Thursday: 31st May 2018

OPENING CALL: The Australian market looks to open higher with SPI Futures Up 40 points.

The Australian share market is expected to open higher after there were strong gains on Wall Street amid hopes there might be a solution to the Italian political crisis.

US stocks rose on Wednesday, with the S&P 500 set to erase all its losses from Tuesday as signs of easing political turmoil in Italy emerged.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

The Australian share market is expected to open higher after there were strong gains on Wall Street amid hopes there might be a solution to the Italian political crisis.
At 0700 AEST on Thursday, the Australian share price futures index was up 40 points, or 0.67 per cent, at 6,035 points.
In the US, stocks were up more than one per cent, after Italy’s 5-Star Movement party made a renewed attempt to form a coalition government, and called for eurosceptic economist Paolo Savona to withdraw his candidacy as economy minister.
The Australian share market on Wednesday fell below 6,000 points to a one-month low, with financial stocks slumping under investor concerns about possible economic fallout from Italy’s political uncertainty.
The benchmark S&P/ASX200 was down 28.9 points, or 0.48 per cent, at 5,984.7 points, while the broader All Ordinaries index was down 27.9 points, or 0.46 per cent, at 6,093.8 points.
In economics news on Thursday, the Australian Bureau of Statistics releases capital expenditure, or business investment data, for the March quarter.
On Thursday morning the Australian dollar has followed US stocks higher, as market confidence improves.
At 0700 AEST, the local currency was worth 75.75 US cents, from 75.06 US cents on Wednesday.

US Markets

US stocks rose on Wednesday, with the S&P 500 set to erase all its losses from Tuesday as signs of easing political turmoil in Italy emerged.
Italy’s 5-Star Movement party made a renewed attempt to form a coalition government and called for eurosceptic economist Paolo Savona to withdraw his candidacy as economy minister.
The Italian government’s successful auction of five- and 10-year bonds also assuaged concerns about the country’s ability to finance itself after a sell-off in Italian bonds on Tuesday resulted in the biggest one-day surge for two-year yields in 26 years.
Fears about instability in Italy had sent investors scurrying to safety assets on Tuesday. US stocks took a beating, with the S&P 500 posting its first one per cent drop in May, while the US Treasury market had its best day since at least July 2011.
At the close of trade, the Dow Jones Industrial Average was up 306.33 points, or 1.26 per cent, to 24,667.78, the S&P 500 gained 34.15 points, or 1.27 per cent, to 2,724.01 and the Nasdaq Composite added 65.86 points, or 0.89 per cent, to 7,462.45.

Commodities

Gold prices were slightly higher Wednesday, lifted by the dollar. The precious metal has recently become more sensitive to the value of the greenback than to geopolitical uncertainty, analysts say, undermining its typical role as a safe-haven asset.
June contracts rose 0.2% to $1,301.50 a troy ounce.
IRON ORE: $64.27 -0.27 (June contract)

Oil Futures

Oil prices rose Wednesday, lifted by a weaker U.S. dollar and questions over whether OPEC supply will increase this year.
Light, sweet crude for July delivery rose 2.2% to $68.21 a barrel on the New York Mercantile Exchange, snapping a five-session losing streak. Brent, the global benchmark, rose 2.8% to $77.50.
Dollar-denominated commodities like oil often have an inverse relationship with the dollar. The Wall Street Journal Dollar Index, which measures the U.S. currency against a basket of 16 of its peers, fell 0.6% on Wednesday.
Brent has lost more than 6% since the end of last week, as Saudi Arabia and Russia neared a deal to increase oil production after more than a year of holding back output.

Forex

The dollar fell against the euro and a broad range of other currencies Wednesday, as investors took stock of the latest developments in Italian politics.
The euro was recently up 1.1% at $1.1666. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was off 0.6% at 87.05.
Tensions eased Wednesday as Italian President Sergio Mattarella sought a way to create a new government and avoid fresh elections. Mr. Mattarella was considering Wednesday the possibility of reviving a coalition government supported by Italy’s two large antiestablishment parties — the 5 Star Movement and the League — that had seemed poised to take power last weekend.
A day before, worries over the future of the eurozone sparked by Italy’s political crisis pounded the euro and other currencies and pushed investors into the perceived safety of the dollar.
With tensions running high and some political leaders pushing for quick elections, however, the situation in Italy can quickly change.

European Markets

A rebound by oil stocks helped Britain’s blue-chip index recover from a global sell-off prompted by a political crisis in Italy and fresh fears of a trade war between the US and China.
The UK’s FTSE 100 ended up 0.75 per cent on Wednesday after ending the previous session at its lowest level in nearly three weeks.
Frankfurt’s DAX index closed 0.93 per cent higher, and the CAC in Paris was up 0.2 per cent.
Oil majors BP and Royal Dutch Shell both rose more than two per cent as oil prices climbed to $US76 a barrel, supported by tight supplies despite expectations OPEC and its allies will pump more in the second half of 2018.
Among smaller companies, engineering firm Bodycote rose nearly seven per cent after predicting it would top market expectations for full-year profit and said it would pay a special dividend.
Discount retailer B&M European Value reported a 25 per cent jump in full-year profit, sending its shares up 4.5 per cent.

Asian Markets

Asian stocks extended a global sell-off on Wednesday as Italy’s political crisis rippled across financial markets, toppling the euro to a 10-month low, pushing up borrowing costs for Rome and sending investors into safer assets such as US Treasuries.
MSCI’s broadest index of Asia-Pacific shares outside Japan tumbled 1.4 per cent, while Japan’s Nikkei average sold off 1.5 per cent to a six-week low.
Chinese shares also headed south, with the Shanghai Composite index down 2.5 per cent, and South Korea’s KOSPI slipped two per cent.
On Wednesday, New Zealand’s S&P/NZX 50 index rose 0.14 per cent, to 8,647.86.

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