Thursday: 30th August 2018

OPENING CALL: The Australian market looks to open higher with SPI futures up 18 points.

Gains in technology shares lifted U.S. stocks, propelling major indexes to a fourth straight session of gains as investors monitored the latest trade developments.

Overnight Summary


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Each Market In Focus

Australian Market
US Markets

Gains in technology shares lifted U.S. stocks, propelling major indexes to a fourth straight session of gains as investors monitored the latest trade developments. Optimism about trade has buoyed stocks recently, as the U.S. struck a deal with Mexico this week and has charted a path to resolve its tariff fight with China. Worries that protectionist policies would weaken the global economy have hurt markets throughout the year, but some analysts view the most recent developments as a sign the Trump administration wants to avoid growth-hindering policies. Still, after markets rejoiced Monday following news of the agreement with Mexico, investors are waiting to see if other compromises will follow. Some remain skeptical that the U.S. and China can reach a timely deal, after months of escalating rhetoric between the world’s largest economies. With trade uncertainty hanging over markets, some investors continue to favor technology firms that have steadily increased revenue and are less sensitive to global growth. The S&P 500 added 16.52 points, or 0.6%, to 2914.04, while the tech-heavy Nasdaq Composite climbed 79.65 points, or 1%, to 8109.69. Both indexes set all-time highs. The Dow Jones Industrial Average erased early losses and closed up 60.55 points, or 0.2%, at 26124.57.

Commodities

Copper prices fell as the U.S. dollar ticked higher, giving up most of their gains from earlier this week. Front-month contracts for August delivery fell 0.9% to $2.709 a pound at the Comex division of the New York Mercantile Exchange, halting a three-day streak of increases. The more-active September contract fell 1%. The higher dollar prompted some traders to lock in gains from the recent rally, said Edward Meir, a consultant at INTL FCStone, adding that the outlook for metal markets was nonetheless improving. Gold prices were also lower, with front-month August contracts falling 0.2% to $1,204.50 a troy ounce as the stronger dollar weighed on that market. The more-active October contract fell too.

IRON ORE: 65.54s – 0.56 (September contract)

Oil Futures

U.S. oil prices rose to a four-week high after a government report showed U.S. stockpiles of crude oil fell for a second straight week, and a measurement of fuel demand hit a record high. Light, sweet crude for October delivery ended 1.4% higher at $69.51 a barrel on the New York Mercantile Exchange. That is the highest closing value since July 30. Brent crude, the global benchmark, rose 1.6% to $77.14 a barrel. Crude oil stockpiles in the U.S. fell by 2.6 million barrels in the week ended Aug. 24, the Energy Information Administration said in its weekly report, while inventories of processed fuels such as gasoline and distillates also declined. Analysts weren’t expecting to see such a large drawdown in crude oil given the summer driving season is ending and refineries are heading into maintenance season, which means the plants can’t take in as much oil for processing. The EIA report also showed motor gasoline supplied to the market, which investors use to gauge U.S. fuel demand, bullishly climbed by 446,000 barrels a day compared with the previous week, to 9.9 million barrels a day. That is the highest weekly number in data going back to 1991.

Forex

The Argentine peso fell to a fresh all-time low against the dollar, after the country’s president asked the International Monetary Fund to speed up the release of a $50 billion loan agreed earlier this year. The dollar was at one point up 4.5% against the peso at 32.89. Argentina’s currency is down more than 40% against the dollar this year. Receiving the financing will allow the government to bolster confidence and return to a growth path as quickly as possible, President Mauricio Macri said in a televised address. Other emerging market currencies also declined. The dollar was at one point up 2.5% against the Turkish lira and gained 1.1% against the South African rand. Turkey and Argentina have been at the forefront of an emerging markets selloff sparked by concerns that higher U.S. yields will pressure countries that had borrowed heavily in dollars over the past few years. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, closed up 0.2% at 89.21.

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