Tuesday: 15th May 2018

OPENING CALL: The Australian market looks to open flat with SPI Futures unchanged.

The Australian share market is expected to open flat after Wall Street pared back earlier gains to end only slightly higher, and most base metals prices fell.

Wall Street edged higher after pulling back from stronger gains on Monday as weakness in defensive stocks offset trade optimism after US President Donald Trump’s conciliatory remarks toward China’s ZTE Corp indicated easing US-China trade tensions.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

The Australian share market is expected to open flat after Wall Street pared back earlier gains to end only slightly higher, and most base metals prices fell.
At 0700 on Tuesday, the Australian share price futures index was flat at 6,122 points.
In the US, stocks ended a choppy session slightly higher as weakness in defensive stocks offset optimism following US President Donald Trump’s conciliatory remarks toward China’s ZTE Corp that calmed the waters of US-China trade tensions.
The Australian share market on Monday closed higher, with gains in the resource and healthcare sectors overshadowing a hefty fall in Telstra shares to an almost seven-year low.
The benchmark S&P/ASX200 was up 19.1 points, or 0.31 per cent, at 6,135.3 points, while the broader All Ordinaries index was up 18.6 points, or 0.30 per cent, to 6,235 points.
In economics news on Tuesday, the Reserve Bank releases minutes of its May monetary policy meeting, the Australian Bureau of Statistics releases lending finance figures for March, and the results of the ANZ-Roy Morgan weekly consumer confidence survey are due out.
In equities news, global toll roads operator Macquarie Atlas Roads hold its annual general meeting in Sydney, and agribusiness Ruralco releases its half year earnings results.

US Markets

Wall Street edged higher after pulling back from stronger gains on Monday as weakness in defensive stocks offset trade optimism after US President Donald Trump’s conciliatory remarks toward China’s ZTE Corp indicated easing US-China trade tensions.
The S&P 500 briefly crossed into negative territory after hitting a roughly two-month high earlier in the session, but was back on track for its fourth straight day of gains.
Trump vowed to help ZTE “get back into business, fast” nearly a month after the Commerce Department implemented a ban on US companies selling to the company.
Trump’s reversal came as high-level trade talks between the world’s two largest national economies were due to resume this week after Washington’s tough stance on trade and tariffs put the countries on track for a potential trade war.

Commodities

The spot price of gold in Sydney at 0700 AEST was $US1,313.32 per fine ounce, from $US1,319.08 per fine ounce on Monday.
IRON ORE: $68.56 +1.03 (June contract)

Oil Futures

Oil prices rose, on more signs a tightening global oil market, despite the release of OPEC data which signaled robust production.

Forex

The Argentine peso hit fresh lows against the dollar Monday, as concerns grew over $30 billion in local debt set to mature this week.
The dollar was recently up around 8.7% against the peso at 25.07. The U.S. currency has risen more than 34% against the peso this year.
Investors will be closely watching Argentina on Tuesday, when the central bank is expected to roll over about $30 billion in short-term, peso denominated securities known as Lebacs that are set to mature.
“If the markets perceive the rollover to have fallen short, the peso is likely to come under more pressure and capital outflows will continue,” Teneo Intelligence said Monday.

European Markets

UK shares fell slightly on Monday following a strong run, while a potential bidding war for IWG triggered a surge in the serviced office provider’s stock, the latest deal in a flurry of mergers and acquisitions.
The FTSE 100 fell nearly 0.2 per cent, weighed down by financials and by a rising pound, which typically weighs on dollar-earning companies, while the broader FTSE 250, which includes IWG, added 0.1 per cent.
On the European mainland shares were virtually flat with Germany’s DAX 30 down 0.18 per cent, and France’s CAC 40 down 0.02 per cent.
The FTSE 100 recorded a seventh straight week of gains on Friday, its longest winning streak since June 2015, as investors began to warm to UK equities amid a wave of deals and takeovers.
Morgan Stanley on Monday upgraded its view on British equities, saying the market should benefit from higher commodity prices and an increase in dealmaking activity despite economic uncertainty over Brexit.
“The UK market is a fertile ground for stock pickers, given a combination of low valuations and increasing corporate activity/activism,” the US bank’s strategists said.

Asian Markets

Asian shares rose to near two-month highs on Monday on hopes of a thaw in US-China trade tensions as US President Donald Trump pledged to help ZTE Corp “get back into business, fast” after a US ban crippled the Chinese technology company.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4 per cent, while Japan’s Nikkei tacked on 0.5 per cent.
Chinese shares came off the day’s highs but were still up after Trump’s comments on ZTE , which JPMorgan analysts said was “a significant positive.”
Shanghai’s SSE Composite rose 0.2 per cent, Hong Kong’s Hang Seng index climbed more than one per cent.
On Monday, New Zealand’s S&P/NZX 50 index rose 0.42 per cent, to 8,713.23.

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