Monday: 9th July 2018

OPENING CALL: The Australian market looks to open higher with SPI Futures up 26 points.

Australian shares are poised to open higher, tracking last week’s gains on Wall Street after strong jobs data offset a brewing US-China trade dispute.
U.S. stocks jumped Friday and posted weekly gains, as signs of a buoyant labor market helped investors look past escalating trade tensions between the world’s two biggest economies.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian shares showed little anxiety over U.S.-China trade tariffs, outperforming throughout the day while steadily building on early gains to notch another 10 1/2-year high. The S&P/ASX 200 rose 0.9% to 6272.3, the best day in two weeks and put the week’s gain at 1.3%. The heavily weighted bank majors rose as much as 2% today while energy rose 1.3% to hit another 3 1/2-year high even as oil fell overnight. Elsewhere, big telco Telstra carried its recovery for a fifth straight day, leaving it up 6.9% this week.

US Markets

U.S. stocks jumped Friday and posted weekly gains, as signs of a buoyant labor market helped investors look past escalating trade tensions between the world’s two biggest economies. Investors contended with a confluence of forces heading into the end of the trading week. Labor Department data Friday showed the number of job seekers rising in June and U.S. employers adding to payrolls for the 93rd consecutive month-extending what has been the longest continuous jobs expansion on record. The unemployment rate ticked higher, but remained near an 18-year low. The upbeat report helped reassure many that the U.S. economy remains on strong footing, even as some worry that increasingly fractious trade policies around the world could weigh on global growth. The U.S. slapped levies on $34 billion of China’s exports early Friday, while in response, China’s State Council said it applied tariffs on 545 U.S. items ranging from agricultural products to vehicles. The Dow Jones Industrial Average rose 99.74 points, or 0.4%, to 24456.48. The S&P 500 added 23.21 points, or 0.8%, to 2759.82 and the Nasdaq Composite advanced 101.96 points, or 1.3%, to 7688.39. The gains came in a quiet session, with just 5.2 billion shares changing hands across exchanges owned by the New York Stock Exchange and Nasdaq–the lowest volume for a full trading day this year. For the week, the Dow industrials added 0.8%, while the S&P 500 notched a 1.5% gain and the Nasdaq posted a 2.4% advance, its biggest one-week rise since May.

Commodities

Gold prices were slightly lower after the latest jobs report showed the economy added more jobs than expected last month, while the unemployment rate edged slightly higher. Front-month gold for August delivery edged down 0.2% to $1,254.30 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices have edged higher since hitting a 2018 low earlier this week, though some analysts expect them to stay around their current levels with economic growth in the U.S. strong. Among base metals, front-month copper for July delivery edged down less than 0.1% to $2.8130 a pound in a seventh straight session of losses. With tariffs potentially slowing the global economy and limiting material demand, copper prices have fallen 15% in the last four weeks-their worst such stretch since 2011.

IRON ORE: $62.83s – 0.27 (August contract)

Oil Futures

Oil prices settled higher, as potential market disruptions outweighed the prospect of increasing OPEC production. Light, sweet crude for August delivery rose 1.2% to $73.80 a barrel on the New York Mercantile Exchange, reversing losses from earlier in the session. Prices fell about 0.5% for the week. Brent, the global benchmark, fell 0.3% to $77.11. Saudi Arabia and Russia have been pumping more oil in recent weeks, after the Organization of the Petroleum Exporting Countries and other major producers succeeded in drain global stocks and pushed prices to three-year highs. However, doubts remain over whether the boost in production will be enough to offset losses to supply in Venezuela, Iran and Libya. OPEC’s June shipments posted their largest monthly gain since late 2016, with Saudi Arabia’s exports rising 407,000 barrels a day versus the previous month, according to ship-tracking firm Kpler. Meanwhile, the trade war between the U.S. and China officially kicked-off on Friday as the countries introduced levies on $34 billion of each other’s exports. China is expected to introduce tariffs on U.S. crude oil in the future although it hasn’t specified when. China was the second largest importer of U.S. crude in 2017, according to the U.S. Energy Information Administration.

Forex

The dollar fell to a three-week low as investors reacted to the June employment report, which showed the economy added slightly more jobs than expected while wages increased modestly and the unemployment rate ticked higher. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently down 0.4% at 87.62.The euro and emerging-markets currencies strengthened. Average hourly earnings, up 0.2% from the previous month, came in below expectations and weighed down the dollar. Some investors may be looking for an excuse to take profits after the dollar’s recent rally. The U.S. currency gained 5.1% in the second quarter and has risen nearly 2% on the year. The dollar fell against emerging-markets currencies after the jobs news and continued to do so throughout the day.

European Markets

The Stoxx Europe 600 index closed up 0.2% at 382.36 as traders brushed off trade war fears for now, while sentiment was helped by U.S. data revealing that more jobs were created but wage growth was weaker than expected. Germany’s DAX ends up 0.3%, France’s CAC 40 up 0.2%, and the U.K.’s FTSE 100 up 0.2%. Spain’s IBEX 35 performs better, up 0.4%, while Italy’s FTSE MIB ends marginally higher, up 0.05%.

Asian Markets

Chinese stocks rebounded in late trading, with the Shanghai Composite up 0.5%. Japan’s Nikkei 225 rose 1.1%, but both indexes were set to finish down for the week.

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