Monday: 20th August 2018

OPENING CALL: The Australian market looks to open higher with SPI futures up 35 points.

Australia’s stock benchmark, the S&P/ASX 200, lagged bigger gains seen in much of Asia Pacific Friday, but the increase was still enough for it to notch another 10 1/2-year closing high.
The Dow Jones Industrial Average rose Friday to finish a second consecutive week higher, as fears of contagion from Turkey’s currency crisis continued to ebb.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australia’s stock benchmark, the S&P/ASX 200, lagged bigger gains seen in much of Asia Pacific Friday, but the increase was still enough for it to notch another 10 1/2-year closing high. The index rose 0.2% to 6339.2, putting the week’s gain at 1%. Consumer discretionary names advanced 0.4%, hitting fresh 10-year highs, and the heavily weighted financials climbed 0.3%. But health care pulled back 0.5% after hitting another record high earlier.

US Markets

The Dow Jones Industrial Average rose Friday to finish a second consecutive week higher, as fears of contagion from Turkey’s currency crisis continued to ebb. The index of the 30 U.S. stock-market stalwarts added to its massive gains from Thursday, when the Dow logged its biggest point move in four months, easing investor concerns that the U.S. market was on the cusp of a more significant pullback. An additional week of solid corporate profit reports from companies like Walmart helped. Turkey’s mounting woes have pressured the market this week and contributed to a punishing run of trading sessions for investors who worried that the threat of additional sanctions could deepen the country’s economic funk and spill over into other markets. But even though Turkey’s lira took another step lower Friday after the Trump administration threatened to impose additional penalties over the country’s imprisonment of a U.S. pastor, investors marked down the risk of seeing a significant, damaging ripple into the U.S. stock market. The Dow industrials climbed 0.4% to 25669.32, while the S&P 500 added 0.3% and the Nasdaq Composite rose 0.1%. The additional gains helped the Dow and S&P 500 notch a second consecutive week of gains, of 1.4% and 0.6%, respectively. The Nasdaq, however, is down 0.3% over the past five trading days, as tech stocks came under pressure earlier in the week. While all 11 major S&P 500 sectors rose Friday, consumer-staples stocks were among the best performers. Up 3.2% this week, the sector of food makers and household-product manufacturers has been enjoying a renaissance lately, as investors have sought their relative safety to hedge against market volatility. Consumer staples tend to pay generous dividends and fare better during periods of economic duress since consumers tend to always need those goods and products.

Commodities

Copper prices rose, with a dip in the dollar helping to steady metal markets after a tough week. Front-month contracts for August rose 0.4% to $2.6245 a pound at the Comex division of the New York Mercantile Exchange, having clambered back from the lowest point in over a year this week. The more-active September contract also rose. The forces that battered metal markets earlier in the week cooled during Friday’s session, leaving some room for modest buying. Increased tensions between the U.S. and Turkey earlier this week, combined with broader macroeconomic fears about emerging-market contagion and Chinese economic growth, pummeled commodities. Copper traders were looking at their own particular set of supply pressures too. Market participants were widely expecting a strike at BHP Billiton’s Chilean Escondida operation, the world’s largest copper mine, before 11th-hour progress suggested disruption had been averted for now. Escondida’s No. 1 union and management reached an agreement late Thursday, according to BN Americas, with voting on the latest wage offer likely to conclude Friday. Gold prices, meanwhile, steadied on Friday. August-dated contracts closed little changed at $1,176.50 per troy ounce, helped by the weakness in the dollar. The more-active October contract was also unchanged. Gold prices have fallen for six weeks consecutively. In other commodity markets, sugar prices fell to the lowest point in a decade or more on Friday, capping off a painful week as traders fled commodity markets in search of safer assets. Sugar futures for October fell 1.2% to 10.18 cents a pound at the ICE Futures U.S. Exchange, the lowest close since June 2008.

IRON ORE: 67.95s + 1.17 (September contract)

Oil Futures

Oil prices rose on hopes of thawing trade tensions between the U.S. and China, after facing pressure throughout the week from a stronger dollar and building inventories. Light, sweet crude for September delivery rose 0.7% to settle at $65.91 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 0.6% to $71.83. Prices have been weighed down this week by the Turkish currency crisis, a stronger dollar, signs of weaker global demand and an unexpected rise in U.S. crude stockpiles. U.S. oil futures fell 2.5% for the week. However, buyers returned to the oil market after the U.S. and China said Thursday they would resume talks over a trade dispute after two months of deadlock. Meanwhile, weekly data from Baker Hughes showed that the number of active oil rigs in the U.S. remained unchanged in the latest week, indicating a pause in production growth.

Forex

The dollar fell, as investors took profits on a rally that has taken he U.S. currency to its highest level in more than a year. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, lost 0.3%. Turbulence in emerging markets and strong U.S. economic data have drawn investors into the dollar in recent weeks. The currency is up 4.5% this year against its peers and stands near its highest level since June 2017. Friday’s nearly 4% slide in the Turkish lira, which came after the Trump administration threatened to impose additional penalties over the country’s imprisonment of a U.S. pastor, weighed on some emerging market currencies. The dollar gained against the Brazilian real and the Russian ruble.

European Markets

European shares closed lower as worries about the Turkish lira continued to weigh on sentiment. The Stoxx Europe 600 slipped 0.1% as the embattled currency fell more than 4% against the dollar. “The heightened tensions between the U.S. and Turkey caused the Turkish lira to take a leg lower, and this reignited fears that the European-banking system could be shaken by either defaults or non-performing loans from Turkey,” said David Madden at CMC Markets. Germany’s DAX shed 0.2% and France’s CAC-40 edged down 0.1%.

Asian Markets

Many Asia Pacific stock markets ended a tough week with generally modest gains, as Turkey’s travails colored activity in most locations. Japan’s Nikkei added 0.3%, led by precision instruments, metals and shipping. Medical-device maker Terumo gained 3%, as did Sumitomo Metal Mining and major shipper Mitsui O.S.K. Hong Kong’s Hang Seng edged up 0.4%, snapping a five-day losing streak as index heavyweight Tencent Holdings rebounded from a large setback that followed downbeat earnings results. Korea’s Kospi rose 0.3% as Samsung and HK Hynix pared the previous day’s losses. The one market that fell was China, which has been one of the world’s biggest decliners this year. Indexes fell more than 1% to fresh multiyear lows, capping roughly 5% declines for the week.

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