Thursday: 16th August 2018

OPENING CALL: The Australian market looks to open lower with SPI futures down 53 points.

U.S. stocks tumbled and Treasurys rose as the fallout from Turkey’s economic crisis continued.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market
US Markets

U.S. stocks tumbled in a broad selloff led by the energy and materials sectors, as the Dow Jones Industrial Average and S&P 500 suffered their fifth decline in the past six sessions. After mostly rising to start the month on the back of strong corporate earnings reports, U.S. stocks have been pressured in recent sessions as investors worry that Turkey’s economic crisis could spread to other emerging markets. Some investors expect steady U.S. earnings and economic growth to continue supporting major indexes, but analysts say the market is starting to pay more attention to the challenges gripping other countries. The S&P 500 slumped 0.8%, while the Dow industrials declined 137.51 points, or 0.5%, to 25162.41. The S&P 500 is up less than 0.1% for the month of August, while the blue chips–which are more sensitive to trade tensions–are down 1%. The technology-heavy Nasdaq Composite fell 1.2% on Wednesday and is up 1.3% month to date.

Commodities

Front-month copper for August delivery had its worst day of the year, slumping 4.4% to $2.5570 a pound on the Comex division of the New York Mercantile Exchange and hitting its lowest level since June 2017. The red metal entered a bear market for the first time since November 2016 and is now down 22% from its June four-year highs. Gold also hit a new low for the year, with front-month futures dropping 1.3% to $1,177.50 a troy ounce. Palladium, silver, platinum, zinc, nickel and lead all fell at least 3%.

IRON ORE: 66.90s – 0.93 (September contract)

Oil Futures

Oil prices fell to their lowest in two months after U.S. oil inventories unexpectedly increased and as investors worried of softening demand from global trade tensions and financial problems in Turkey. Light, sweet crude for September delivery ended 3% lower at $65.01 a barrel on the New York Mercantile Exchange. That’s the lowest closing level since June 6 and well below the $74 level it reached as recently as July 10. Brent crude, the global benchmark, fell 2.4% to $70.76 a barrel. The U.S. Energy Information Administration reported Wednesday a hefty, 6.8-million-barrel increase in U.S. stockpiles of crude oil, which surprised analysts who, on average, were expecting a 2.4-million-barrel decrease. U.S. commercial crude-oil inventories now stand at 414 million barrels, which is above the five-year average for the first time in several months. The data also showed U.S. oil production ticked back up slightly, to 10.9 million barrels a day, which suggests supplies could remain plentiful as the high-demand summer driving season ends and the lower-demand, back-to-school season starts. In other commodity news, copper closed in bear-market territory as metals fell across the board Wednesday, punished by the latest worries that a global economic slowdown will weaken demand.

Forex

The WSJ Dollar Index, which measures the greenback’s strength against 16 peers, including the lira, was down 0.1% at 90.29, driven lower by the lira’s rally. The dollar’s European rivals meanwhile steadily declined and both the euro and the British pound hit their lowest levels since late June late year on Wednesday. One euro last bought $1.1345, having recovered from an earlier session low of $1.1301, while the sterling fetched $1.2694 versus $1.2721 in the prior session.

European Markets

The WSJ Dollar Index, which measures the greenback’s strength against 16 peers, including the lira, was down 0.1% at 90.29, driven lower by the lira’s rally. The dollar’s European rivals meanwhile steadily declined and both the euro and the British pound hit their lowest levels since late June late year on Wednesday. One euro last bought $1.1345, having recovered from an earlier session low of $1.1301, while the sterling fetched $1.2694 versus $1.2721 in the prior session.

Asian Markets

This year’s rate hikes from Bank Indonesia may not be done, said OCBC, as the Fed is poised to continue its cycle of increases. That as “the prospect of further trade tensions between the U.S. and China or the U.S. with other countries could further” dampen sentiment towards the rupiah, which hit 3-year lows versus the dollar this week. That as the investment bank is predicting 5.1% GDP growth for Indonesia this year, the lower end of the central bank’s forecast.

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