Tuesday: 18th September 2018

OPENING CALL: The Australian market looks to open lower with SPI futures down 4 points.

U.S. stocks fell amid lingering trade concerns. Treasurys slipped as investors digested mixed economic data. Oil prices edged lower as sanctions on oil-producing Iran loomed. Gold rose on the back of a weaker dollar.

 

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market
US Markets

U.S. stocks slipped, sending the Nasdaq Composite to its biggest one-day loss since July, as fresh trade threats between the U.S. and China stoked caution among investors. Signs that the U.S. trade fight with China is set to escalate this week capped stock gains and sent the dollar lower. The Trump administration is planning to unveil new tariffs on $200 billion in Chinese goods, with President Trump saying Monday that he would make an announcement after the end of the trading day. (Please update this language after the announcement.) Chinese officials have said they could pull out of trade talks if President Trump carries out his plans. The Dow Jones Industrial Average fell 92.55 points, or 0.4%, to 26062.12, ending near its low for the day. The S&P 500 lost 16.18 points, or 0.6%, to 2888.80, snapping a five-day winning streak, and the Nasdaq Composite dropped 114.25 points, or 1.4%, to 7895.79. Even with Monday’s pullback, U.S. stocks remain near records. Analysts have attributed the relative resilience of the market to trade developments so far being incremental and having a minimal impact on the U.S. economy.

Commodities

In other commodity news, copper prices inched higher, supported by a weaker dollar despite the latest escalation in the trade fight between the U.S. and China. Front-month copper for September delivery added 0.2% to $2.6335 a pound on the Comex division of the New York Mercantile Exchange. Trade worries have punished prices, pushing them down 20% from their June four-year highs with investors betting that tariffs will slow the Chinese economy and lower consumption of materials. Among precious metals, front-month gold for September delivery rose 0.4% to $1,199.70 a troy ounce, boosted by the weaker dollar. The dollar’s strength has been a bearish factor for gold this year, while higher short-term Treasury yields have also weighed on prices. The yellow metal is down 8.2% in 2018 and hit its lowest point since early 2017 this summer.

IRON ORE: 68.73s + 0.08 (October contract)

Oil Futures

Oil prices edged lower, giving back gains as traders weighed the potential impact of Iran sanctions. Light, sweet crude for October delivery declined 0.1% to $68.91 a barrel on the New York Mercantile Exchange, after trading as high as $69.71 earlier in the session. Brent, the global benchmark, closed down 4 cents to $78.05 a barrel. Prices rose Monday morning on a weaker U.S. dollar and expectations of a global supply crunch, but reversed course as the trading day went on. Dollar-denominated commodities like oil tend to have an inverse relationship with the greenback. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 of its peers, was trading down 0.3% Monday. Top buyers of Iranian crude, including China and India, have already begun to reduce imports, potentially tightening global supply. Total exports of Iranian crude fell by 280,000 barrels a day in August, to stand at 1.9 million barrels a day, the International Energy Agency reported last week.

Forex

The dollar fell, as investors focused on an intensifying trade battle between the U.S. and China. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, fell 0.3% to 89.33.

European Markets
Asian Markets

President Trump’s economic conflict with China is set to escalate this week, as the administration plans to unveil fresh tariffs on $200 billion in Chinese products entering the U.S. and Beijing debates new ways to retaliate against U.S. corporations doing business in China. The ramped-up trade threats between the two countries have buoyed the dollar in recent weeks, as many investors believe the U.S. will suffer less than other countries in a global trade conflict. At the same time, some investors were encouraged by reports that the White House may lower the tariff rate on the $200 billion in goods to about 10%-down from the 25% level they said in early August they would impose on those imports.”We already have real trade issues,” but it doesn’t appear that the U.S. and China have reached the point of no return, said Jason Ware, chief investment officer at Albion Financial Group. “If we get there, that will be truly problematic for the economy and markets,” he said. Shares of technology-focused companies retreated, weighing on the Nasdaq.

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