Monday: 10th September 2018

OPENING CALL: The Australian market looks to open lower with SPI futures down 23 points.

U.S. stocks ended lower on Friday on reports President Trump may place more tariffs on goods from China. Treasurys fell after the August payrolls report showed higher-than-expected wage growth, which fueled inflation worries. The dollar strengthened as the jobs data bolstered the case for more Fed rate increases. Oil and gold prices were weighed down by the stronger dollar.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

ANZ senior commodity strategist Daniel Hynes said that while the escalating trade conflict had invoked fears of weaker economic growth in China, which accounts for around half the world’s copper demand, Chinese import data and inventory levels suggested there had been little impactso far. “After initially weakening as consumers pulled back from restocking amid the uncertainty, various premiums for metals have started to push higher, as China has earmarked a more proactive stance on fiscal policy,” Mr. Hynes said.

US Markets

A rough week for technology stocks battered the Nasdaq Composite, dragging the index to its worst week since March. The tech-heavy index slipped Friday after President Trump said tariffs on an additional $267 billion in goods imported from China could be implemented on short notice. The ramped-up rhetoric around the trade dispute reverberated through the stock market, sending major indexes lower. Shares of technology companies, which had been trading higher earlier in the session, erased gains. The Nasdaq Composite fell 0.3% on Friday, putting its weekly decline at 2.6% — its worst performance since the week ended March 23 when Facebook’s data-privacy scandal erupted. The S&P 500 shed 0.2%, while the Dow Jones Industrial Average lost 0.3%. Fears of tariffs, increased government regulation and pricing pressures have weighed on tech companies in recent sessions. Internet companies such as Facebook and Twitter tumbled earlier this week as executives testified before Congress about foreign influence on their platforms in the 2016 presidential election. On Thursday, semiconductor stocks slumped on lowered analyst expectations and ongoing worries about how resilient their revenue will be if the U.S. trade dispute with China grows. Twitter’s stock declined 1% on Friday, putting its weekly loss at 13%. Facebook shares edged up 0.3% on the day, but ended the week down 7.2%. And shares of Tesla dropped 6.3% following executive departures and an interview that appeared to show Chief Executive Elon Musk smoking marijuana. More broadly, stocks wobbled Friday after the August jobs report showed a pickup in hiring and healthy wage growth, bolstering the case for the Federal Reserve to continue raising rates at its current pace. The Federal Reserve closely watches wage growth as an indicator of inflation, and some analysts have said the rise in wages could encourage more short-term rate increases from the Fed. Labor Department data showed the U.S. added 201,000 jobs in August, ahead of forecasts for 192,000 additional jobs. Average hourly earnings were up 2.9% from a year earlier, while the unemployment rate held steady.

Commodities

In commodity markets, better-than-expected U.S. job figures and President
Trump’s decision to flag another $267 billion in tariffs against China has spelled more bad news for metals prices. Both gold and copper prices, which have been sold down heavily in recent months, came under renewed pressure on Friday. Gold for delivery in September fell $4.30 to $1,193.60 an ounce on the Comex division of the New York Mercantile Exchange, while copper for delivery in September closed $1.50 lower to $2.6035 a pound after trading higher earlier in the day.

IRON ORE: 67.92s – 0.10 (October contract)

Oil Futures

U.S. oil prices inched lower for a third straight session on Friday, hurt by a stronger dollar as traders looked ahead to future supply signals. Light, sweet crude for October delivery fell less than 0.1% to $67.75 a barrel on the New York Mercantile Exchange to cap off its worst week since mid-July. Brent crude, the global benchmark, edged up 0.4% to $76.83 a barrel. Prices have stabilized well below multiyear highs hit earlier this year as the supply disruptions that buoyed oil have eased and worries about trade tensions lowering demand have intensified. Trade threats and weakness in emerging markets have also boosted the dollar, making oil and other dollar-denominated commodities more expensive for overseas buyers. Prices have fallen lately even though the Energy Information Administration’s latest weekly report showed a larger-than-expected decline in crude-oil stockpiles.

Forex

The dollar rose, boosted by a strong U.S. jobs report and heightened global trade fears. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was up 0.4% in late-afternoon trading in New York. Nonfarm payrolls rose a seasonally adjusted 201,000 in August, a pickup from the prior month, the Labor Department said. The unemployment rate was 3.9%, and wages rose 2.9% from a year earlier in August. Economists had expected 192,000 new jobs and a 3.8% unemployment rate. Expectations of higher rates tend to make the dollar more attractive to yield-seeking investors. Later in the day, the U.S. currency extended gains after President Trump said tariffs on an additional $267 billion in goods imported from China could be implemented on short notice. Intensifying global trade fears have boosted the dollar in recent weeks, as many investors believe the U.S. will likely weather trade disruptions better than other countries.

European Markets
Asian Markets

In Asian trading Friday, South Korea’s Kospi shed 0.3% and Japan’s Nikkei dropped 0.8%, with the Japanese index closing lower for the sixth consecutive trading day. Meanwhile, Hong Kong’s Hang Seng held steady and the Shanghai Composite Index rose 0.4%.

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