Thursday 11th July 2019

OPENING CALL: The Australian share market is expected to open flat. The SPI200 futures contract expected to open up 5 points.

The S&P 500 briefly crossed the 3,000-point mark for the first time after Fed Chair Jerome Powell signalled that a rate cut is likely later this month.

Oil prices soared on a drop in inventories as well as a major storm forming in the Gulf of Mexico.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian shares rose, underpinned by consumer and tech stocks, as Asia-Pacific
markets were broadly buoyed by the resumption of trade talks between U.S. and China. The
benchmark S&P/ASX 200 lifted 0.4% to 6689.8, bouncing back from two days of losses.
Consumer staples rose 1.9%–helped by big gains in the A2 Milk Co–while IT shares
gained 1.8%. Miners didn’t fare so well, easing 0.4%. The Aussie benchmark is up 18% so
far this year.

US Markets

U.S. stocks leapt to records after Federal Reserve Chairman Jerome Powell set the stage
for the central bank to cut interest rates to bolster flagging growth.
The Nasdaq Composite rose 0.8% to end to close at a record 8202.53. The S&P 500 touched
an all-time high during the trading session, briefly eclipsing the 3000 level for the
first time before ending the day at 2993.07, 0.5% higher. The Dow Jones Industrial
Average climbed 0.3% to 26860.2, snapping a three-day losing streak.

Major U.S. indexes had faltered in recent days as investors weighed an economic
slowdown against the odds the Fed will bolster the economy by cutting interest rates. Mr.
Powell’s testimony before the House Financial Services Committee signaled that the Fed is
likely to cut rates later this month. Minutes from the Fed’s June meeting were also
released Wednesday, and showed many central bank officials saw a stronger case for a rate
cut.

MATERIE PRIME

The gold futures price rose by US$12.00 an ounce or 0.9% to US$1,412.50 an ounce. The spot gold price was trading near US$1,417 an ounce in late US trade. Iron ore fell by US$1.40 or 1.1% to US$121.20 a tonne.

Oil Futures

U.S. oil prices went on a tear, rising 4.5% to a seven-week closing high of $60.43 amid
falling U.S. oil inventories and a storm in the Gulf of Mexico that’s disrupting
supplies.
The EIA says domestic crude-oil inventories plunged by 9.5 million barrels last week to
459 million, the lowest total in three months.
Meanwhile, a storm that is expected to become Hurricane Barry by Friday has already
reduced offshore oil production in the Gulf of Mexico by 32%, or more than 600,000 bpd,
as companies evacuate workers.

Forex

The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others,
fell to 90.23 from 90.58 Tuesday after release of dovish comments from Fed Chairman
Powell. The comments are taken as an indication the central bank could be prepared to cut
its benchmark short-term interest rate when officials meet later this month, pushing
traders to search for yield outside the dollar.
Arturo Herrera, named Mexico’s finance minister after Carlos Urzúa unexpectedly
resigned Tuesday, must juggle three conflicting objectives–maintaining fiscal
responsibility, delivering on President López Obrador’s campaign promises of increased
social spending and rescuing troubled state oil company Pemex–that will prove
challenging to reconcile, UBS Wealth Management wrote.
UBS noted López Obrador has already publicly contradicted Herrera twice, once when he
suggested a new oil refinery could be delayed, and once after he made statements about
vehicle taxes, suggesting Herrera takes his place in the cabinet with a weak hand. The
investment bank expects Mexico’s peso, trading at 19.14, to hit 20 on the dollar in six
months and 20.5 in 12 months.

European Markets

European sharemarkets fell on Wednesday. The pan-European STOXX600 index closed down by 0.2%. The German Dax fell by 0.5% and the UK FTSE was down by 0.1%. British recruiter Hays was down 6.6% as peer Pagegroup fell by 15.1% after issuing a profit warning. In London trade, shares of Rio Tinto and BHP both rose by 1.1%.

Asian Markets

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