang over the market’s best-performing sector. A day after internet shares led the group lower, semiconductor stocks were the laggard. Micron Technology shares slumped after Baird analysts lowered their price target on the stock, and KLA-Tencor, Lam Research and Applied Materials were also among the S&P 500’s worst performers, with each of the four companies dropping at least 5%. Investors weighed mixed comments about industry pricing from executives at a Citigroup technology conference. Trade developments have buffeted chip makers throughout the year because of their reliance on global commerce, particularly through China. While their shares recovered last month, some analysts expect swings to continue as trade discussions roll on. More broadly, some investors predict the volatility that has engulfed stocks around the world will spread to the U.S. if the trade dispute with China intensifies.


Meanwhile, gold futures settled higher for a second straight session, extending their climb above $1,200 an ounce but failing to hold onto a week-to-date gain as the leading dollar index stabilized following a flurry of U.S. economic data. December gold rose $3, or nearly 0.3%, to settle at $1,204.30 an ounce. It had settled beneath the psychologically important level of $1,200 earlier this week for the first time since Aug. 23, according to FactSet data. The metal was so far looking at a nearly 0.2% loss for the week. Commodities priced in dollars often trade inversely with the currency, as moves in the U.S. unit can influence the attractiveness of those commodities to holders of other currencies. Certainly, mild dollar weakness has helped gold to reclaim $1,200 this week. The metal maintained that ground as the ICE U.S. Dollar Index fell less than 0.1% to 95.103, barely lower week to date.

IRON ORE: 68.02s + 1.00 (October contract)

Oil Futures

U.S. oil prices fell sharply after a weekly report showed U.S. inventories of petroleum products are already starting to rise now that summer is ending and the lower-demand fall season is near. Light, sweet crude for October delivery fell 1.4% to close at $67.77 a barrel on the New York Mercantile Exchange. The Energy Information Administration said that crude oil inventories fell by 4.3 million barrels last week. And while that data point alone is bullish, the report also showed gasoline and distillates inventories rose by a combined 5 million barrels, and the grand total of crude oil and processed petroleum products rose by a bearish 3.6 million barrels. The EIA report also showed U.S. crude oil exports fell by 271,000 barrels a day last week, to 1.5 million barrels a day.


A popular gauge of the U.S. dollar retreated slightly in subdued action with investor focus fixed in part this week on the U.S. job market. U.S. economic data released a day ahead of the latest closely watched jobs report included the ADP private-sector employment snapshot for August. Its softer-than-expected result undercut expectations for a strong reading in the government’s broader hiring report out Friday, though the ADP figures have been a less-than-perfect guide to the official numbers. Meanwhile, first-time jobless benefits claims for the week ended Sept. 1 came in at 203,000, below the consensus forecast of 212,000, further evidence of a super tight job market. The ICE U.S. Dollar Index was down 0.2% at 95.033, on a course to finish the week in negative territory.

European Markets
Asian Markets

Earlier in the day, Asian equities were broadly lower for a second day as buyers continued to wait for reasons to buy. Perhaps that will come from Friday’s U.S. jobs report. Until then, investors appear set to put some money on the side, egged on by 1%-plus drops overnight in Europe. Stocks in Hong Kong and the Philippines fell more than 1%. But the drops have been less than 0.5% in Japan, South Korea and Singapore, while India’s Sensex was essentially flat and stopped a six-day losing streak. Trade tensions between the U.S. and China are set to take center stage again, as Thursday marks the final day for public comment on the Trump administration’s plan to impose tariffs on an additional $200 billion of Chinese goods. Reports indicated that U.S. President Trump could impose the tariffs as soon as this week. Pessimism from Chinese investors has also impacted stocks in Hong Kong, as the Hang Seng dropped 1%. Mainland Chinese investors trimmed their bets on Hong Kong-listed stocks in August, making it the fourth month this year when they sold more Hong Kong shares than they bought through the Stock Connect program that launched in 2014. Shares in Tencent Holdings, the most valuable Hong Kong-listed company, fell 3.1% to a one-year low. Elsewhere in Asia, the Shanghai Composite Index and Japan’s Nikkei were both down, dropping 0.5% and 0.4%, respectively. Indonesian stocks rose, with the benchmark index up 1.6% following its biggest one-day drop since November 2016 on Wednesday.

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