Thursday: 20th September 2018

OPENING CALL: The Australian market looks to open unchanged.

U.S. stocks approached fresh records amid continued monitoring of the global trade situation. The dollar and Treasurys fell as recent trade actions have been less severe than feared. Oil rose after data showed a drop in inventories. Gold was boosted by the dollar’s weakness.


Overnight Summary

Market Quotes by TradingView

Each Market In Focus

Australian Market
US Markets

Gains in shares of manufacturers and financial firms pushed the Dow Jones Industrial Average and S&P 500 near fresh records as investors continued monitoring the latest updates on global trade policy. Major indexes rose a day earlier alongside commodities and other risk assets after analysts said new tariffs announced by the U.S. and China were less stringent than previously anticipated. Anxiety over an escalating U.S.-China trade conflict and uncertainty about U.S. trade relationships with Canada and the European Union have hung over global markets lately, but some investors expect compromises to eventually quell fears of a growth-hindering trade war. Despite the recently announced tariffs, renewed faith in global economic stability could support the market heading into third-quarter earnings season, some analysts said. A pickup in other parts of the world could support multinational companies, with the U.S. already growing at its quickest pace in years. The blue-chip index added 159 points, or 0.6%, to 26406, pulling within 1% of its January record. The S&P 500 added 0.1%, while the tech-heavy Nasdaq Composite edged down 0.1%. The S&P 500 was about 0.2% off its Aug. 29 record, while the Nasdaq was about 2% from its all-time high from last month.


In other commodity news, copper prices closed near flat as investors weighed the latest moves in the trade battle between the U.S. and China. Copper futures for December delivery settled down 0.04% at $2.7295 a pound on the Comex division of the New York Mercantile Exchange. Gold for December delivery climbed 0.5% to $1,208.30 a troy ounce in New York. Copper prices were also supported by signs of a tighter market. Copper inventories in London Metal Exchange-registered warehouses dropped 20,000 metric tons over the past week, taking the total inventory withdrawal to more than 80,000 in the third quarter so far, according to ING Bank.

IRON ORE: 69.09s + 0.06 (October contract)

Oil Futures

U.S. oil prices rose to a two-month high after a weekly report showed U.S. inventories of crude oil dropping to a three-and-a-half-year low. Light, sweet crude for October delivery closed 1.8% higher at $71.12 a barrel on the New York Mercantile Exchange, for its fifth rise in the past seven sessions and the highest closing level since July 10. Brent crude, the global benchmark, rose 0.5% to $79.40 a barrel. The Energy Information Administration reported Wednesday that U.S. crude oil stockpiles fell by 2.1 million barrels last week to 394 million barrels. That marks a fifth straight weekly decline and is the lowest total since February 2015. It is also 142 million barrels less than a record-high inventory of 536 million barrels in March 2017, when the years-long oil downturn was in full swing. Gasoline stockpiles also declined last week, by 1.7 million barrels. Analysts said the continued drop in oil stockpiles even though the summer driving season is in the rear-view mirror is partly a result of rising U.S. crude oil exports, which have been helped in recent weeks by a widening differential between U.S. benchmark prices, known as West Texas Intermediate, and the global benchmark, Brent. Crude oil exports surged for a second straight week last week, to 2.4 million barrels a day, the EIA said. Though U.S. benchmark prices rose sharply Wednesday after the U.S. inventory report, Will Rhind, chief executive of GraniteShares, an exchange-traded fund issuer in New York, noted that prices for the global benchmark crude oil, Brent, only eked out minor gains.


The U.S. dollar was slightly weaker versus many of its rivals, as investors focused on new Brexit-inspired turmoil surrounding the British pound, as well as China’s reiteration that it wouldn’t use its yuan as a trade-war weapon. The ICE U.S. Dollar Index was down 0.1% at 94.538, having remained in the same range for most of Wednesday’s session. The gauge is on track for a 0.4% loss for the week, according to FactSet. The British poundhad a volatile day on Wednesday, starting off on a stronger note and rising to a high of $1.3214 following higher-than-expected consumer price inflation numbers.

European Markets

Sentiment turned as a report from the Times of London said U.K. Prime Minister Theresa May was going to reject the European Union’s new proposal regarding the Irish border, which brought sterling to a session low of $1.3098. EU chief negotiator Michel Barnier said late Tuesday that Brussels was ready to improve its offer on the Irish border as both the U.K. and the EU are trying to avoid a hard border between Northern Ireland and the Republic of Ireland. The pound last bought $1.3146, compared with $1.3147 late Tuesday in New York. The euro, meanwhile, rose to $1.1674 against the dollar versus $1.1670, and GBP0.8884 against the pound compared with GBP0.8876.

Asian Markets

The Bank of Japan kept its monetary policy unchanged and reiterated that interest rates would remain ultralow for “an extended period.” Japan is widely viewed to be one of the last developed-market countries to move down the path of policy normalization. The greenback was slightly weaker versus Japan’s yen, fetching Yen 112.25. On the trade war front, China’s Premier Li Keqiang reiterated that China wouldn’t devalue its yuan as a tool in the spat, which lent some support to the Chinese currency. The dollar bought 6.8491 yuan in Beijing , down 0.2%, and 6.8606 yuan offshore , little changed from Tuesday. The South Korean won, the Taiwan dollar and Indian rupee were stronger versus the greenback on Wednesday.

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