Tuesday: 19th June 2018

OPENING CALL: The Australian market looks to open higher with SPI Futures up 35 points.

The Australian share market looks set to open more than a half a percent higher, ignoring the global trend of falling markets with investors apparently still worried about the trade spat between the US and China.

US president Donald Trump last week said he was pushing ahead with tariffs on $US50 billion of Chinese imports, prompting a quick response from Beijing, which said it would put duties on several American commodities.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

The Australian share market looks set to open more than a half a per cent higher, ignoring the global trend of falling markets with investors apparently still worried about the trade spat between the US and China.
At 0700 AEST on Tuesday, the share price futures index was up 35 points, or 0.57 per cent, at 6,154.
In economic news on Tuesday, the Reserve Bank of Australia releases the minutes of its June policy meeting, hte Australian Bureau of Statistics’ March quarter capital city property price indexes is due out and the ANZ-Roy Morgan Consumer Confidence weekly survey is also scheduled.
No major equities news is expected, but investors will likely keep a keen eye on Atlas Iron after Gina Rinehart’s Hancock Prospecting on Monday made an all-cash takeover bid that values the junior miner at $390 million.
The Australian market on Monday recovered from early weakness to eke out a tiny gain despite fears of a US-China trade war and lower commodity prices weighing upon mining and energy stocks.
The benchmark S&P/ASX200 closed up 10.1 points, or 0.17 per cent, at 6,104.1 points, while the broader All Ordinaries index was up 7.5 points, or 0.12 per cent, to 6,212.8 points, supported by strength among the big four banks.

US Markets

The Dow and S&P have fallen modestly, ending well off session lows, as gains in energy shares helped curb declines stemming from trade war concerns after China’s retaliation to US tariffs.
US president Donald Trump last week said he was pushing ahead with tariffs on $US50 billion of Chinese imports, prompting a quick response from Beijing, which said it would put duties on several American commodities.
Boeing, which has acted as a proxy for trade war tensions with China as it is the single largest US exporter to the country, fell 0.9 per cent as the biggest drag on the Dow. Construction equipment maker Caterpillar declined 0.9 per cent.
Chipmakers, which rely on China for a large portion of their revenue, also lost ground. The PHLX semiconductor index lost 0.99 per cent, its worst daily performance in a month. Intel, off 3.4 per cent, was the biggest drag on the S&P 500 and Nasdaq on tariff concerns and a downgrade by Northland Securities.
The Dow Jones Industrial Average fell 103.01 points, or 0.41 per cent, to 24,987.47, the S&P 500 lost 5.79 points, or 0.21 per cent, to 2,773.87 and the Nasdaq Composite added 0.65 points, or 0.01 per cent, to 7,747.03.

Commodities

The spot price of gold in Sydney at 0700 AEST was $US1,278.10 per fine ounce, from $US1,298.97 per fine ounce on Monday.
IRON ORE: $65.50 -0.43(July contract)

Oil Futures

Oil prices started the week higher as traders tempered their expectations for production increases from the global oil cartel.

Forex

The dollar rose against several emerging-market currencies Monday, as investors weighed the impact of tightening monetary policy in the U.S and an intensifying trade dispute with China.
The U.S. currency was recently up 1.6% against the South African rand and rose 0.5% against the Russian ruble. It also strengthened against the Chilean peso, Brazilian real and other currencies.
Expectations that the Federal Reserve will accelerate the pace of rate increases in coming months have boosted the dollar and weighed on emerging-market currencies. Higher yields in the U.S. tend to dim the allure of foreign assets, while a stronger U.S. currency makes it more difficult for nations to service their dollar-denominated debt.
The Australian dollar has continued its slide against the US dollar, performing poorly versus an unchanged US currency.
At 0635 AEST on Tuesday, the Australian dollar was worth 74.23 US cents, down from 74.44 US cents on Monday.

European Markets

Britain’s top stock index dipped on Monday as trade tensions between the US and China kept the pressure on equity markets across Europe, weighing on multinational companies.
The FTSE 100 fell 0.03 per cent to 7,631.33, its lowest since May 30 but substantially outperformed other European stock markets.
Germany’s DAX – home to big autos stocks on the trade dispute’s front line – sank 1.36 per cent to 12,834.11, while the STOXX 600 fell 0.8 per cent.
Strong energy stocks underpinned the FTSE 100, while a weaker pound also boosted the index’s mainly exporting companies.
The pan-European FTSEurofirst 300 index lost 0.80 per cent and MSCI’s gauge of stocks across the globe shed 0.51 per cent.
On top of trade, a potentially destabilizing spilt in German Chancellor Angela Merkel’s governing coalition over a migration plan weighed on the euro and put further pressure on European shares.

Asian Markets

Japanese stocks also fell as the escalating trade dispute between the US and China stoked concerns about the impact on global demand, triggering a sell-off in stocks such as makers of construction equipment.
Also denting sentiment was a magnitude 6.1 earthquake in Osaka in western Japan on Monday, hitting the shares of utility companies headquartered in the Kansai region.
Kansai Electric dropped 1.9 per cent though it said no irregularities had been detected at the Mihama, Takahama and Ohi nuclear plants after the quake. Osaka Gas stumbled 3.4 per cent.
On the other hand, contractors based in the Kansai region soared on speculation that construction demand will rise after the earthquake.
Asanuma Corp rose 1.3 per cent, Mori-gumi 1.6 per cent and Okumura Corp rose 0.1 per cent.
The Nikkei share average dropped 0.75 per cent to 22,680.33, after falling to as low as 22,601.13, the lowest point since June 6.
Hong Kong and China’s markets were closed.
New Zealand’s S&P/NZX 50 index again closed virtually unchanged, down 0.02 per cent, at 8,974.23.

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