Thursday: 5th April 2018

OPENING CALL: The Australian market looks to open higher with SPI Futures up 24 points.

The Australian share market is expected to open higher after US stocks finished higher as fears about trade tensions between the US and China ease.

Wall Street’s three major indexes staged a comeback to close around one per cent higher on Wednesday as investors turned their focus to earnings and away from a trade conflict between the United States and China that wreaked havoc in earlier trading.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

The Australian share market is expected to open higher after US stocks finished higher as fears about trade tensions between the US and China ease.
At 0700 AEST on Thursday, the Australian share price futures index was up 24 points, or 0.42 per cent, at 5,767.
Wall Street finished around one per cent higher after the US government said talks with Beijing could resolve an escalating US-China tensions after China retaliated against
US proposals to slap tariffs on $US50 billion ($A65 billion) in Chinese goods by targeting key American imports with similar duties.
Australian shares on Wednesday ended with a late move into positive territory, recovering from a midday slump.
The benchmark S&P/ASX200 closed down 9.5 points, or 0.17 per cent, at 5,761.4 points, while the broader All Ordinaries index was up 4.6 points, or 0.08 per cent, at 5,863.7 points.
In economics news on Thursday, the Australian Bureau of Statistics releases international trade figures for February.
In equities news, Murray Goulburn unitholders vote on the Saputo takeover. and Scentre Group, the owner of Westfield shopping centres in Australia, hold its annual general meeting.

US Markets

Wall Street’s three major indexes staged a comeback to close around one per cent higher on Wednesday as investors turned their focus to earnings and away from a trade conflict between the United States and China that wreaked havoc in earlier trading.
After investors fled equities in the morning due to proposed retaliatory tariffs from China, their concerns about a potential trade war eased by the afternoon after Trump’s top economic adviser Larry Kudlow said the administration was in a “negotiation” with China rather than a trade war.
Investors said they were comforted by the fact that any tariffs would not take effect immediately, if at all.
Strategists also cited the S&P’s bounce above a key technical support level and said they expect equities to rise further around the first quarter earnings season, due to start in mid-April.
“We’re starting to feel that while markets hate uncertainty, Trump’s bark is worse than his bite when it comes to trade,” said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.
“It’s earnings that’s going to lift us off this bottom. It wouldn’t shock me if we chopped around sideways for a little bit before earnings season … The trade stuff is really a side show,” he said.
The Dow Jones Industrial Average rose 230.94 points, or 0.96 per cent, to close at 24,264.30, the S&P 500 gained 30.24 points, or 1.16 per cent, to 2,644.69 and the Nasdaq Composite added 100.83 points, or 1.45 per cent, to 7,042.11.

Commodities

Gold futures settled higher Wednesday after China said it would impose tariffs of up to 25% on 106 American categories of products such as soybeans, elevating tensions in a simmering trade conflict between the U.S. and Beijing.
Mounting confrontation provided a lift for gold and other havens that tend to attract bids in times of global uncertainty.
IRON ORE: $62.26 -1.57(May contract)

Oil Futures

Oil prices climbed back from more than two-week-lows during trading Wednesday but still ended the day down despite an unexpected drop in U.S. oil inventories as trade fears rattled markets.

Forex

The Japanese yen rose against the U.S. dollar Wednesday, reflecting investors’ concern over escalating trade tensions between the U.S. and China.
The dollar was recently down 0.3% against the yen to Yen106.30. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was down 0.1% to 83.78.
China’s State Council announced Wednesday that it would levy penalties on 106 types of U.S. goods, including high-profile items such as soybeans and smaller commercial-passenger planes, made mostly by Boeing Co. The move came shortly after the Trump administration unveiled plans to impose tariffs of 25% on Chinese products worth $50 billion.

Australian Dollars:
The Australian dollar is higher, after confidence on financial markets got a boost by a statement from US government that it is prepared to negotiate with China to ease escalating trade tensions.
At 0635 AEST on Thursday, the local currency was worth 77.16 US cents, up from 76.93 US cents on Wednesday.

European Markets

Britain’s FTSE 100 managed a small gain on Wednesday despite global trade worries denting appetite for risky assets, as investors piled into defensive sectors which make up a large part of the UK index.
The FTSE recovered from sharp losses at the open, when it slid along with other European indexes after China announced additional tariffs on US goods.
“It’s more (about) the second-order effects on global growth sentiment, and the fact that this is all arriving at a time where some of the leading indicators have been rolling over anyway,” Ian Williams, economics & strategy research analyst at Peel Hunt, said.
The FTSE closed up 0.05 per cent, while the DAX closed down 0.37 per cent and France’s CAC 40 index fell 0.2 per cent.

Asian Markets

Asian share markets faltered on Wednesday as simmering China-US trade tensions overshadowed a bounce on Wall Street and left investors reluctant to take positions in anything.
The US market had taken heart overnight from bets that President Donald Trump’s Twitter attacks on Amazon would not translate to actual policy.
Yet trade worries were never far away. Late on Tuesday, the Trump administration announced 25 per cent tariffs on $50 billion of annual imports from China, covering around 1,300 industrial technology, transport and medical products.
For now, caution was the watchword and MSCI’s broadest index of Asia-Pacific shares outside Japan spent most of the session dithering either side of flat, and was last off 0.3 per cent.
Japan’s Nikkei added 0.13 per cent in thin volumes, while South Korea slipped 1.4 per cent, and the Shanghai Composite index fell 0.2 per cent.
On Wednesday, New Zealand’s S&P/NZX 50 index rose 0.82 per cent, to 8,398.08.

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