Thursday: 25th January 2018

OPENING CALL: The Australian market looks to open lower with SPI Futures down 19 points.

The Australian share market looks set to open lower following a night of mixed trading in the US and dips across Europe.
The U.S. dollar hit another three-year low against a basket of leading global currencies, a continuing rout that accelerated Wednesday after U.S. Treasury Secretary Steven Mnuchin said a weaker dollar was good for trade.
Gold prices rose to their highest level since August 2016 Wednesday with the dollar hitting fresh multiyear lows after U.S. Treasury Secretary Steven Mnuchin said a weaker dollar was good for trade.

Overnight Summary


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Each Market In Focus

Australian Market

The Australian share market looks set to open lower following a night of mixed trading in the US and dips across Europe.
At 0700 AEDT on Thursday, the share price futures index was down 19 points, or 0.32 per cent, at 5,982.
No major economic news is expected on Thursday.
In equities news, gold miner Northern Star is expected to release its December quarter results, while logistics software firm Getswift has said it will respond to ASX inquiries about whether it has kept investors sufficiently informed about its activities.
The Australian market on Wednesday gained for a second straight day as demand for energy, healthcare and some financial stocks offset the impact of weaker commodity prices on miners.
The benchmark S&P/ASX200 index gained 0.3 per cent to 6,054.7 points, with most sectors in positive territory.
Meanwhile, the Australian dollar hit its highest level since September after the US Treasury Secretary said a weaker greenback would benefit US trade.

US Markets

Both the Dow and S&P 500 have edged higher while the Nasdaq has lost ground in choppy trading in the wake of comments by US Commerce Secretary Wilbur Ross that hinted at action against China in a trade war.
Speaking at the World Economic Forum in Davos, Ross said US trade authorities were investigating whether there is a case for taking action over China’s infringements of intellectual property.
That was enough to erase early gains and send the S&P down as much as 0.5 per cent after equities were initially lifted by another round of solid earnings and a drop in the dollar, which supports large multinational companies.
The Dow and S&P were able to claw back to the upside as investors chose to wait for concrete action.
The Dow Jones Industrial Average rose 63.55 points, or 0.24 per cent, to 26,274.36, the S&P 500 gained 3.17 points, or 0.11 per cent, to 2,842.3 and the Nasdaq Composite dropped 24.34 points, or 0.33 per cent, to 7,435.95.

Commodities

Gold prices rose to their highest level since August 2016 Wednesday with the dollar hitting fresh multiyear lows after U.S. Treasury Secretary Steven Mnuchin said a weaker dollar was good for trade.
Front-month gold for January delivery climbed 1.5% to $1,355.90 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices have climbed in eight of the last 10 sessions with the dollar sliding, as a weaker U.S. currency makes dollar-denominated commodities cheaper for overseas buyers.
IRON ORE: $72.75 +0.62 (February contract)

Oil Futures

U.S. crude prices climbed to fresh three-year highs Wednesday after government data showed that oil supplies in the U.S. fell last week, surprising market participants who had been bracing for an increase.
The U.S. Energy Information Administration reported that crude stockpiles dropped by 1.1 million barrels last week — the 10th consecutive week of declines. The American Petroleum Institute had reported Tuesday a 4.8 million barrel rise in U.S. crude stocks, which weighed on prices in earlier trading, so the decrease helped jolt prices higher.

Forex

The U.S. dollar hit another three-year low against a basket of leading global currencies, a continuing rout that accelerated Wednesday after U.S. Treasury Secretary Steven Mnuchin said a weaker dollar was good for trade.
The comments added to the greenback’s woes and rippled across global markets, boosting the price of metals and emerging market assets, halting the rally in European and Japanese shares, and pushing currencies like the British pound and euro higher. But the decline also comes as Treasury yields rise to a three-year high, an unusual trend that investors are trying to grapple with.
The ICE U.S. Dollar Index, which measures the dollar against other currencies, fell below 90 for the first time since December 2014. The dollar’s decline means that more than half of the dollar’s 30% gain during its bull run between 2014 and the end of 2016 has been erased.
Mr. Mnuchin’s remarks at the World Economic Forum in Davos, Switzerland, hastened the dollar’s retreat as the comments strayed from the more neutral statements of past U.S. Treasury secretaries.
Australian dollar:
At 0700 AEDT on Thursday, the local unit was worth 80.79 cents, up from 80.17 on Wednesday.
The Australian dollar reached 80.84 US cents overnight – its highest since September’s two-plus year peak.

European Markets

Britain’s top share index fell as sterling was pushed to a post-Brexit-vote high by data showing that the number of people in work had surged unexpectedly.
The FTSE 100 ended the session down 1.1 per cent at a three-week low of 7,643.43 points. The blue-chip index underperformed its continental European peers as the pound rose above $1.42, a level not seen since June 2016.
The UK jobs data boosted gilt yields, dimming the appeal of consumer staples stocks that are a favorite among income investors. Among those were BAT and Reckitt Benckiser, which contributed most to the FTSE’s fall.
The slow recovery of sterling since the June 2016 Brexit vote has given an accounting boost to UK blue chips with revenue in dollars. A weak pound typically supports the FTSE while its rise usually drags on the index.

Asian Markets

Asian stocks steadied in afternoon trading, with Chinese and Hong Kong equities climbing and Japan trimming its declines as the U.S. dollar rebounded some.
The broad, strong gains Tuesday–part of this month’s global equities rally–were followed by weakness in morning trading. The rally paused after the dollar fell in recent days, and the currency hit fresh three-year lows in Asian trading Wednesday.
The latest bout of weakness “is more from a sense that people are getting uncomfortable with rising trade tensions,” said Terence Wu, a forex analyst at OCBC Bank in Singapore. In general, “everyone seems to be looking for an opportunity to sell the dollar.”
New Zealand stocks continued its January trend of going opposite much of the rest of Asia Pacific. After the NZX 50 was the only major index to drop yesterday, it’s in the minority among today’s gainers. The index rose 0.2% to 8324.09 as it tries to not notch its first down months since December 2016. A2 Milk hit a fresh record high in jumping 2.7%. That as Auckland International Airport climbed another 1.8%.

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