Tuesday: 26th June 2018

OPENING CALL: The Australian market looks to open lower with SPI Futures down 56 points.

The Australian share market looks set to open close to one percent lower after escalating war of words between the US and China over trade hits risk sentiment and global markets tumble.

An escalating trade dispute between the United States and other leading economies has battered US stocks, driving benchmark indexes lower by around 2 per cent to their steepest losses in more than two months.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

The Australian share market looks set to open close to one percent lower after escalating war of words between the US and China over trade hits risk sentiment and global markets tumble.
At 0700 AEST on Tuesday, the share price futures index was down 56 points, or 0.9 per cent, at 6,099.
in economic news on Tuesday, Reserve Bank of Australia head of payments
policy Tony Richards is slated to speak at an Australian Business Economists function on cryptocurrencies in Sydney.
The ANZ-Roy Morgan Consumer Confidence weekly survey is due out.
No major equities news is expected on Tuesday.
The Australian equities market on Monday lost ground after losses in the finance sector following Commonwealth Bank’s announcement it will spin off its wealth management business.
The benchmark S&P/ASX200 index closed down 14.8 points, or 0.24 per cent, at 6,210.4 points, while the broader All Ordinaries was down 13.4 points, or 0.21 per cent, at 6,308.7 points.

US Markets

An escalating trade dispute between the United States and other leading economies has battered US stocks, driving benchmark indexes lower by around 2 per cent to their steepest losses in more than two months.
Losses were widespread but technology stocks suffered the most, with the Nasdaq diving 2.5 per cent, as the US Treasury Department was drafting curbs that would block firms with at least 25 per cent Chinese ownership from buying US tech firms, a government official said on Sunday.
US Treasury Secretary Steven Mnuchin on Monday twitted that the restrictions would apply not specifically to China but “to all countries that are trying to steal our technology”.
The S&P technology index dropped 3.0 per cent, set for its biggest one-day plunge in nearly three months. The Philadelphia Semiconductor index dropped 3.7 per cent as shares of chipmakers, which derive much of their revenue from China, took a hit.
Harley-Davidson Inc shares tumbled 7.1 per cent after the company said it would move production of motorcycles shipped to the European Union to its international facilities.
It forecast that tariffs would cost the company $90 million to $100 million a year.
The Dow Jones Industrial Average fell 1.33 per cent, to 24,252.80, the S&P 500 lost 1.37 per cent, to 2,717.07 and the Nasdaq Composite dropped 2.09 per cent, to 7,532.01.

Commodities

The spot price of gold in Sydney at 0700 AEST was $US1,265.4 per fine ounce, from $US1,265.64 per fine ounce on Monday.
IRON ORE: $64.58 +0.01(July contract)

Oil Futures

Oil prices fell Monday in the wake of a weekend decision by OPEC and its allies to begin ramping up production and the latest trade barbs between the U.S. and China.

Forex

Trade-war worries remained front and center on Monday, following President Donald Trump’s latest tariff salvos against some of its largest global partners. In response, traditional haven currencies like Japan’s yen strengthened.
Currencies considered safe in times of global uncertainty have outperformed due to their high liquidity versus alternatives perceived as riskier. The U.S. dollar at times also functions as a haven, though it seemingly didn’t on Monday, when the buck added on from a 0.3% loss last week. The ICE U.S. Dollar Index was last down 0.2% at 94.290.
The yen was up 0.2% against the greenback on Monday, with one dollar buying ¥109.79.
The buck also gained against China’s yuan, buying 6.5448 onshore and 6.5410 offshore, up 0.6% and 0.4%, respectively.
The Australian dollar has fallen against the US dollar amid a drop in oil prices with a looming lift in crude output and a worsening of the trade war between China and the US.
At 0635 AEST on Tuesday, the Australian dollar was worth 74.12 US cents, from 74.18 US cents on Monday.

European Markets

British shares suffered their worst trading day since February as a global sell-off caused by the escalating trade dispute between the US and China.
The FTSE 100 closed down 2.2 per cent, with financials, energy and material stocks weighing on the British blue chip index.
Losses accelerated across Europe after trading began on Wall Street and President Trump announced plans to bar Chinese companies from investing in US technology firms and block additional technology exports.
Cruise operator Carnival’s shares took the biggest hit, down 11.1 per cent as it cut its earnings forecast.
Heavyweights BP and Royal Dutch Shell were down 3.4 per cent and 2.6 per cent as oil prices gave back Friday’s gains made after an output agreement between major oil exporters.
The pan-European STOXX 600 index dropped 2 per cent, while Frankfurt’s DAX lost 2.5 per cent to 12,270.33.

Asian Markets

In Asia, Japan’s Nikkei share average dropped as sellers targeted large caps including Fast Retailing and SoftBank as well as defensive stocks, while the mining sector outperformed after oil prices jumped on Friday.
Sharp Corp stumbled 5.1 per cent after the company said it will issue 78.4 million shares via a public offering.
The Nikkei fell 0.8 per cent to 22,338.15.
Hong Kong stocks fell to a six-month low, dragged down by tech shares due to the US plans to limit on Chinese investment in US technology firms.
The Hang Seng index fell 1.3 per cent, to 28,961.39, while the China Enterprises Index lost 1.2 per cent, to 11,208.90.
China stocks gave up early gains to close lower, as an expected reserve requirement ratio (RRR) cut was largely offset by lingering trade war fears, and as a weakening yuan pushed lower real estate and airline shares.
The blue-chip CSI300 index fell 1.3 per cent to 3,560.48, while the Shanghai Composite Index slid 1.1 per cent to 2,859.34.
The S&P/NZX 50 closed fractionally in the red, down 0.03 per cent at 8,996.24.

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