Monday 8th July 2019

OPENING CALL: The Australian share market is expected to open lower. The SPI200 futures contract expected to open down 12 points.

Yields on U.S. government bonds surged after a solid jobs report eased some of the pressure on the Federal Reserve to move aggressively to cut interest rates.

Huawei has disputed the findings that said its gear is far more likely to contain flaws than equipment from rival companies, characterizing the analysis as incomplete and inaccurate.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australia’s S&P/ASX 200 index shrugged off a poor performance by materials stocks to
close up 0.5% at 6751.3, logging an around 2% weekly gain.
Equities have been supported by the central bank cutting interest rates twice in as
many months, and the federal government’s tax-cut package, which is expected to boost
consumer spending.
Pharma giant CSL advanced 1.6% to A$224.65, while Telstra led telecoms stocks higher
with a 0.5% rise to A$3.88. Commonwealth Bank was strongest among the big 4 retail banks,
lifting 0.9% to A$82.26.
The pull back in iron-ore prices impacted mining stocks, with BHP falling 1.3% to
A$41.29 and Fortescue declining by 4.4% to A$8.80.
In a note, CBA says it expects the fall in iron-ore prices to accelerate from August
due to stronger supply and weakening steel demand in China.

US Markets

U.S. stocks stumbled and Treasury yields jumped after a better-than-expected June jobs
report clouded expectations of an imminent interest-rate cut by the Federal Reserve.
All three major indexes fell from their records after new data showed U.S. employers
hired at a robust pace in June, somewhat dashing investors’ expectations of an
interest-rate cut at the Fed’s policy meeting later this month. A sustained slowdown in
job growth could potentially nudge the central bank into taking steps that would have
stoked further economic growth.
Instead, U.S. employers added 224,000 jobs last month, according to the Labor
Department’s latest data. That topped analysts’ expectations and sent stocks lower after
the opening bell.
The Dow Jones Industrial Average fell 43.88 points, or 0.2%, to 26922.12, while the S&P
500 declined 5.41 points, or 0.2%, to 2990.41. The Nasdaq Composite also fell, shedding
8.44 points, or 0.1%, to 8161.79.

MATERIE PRIME

Gold prices slid following an upbeat June jobs report, logging the largest weekly
decline since mid-April as traders dialed back bets that the Federal Reserve will lower
interest rates.
Front-month gold contracts for July delivery shed 1.5% to $1,396.70 a troy ounce on the
Comex division of the New York Mercantile Exchange. Prices ended the week down 0.9%,
their biggest weekly decline since April 18.
The reversal came after anticipation that the Fed will aggressively cut rates later
this year had pushed the safe-haven metal to roughly six-year highs earlier in the week.

In other commodity markets, July wheat prices rose 1 1/4 cents to $5.19 1/4 cents.

Oil Futures

Oil futures climbed as tensions in the Middle East grew, but prices suffered their
first weekly loss in three weeks as energy-demand worries persist.
A jump in the U.S. dollar, following strong U.S. jobs data, capped the session’s gains
for West Texas Intermediate crude prices.
August West Texas Intermediate crude rose 17 cents, or 0.3%, to settle at $57.51 a
barrel on the New York Mercantile Exchange. Despite a 1.9% rise on Wednesday, before
Thursday’s Independence Day holiday, the contract lost 1.6% for the week, according to
Dow Jones Market data.
International benchmark September Brent climbed by 93 cents, or 1.5%, to $64.23 a
barrel on ICE Futures Europe. Brent, which settled 0.8% lower on Thursday, declined by
0.8% for the week.

Forex

The U.S. dollar rose after higher-than-expected nonfarm payroll data, with EUR/USD
falling early to 1.1233, a two-week low, according to FactSet.
The U.S. added 224,000 jobs in June compared with 72,000 added in May, and well above
the 165,000 expected by economists polled by WSJ. The unemployment rate also rose
unexpectedly to 3.7% during the same month from 3.6% in May. The payroll data is another
set of data suggesting the U.S. economy is strong enough to prevent the Federal Reserve
from cutting interest rates.
The WSJ Dollar Index was up 0.46 point, or 0.51%, and up 0.68 point, or 0.76% on the
week.

European Markets

European stocks declined, with the Stoxx Europe 600 falling 0.7%.
The index was up 5.24 points, or 1.36%, this week to 390.11, and was up for five
consecutive weeks.
The FTSE extended its losses in afternoon trading to close down 0.7%. In Germany,
disappointing production data heightened worries of a cooling economy. The DAX was down
61.37 points, or 0.49%, on the day but up 169.73 points, or 1.37%, this week to 12568.53.

The French CAC was down 27.01 points, or 0.48%, on the day but up 54.75 points, or
0.99%, on the week to 5593.72.

Asian Markets

Asian stock markets were mixed.
Hong Kong’s Hang Seng slipped 0.1% while the Shanghai Composite and Japan’s Nikkei both
gained 0.2%.
The Hang Seng Index closed down 0.1% at 28774.83, ending the week up 232 points. Geely
Automobile extended early declines to end down 6.4% at HK$12.68 and Hengan International
Group closed 2.5% lower at HK$57.25. But most other Hong Kong stocks ended roughly flat
today, signaling a cautious outlook for July.
Singapore’s stock benchmark closed lower, dragged by bank and electronics stocks. The
Straits Times Index ended down 0.2% at 3366.81.
Malaysian stocks ended lower for the third consecutive day, but rose for the week.
Market breadth was negative with losers beating gainers 480 to 350. The Kuala Lumpur
Composite Index closed down 0.3% at 1682.53.
Meanwhile, Korean stocks edged up, erasing early tech-led losses to trade in a tight,
choppy manner toward the end of the session. The Kospi ended up 0.1% at 2110.59. Tech
stocks weighed the benchmark with Samsung Electronics and LG Electronics down 0.8%, and
5.2%, respectively, as their earnings guidance pointed to a sizable decline for their
second quarter operating profits.
India shares snap a four-day winning streak after the federal budget didn’t meet street
expectation of immediate stimulus that would boost consumption. The BSE Sensex ended 1.0%
lower at 39513.39, after crossing the key 40000-level for the first time since June 11
during the day.

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