Thursday: 1st February 2018

OPENING CALL: The Australian market looks to open flat with SPI Futures down 3 points.

The Australian share market is expected to start the day mostly flat after US stocks gave up gains made earlier in the session.
US stocks have closed higher, but trimmed earlier gains after the Federal Reserve said inflation rising this year, signaling it remains on track to boost interest rates again in March.
Gold futures settled modestly higher Wednesday, helped by a slightly weaker dollar index even as stocks reclaimed a portion of the sharp declines that marked the start to the week.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

The Australian share market is expected to start the day mostly flat, after US stocks gave up gains made earlier in the session.
At 0700 AEDT on Thursday, the share price futures index was down three points, or 0.05 per cent, at 5,978.
On Wednesday, Australian shares staged an afternoon recovery as US President Donald Trump delivered a State of the Union address that reassured financial markets.
The benchmark S&P/ASX200 index rose 0.25 per cent to 6,037.7 points, after falling 0.45 per cent in early trade.
In economic news on Thursday, the Australian Bureau of Statistics will release September building approvals figures, and the Ai Group will release the Performance Manufacturing Index.

US Markets

US stocks have closed higher, but trimmed earlier gains after the Federal Reserve said inflation rising this year, signaling it remains on track to boost interest rates again in March.
The Fed kept rates unchanged but, in a statement following its two-day policy meeting, it repeated that it expected that “further gradual” rate hikes will be warranted.
The central bank raised rates three times last year and sees three more hikes in 2018 even as it continues to trim its balance sheet on a largely pre-set schedule.
“The Fed’s acknowledgment of the quickening pace of inflation today put three hikes in 2018 into the ‘base-case’ and perhaps raises the prospects for a fourth,” said Mike Terwilliger, portfolio manager, Resource Credit Income Fund.
Stocks had been higher in earlier trading, lifted by a surge in Boeing that helped lead Wall Street out of a two-day slump on Wednesday.
The Dow Jones Industrial Average was up 72.5 points, or 0.28 per cent, to 26,149.39, the S&P 500 gained 1.69 points, or 0.06 per cent, to 2,824.07 and the Nasdaq Composite added 9.0 points, or 0.12 per cent, to 7,411.48.

Commodities

Gold futures settled modestly higher Wednesday, helped by a slightly weaker dollar index even as stocks reclaimed a portion of the sharp declines that marked the start to the week.
Prices for the yellow metal then headed lower in electronic trading. The Fed left a short-term U.S. interest rate unchanged as expected, but also said it expects inflation “to move up this year” in a sign it’s likely to hike rates at its next meeting in March.
IRON ORE: $71.37 -0.51(March contract)

Oil Futures

Oil prices ended higher, buoyed by data from the Energy Information Administration showing strong U.S. demand for gasoline and distillates and declines in domestic supplies of the petroleum products, even as U.S. crude supplies climbed for the first time in 11 weeks.
March West Texas Intermediate crude rose 23 cents, or 0.4%, to settle at $64.73 a barrel on the New York Mercantile Exchange after spending time below $64 following the release of data on U.S. supplies. For the month and year to date, the March contract climbed 7.1%.

Forex

The U.S. dollar edged lower Wednesday as investors piled into the euro and other currencies on expectations of surging growth abroad.
Investor expectations for a surge in global growth to continue has made other currencies more attractive.
The Wall Street Journal Dollar Index, which measures the currency against a basket of 16 others, declined by 0.1% to 83.15. The euro was up 0.1%. The dollar rose 0.5% against the yen, while declining 0.3% against the British pound and 0.8% against the Mexican peso.
While the U.S. has enjoyed a steady economic expansion and solid job growth, investors have been moving money into economies that are closer to the beginning of their economic cycle. The U.S. economic expansion began in 2009, making it one of the longest on record.
Australian dollar:
The Australian dollar is lower, extending the losses that started after the release of weaker than expected inflation figures on Wednesday.
At 0635 AEDT on Thursday, the local currency was worth 80.43 US cents, down from 80.90 cents on Wednesday.

European Markets

European shares fell on Wednesday as investors locked in profits at the end of a strong month while results from some of the region’s biggest names also weighed.
The STOXX 600 index was down 0.2 per cent on the day, ending at its lowest in more than three weeks and suffering its third consecutive day of losses.
The pan-European benchmark, however, ended January with a 2.1 per cent monthly gain as optimism over earnings and economic growth outweighed recent bond market jitters and concerns over a rising euro.
“We’ve the impression that investors are looking for a pretext to take a breather and lock in some of their gains.” said Andrea Tueni, head of sales at Saxo Banque Paris.
Results were centre stage on Wednesday, with investors particularly impatient with earnings misses in this high-valuation environment.

Asian Markets

Asia stocks steadied on Wednesday after stuttering in the wake of rising global bond yields, while the US dollar came under renewed pressure, slipping to 2-1/2-year lows versus the yuan, ahead of the Federal Reserve’s policy decision.
In his first State of the Union address since becoming US President, Donald Trump urged Republicans and Democrats to work toward compromises on immigration and infrastructure and implement legislation that generates at least $US1.5 trillion for new infrastructure investment.
MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.3 per cent, reversing earlier losses. January has so far seen the index gain 6.5 per cent, putting it on course for its best month since March 2016.
Japan’s Nikkei however dropped 0.8 per cent, though still capping a monthly gain of 1.5 per cent.
On Wednesday, the S&P/NZX50 Index rose 143.43 points, or 1.73 per cent, to 8,442.01.

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