Tuesday: 24th April 2018

OPENING CALL: The Australian market looks to open higher with SPI Futures up 6 points.

The Australian share market is expected to open slightly higher after a mixed performance by US stocks overnight.

Wall Street ended mixed as concerns about soft smartphone demand weighed on tech stocks and pulled the Nasdaq lower while earnings optimism protected against deeper losses.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

The Australian share market is expected to open slightly higher after a mixed performance by US stocks overnight.
At 0700 AEST on Tuesday, the Australian share price futures index was up six points, or 0.1 per cent, at 5,874.
The Australian share market on Monday closed higher, with investors finding value in the big mining companies and the nation’s largest lenders.
The benchmark S&P/ASX200 was up 17.2 points, or 0.29 per cent, at 5,886 points, while the broader All Ordinaries index was up 11.6 points, or 0.19 per cent, at 5,976 points.
In economics news on Tuesday, the Australian Bureau of Statistics releases inflation figures for the March quarter, Reserve Bank Assistant Governor (Financial Markets) Christopher Kent speaks at a Housing Industry Association function, and the ANZ-Roy Morgan weekly consumer confidence survey is due out.
In equities news, Fortescue Metals releases its March quarter production report.
The Australian dollar on Tuesday morning hit its lowest level in over four months, dragged down by lower US stocks, and higher US bond yields, which are supporting a higher US dollar.

US Markets

Wall Street ended mixed as concerns about soft smartphone demand weighed on tech stocks and pulled the Nasdaq lower while earnings optimism protected against deeper losses.
Tech stocks dragged on both the S&P 500 and the Nasdaq ahead of a big week of earnings for the sector. Chipmaker shares dropped after the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co Ltd, cut its full-year revenue target due to softer demand for smartphones.
Yields on 10-year US Treasuries rose to their highest level since January 2014 amid concerns over the growing supply of government debt and accelerating inflation.
“The markets are clearly spooked by this move in the bond market,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
“Ultimately if these long-term interest rates continue to move higher, that’s going to continue to be a stumbling block for markets and I think we’ll continue to see markets trading down,” said Massocca.
Earnings provided a bright spot, with 18 per cent of the companies in the S&P 500 having reported, 78.2 per cent of which have beat consensus estimates.
Google parent Alphabet Inc was up slightly in volatile after-hours trading following its earnings release; the company reported a 73 per cent jump in profits in the first quarter.

Commodities

The spot price of gold in Sydney at 0700 AEST was $US1,324.64 per fine ounce, from $US1,344.50 per fine ounce on Monday.
IRON ORE: $67.75 +0.68 (May contract)

Oil Futures

Oil prices rose to three-year highs as tightening supplies and escalating geopolitical risks helped the market climb back from earlier losses.

Forex

The dollar rallied to its highest level since early January on Monday, boosted by rising Treasury yields.
The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.6% at 84.90 on gains against the euro, yen and emerging markets.
Yields on the U.S. 10-year Treasury note were at 2.971% earlier Monday, according to Tradeweb, after settling at 2.949% late Friday in New York, the highest afternoon level since January 2014. Higher yields tend to boost the dollar, as they make the currency more attractive to income-seeking investors.
Investors are “heartened by improving U.S. economic data and moderating geopolitical worries,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange, in a note to clients.

European Markets

The UK’s top share index rose on Monday as a rise in bond yields buoyed financials and an appetite for risk returned at the beginning of a busy week of company updates.
The FTSE 100 ended the session up 0.4 per cent at 7,398.87 points, its highest level in seven weeks, pulling into positive territory following a muted start to the day’s trading.
A rise in bond yields helped boost shares in financial stocks, as US Treasury yields headed towards the psychologically significant three-per cent mark.
Shares in HSBC, Lloyds and Barclays were all up by between 0.4 per cent and 1.1 per cent.

Asian Markets

Asian stocks dipped on Monday as investors braced for a bevy of earnings from the world’s largest corporations, while keeping a wary eye on US bond yields as they approach peaks that have triggered market spasms in the past.
Traders were also anxiously awaiting surveys on global manufacturing for April to see if economic softness in the first quarter was just a passing phase linked to poor weather and the Lunar New Year holidays.
The first reading from Japan was tentatively upbeat with its PMI firming to 53.3 in April as output and domestic demand picked up.
On the geopolitical front, US President Donald Trump said on Sunday the North Korean nuclear crisis was a long way from being resolved, striking a cautious note a day after the North pledged to end its nuclear tests.
In stock markets, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4 per cent, with South Korea off 0.2 per cent.
Japan’s Nikkei eased 0.3 per cent and China blue chips 0.6 per cent as tech stocks continued to struggle with a warning on waning demand for mobile phones.
On Friday, New Zealand’s S&P/NZX 50 index fell 0.24 per cent, to 8,303.62.

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