Australian market expected to open higher 09/01/20

Australian market expected to open higher 09/01/20

 

OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract expected to open up 46 points.

 

President Trump said Iran appears to be backing away from conflict with the U.S. and signalled no further U.S. military strikes, after an Iranian missile barrage on U.S. bases in Iraq that seemed calibrated to avoid further escalation.  

 

 

Investors who bought Aramco shares after the Saudi oil giant’s highly anticipated IPO last month haven’t benefited from the outbreak of conflict in the company’s Mideast backyard.  

 

Overnight Summary

 

 

Each Market in Focus

 

Australia’s S&P/ASX 200 closed 0.1% lower at 6817.6, as equities came under pressure from investors spooked by Iran’s retaliation against the U.S. following last week’s killing of a top military commander. Still, the benchmark index recovered from an intraday low of 6749.6 it touched in the aftermath of the Iranian missile attack on two bases where U.S. troops are stationed in Iraq.  

The attacks pushed oil prices higher, which in turn lifted Aussie energy stocks. Santos gained 1.1% to A$8.89 and Oil Search lifted 0.9% to A$7.92.

Qantas again suffered, down 3.4% at A$6.86, as heightened geopolitical tensions raised concerns around air travel. Independence rose 6.3% to A$6.91 after beating its own guidance for 1H nickel, gold, and copper output.  

U.S. stocks rose intraday, extending gains after remarks from Iranian officials and President Trump suggested both countries were hoping to de-escalate tensions in the Middle East.  

The Dow Jones Industrial Average added 207 points, or 0.7%, to 28791. The S&P 500 rose 0.7%, heading toward a fresh closing record, while the Nasdaq Composite added 0.8%.  

Tehran’s military response to the U.S.’s killing of a key Iranian general rattled markets overnight. But in the hours that followed, an initial selloff in stocks and rally in the bond and oil markets eased as investors reassessed the chances of a broader conflict.  

Corporate news drove some of the bigger moves, with Boeing falling 1.4% after one of its planes operated by Ukrainian International Airlines crashed in Tehran on Wednesday shortly after takeoff, killing all 176 passengers and crew on board.  

Walgreens Boots Alliance dropped 5.8% after reporting sales and earnings for the latest quarter that fell short of analysts’ expectations.  

 
 
Gold futures settled lower after a speech from President Donald Trump indicated that Iran may be “standing down,” temporarily easing fears of escalating tensions between Washington and Tehran, prompting prices for the metal to settle lower for the first time
in 11 sessions.  

Fears about how the U.S. might respond to an Iranian retaliatory strike late Tuesday against U.S. miliary bases in Iraq temporarily sent gold to $1,613.30 an ounce in intraday trading, according to FactSet data.  
 
 
Oil futures moved sharply lower, with U.S. prices logging their lowest settlement in nearly four weeks after briefly rallying to highs not seen since April, as worries surrounding the U.S.-Iran conflict subsided for now.  
 
Data from the Energy Information Administration showing a surprise weekly rise in U.S. crude inventories, along with hefty increases in gasoline and distillate stockpiles, contributed to oil’s price losses.  
 
 
The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, rose intraday to 90.25 from 90.04 on Tuesday after December private employment figures from ADP came in stronger than expected. The Labor Department will release its closely
watched payrolls data for December on Friday.  
 

European stocks edged higher after an upbeat start to trading on Wall Street as tensions between the U.S. and Iran eased. The Stoxx Europe 600 gained 0.2%, the FTSE 100 advanced 0.05%, the CAC-40 was up 0.3% and the DAX rose 0.7%.

In a press conference earlier President Trump signaled no further U.S. military action following overnight Iran missile strikes against two military bases in Iraq which didn’t result in U.S. casualties.  

 
Hong Kong stocks ended the session lower as sentiment soured again following the latest escalation in Middle East tensions. The benchmark Hang Seng Index closed 0.8% lower at 28087.92. Banks and financial-services companies led the declines, erasing some of the sector’s strong gains over recent months following various stimulus moves in China.
 
Japanese stocks settled lower, with the Nikkei Stock Average falling 1.6% to 23204.76. Investors likely monitored headlines related to U.S.-Iran tensions, and further hostile exchanges may compel them toward a sustained risk-off posture, OCBC says. Energy stocks were among the worst performers, with Toho Gas down 2.0%, Kyushu Electric Power cut 2.1% and Tokyo Electric Power was 2.2% lower.  

India’s benchmark Sensex closed 0.1% lower at 40817.74, in line with broadly weaker Asian equities as escalating tensions in the Middle East weighed on investor sentiment. Banks were a mixed bag, with HDFC Bank down 0.3% and Kotak Mahindra Bank off 0.9% while
ICICI Bank was up 1.0%.  


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