Thursday: 26th April 2018

OPENING CALL: The Australian market looks to open higher with SPI Futures up 41 points.

The Australian share market is expected to open higher after a positive night on Wall Street as some encouraging company earning reports gave investors a reason to be confident.

Wall Street has climbed into positive territory as optimism over a spate of upbeat earnings was dampened by jitters over rising bond yields and corporate costs.

Overnight Summary


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Each Market In Focus

Australian Market

The Australian share market is expected to open higher after a positive night on Wall Street as some encouraging company earning reports gave investors a reason to be confident.
At 0700 AEST on Thursday, the Australian share price futures index was up 41 points, or 0.7 per cent, at 5,909.
The Australian share market on Tuesday gained ground as the Australian dollar hovered at a four-month low and inflation remained below the Reserve Bank’s target.
The benchmark S&P/ASX200 was up 35.6 points, or 0.6 per cent, at 5,921.6 points, while the broader All Ordinaries index was up 33.4 points, or 0.56 per cent, at 6,009.4 points.
Australian markets were closed on Wednesday for the Anzac Day public holiday.
In equities news on Thursday, gold miner Newcrest Mining releases its March quarter production report, and Wesfarmers releases its third quarter sales report.

US Markets

Wall Street has climbed into positive territory as optimism over a spate of upbeat earnings was dampened by jitters over rising bond yields and corporate costs.
All three major US indexes fluctuated in choppy trading and the Dow flirted with its sixth consecutive decline during much of the session, which would continue its longest losing streak since an 8-day slide in March 2017.
“I think there’s a bit of profit-taking churning through the market, and at the end of the day this is what a return to normal looks like,” said Chris Wolfe, chief investment officer of First Republic Private Wealth Management in San Francisco. “It’s messy, it’s choppy, and it’s far more normal that what we’ve been used to over the last five to seven years.”
The 10-year Treasury yield, a benchmark for global borrowing costs, again breached the three per cent level as government debt issuance surged due to a revenue shortfall related to the massive tax overhaul.
Shares of Boeing were up 4.6 per cent after the company posted better-than-expected profits amid strong commercial airliner sales, leading it to raise its forecasts after a record 2017.

Commodities

The spot price of gold in Sydney at 0700 AEST was $US1,323.01 per fine ounce, from $US1,326.23 per fine ounce on Tuesday.
IRON ORE: $67.19 -0.64 (May contract)

Oil Futures

Oil prices resumed their climb, shrugging off U.S. data showing an unexpected rise in crude oil and gasoline inventories as investors focused on geopolitical risk.

Forex

The dollar rose broadly Wednesday, pushed higher by U.S. bond yields’ rise to multiyear highs.
The WSJ Dollar Index, which tracks the currency against a basket of 16 others, rose 0.5% to 85.27.
The Treasury 10-year note rose above 3% Tuesday for the first time since January 2014, attracting some investors searching for income-generating assets, while also making it more expensive to bet against the currency, investors said. The dollar is additionally being supported by increasing expectations that the Federal Reserve will raise interest rates a total of four times in 2018.
Australian Dollar:
The Australian dollar has fallen to a new four month low as the US dollar rallies against most major currencies after US Treasury bonds broke the three per cent mark.
At 0635 AEST on Thursday, the local currency was worth 75.65 US cents, down from 75.98 US cents on Tuesday.

European Markets

A bid for drug maker Shire and a fresh offer for Sky failed to lift the UK stock market on Wednesday as worries about rising US bond yields and corporate costs continued to weigh on global markets.
Britain’s blue chip FTSE 100 closed down 0.62 per cent at 7,379.32 points, broadly in line with other European markets and Wall Street where warnings by top US firms about rising costs fuelled worries corporate earnings may have peaked.
In Germany the DAX 30 was down one per cent, and France’s CAC40 fell 0.57 per cent.
A rise in U.S. 10-year treasury yields is driving fears of higher borrowing fees for companies which have thrived in a low-interest rate environment and could also encourage investors to dump shares for safer government bonds.
Sky shares were the top performers of the session after U.S. media group Comcast submitted a 22 billion pound ($A40.5 billion) bid, prompting the European pay TV group to drop its support for a lower offer from Rupert Murdoch’s Twenty-First Century Fox.
Rare disease specialist Shire lost 2.6 percent after it said it was willing to recommend a sweetened $US64 billion ($A84.6 billion) offer from Takeda Pharmaceutical.

Asian Markets

Asian shares fell on Wednesday as a rise in U.S. bond yields above 3 percent and warnings from bellwether U.S. companies of higher costs drove fears that a boom in corporate earnings may be near its peak.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.3 percent, hitting their weakest in almost three weeks, with tech-heavy Taiwan shares slipping to two-month lows on worries about slowing semi-conductor demand. Japan’s Nikkei dropped 0.2 percent.
On Tuesday, New Zealand’s S&P/NZX 50 index fell 0.18 per cent, to 8,288.64. The New Zealand market was closed on Wednesday for the Anzac Day public holiday.

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