Tuesday: 27th February 2018

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

Australian shares look set to open almost half a per cent higher after Wall Street rallies strongly and risk appetite returns to global equity markets.
US stocks have risen sharply, led by gains across sectors as investors bet that Federal Reserve chair Jerome Powell will stick to a gradual rate-hike approach despite indications that inflation is picking up.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australian shares look set to open almost half a per cent higher after Wall Street rallies strongly and risk appetite returns to global equity markets.
At 0700 AEDT on Tuesday, the share price futures index was up 35 points, or 0.58 per cent, at 6,050.
In economic news on Tuesday, the ANZ-Roy Morgan Consumer Confidence weekly survey is due out.
In equities news, Cabcharge, Costa Group Holdings, and Caltex Australia are expected to announce results.
Also, the hearing into the Seven Network and Amber Harrison contempt of court case is expected to be heard in Sydney.
The Australian market on Monday ended higher, with the benchmark index closing above 6,000 points for the first time since February 5, supported by solid company results and rising bank stocks.
The benchmark S&P/ASX200 index finished up 42.4 points, or 0.71 per cent, at 6,042.2 while the broader All Ordinaries index closed up 40.9 points, or 0.67 per cent, at 6,146.1 points

US Markets

US stocks have risen sharply, led by gains across sectors as investors bet that Federal Reserve chair Jerome Powell will stick to a gradual rate-hike approach despite indications that inflation is picking up.
Powell faces questions from both houses of the US Congress in a semi-annual testimony starting on Tuesday, his first major set piece since he took over from Janet Yellen earlier in February.
His testimony comes at a time when investors have been anxious about the pace of rate hikes, which have weighed on equity markets globally.
The Fed said on Friday it expected economic growth to remain steady and saw no serious risks on the horizon that might pause its planned pace of rate hikes.
The US 10-year Treasury yields eased to 2.8587 per cent , slipping from the four-year high it hit last week, while the CBOE Volatility index, known as Wall Street’s fear gauge, was last at 16.12.

Commodities

Gold prices finished higher Monday, recouping the losses suffered in the previous session on the back of a more steady U.S. dollar and a pull back in Treasury yields ahead of a busy week for appearances by Federal Reserve officials.
IRON ORE: $78.69 +0.61(March contract)

Oil Futures

Oil prices settled higher Monday, with U.S. benchmark crude up for a third session in a row.
The recent shutdown of an oil field in Libya helped provide support as traders awaited this week’s update on U.S. crude supplies following the unexpected decline reported a week earlier. April WTI crude rose 36 cents, or 0.6%, to settle at $63.91 a barrel on the New York Mercantile Exchange. Brent crude for April delivery gained 19 cents per barrel, or 0.28%, to $67.50.

Forex

The dollar edged higher Monday, as investors awaited a speech from Federal Reserve Chairman Jerome Powell later in the week.
The Wall Street Journal Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently up 0.1% at 83.67.
Investors will be closely watching Mr. Powell’s policy update to Congress on Tuesday, his first appearance on Capitol Hill since he was sworn in as the new Fed chief earlier this month.
Signs that the central bank is leaning toward raising rates at a faster-than-expected pace this year could jolt the ollar higher, as higher rates make the U.S. currency more attractive to investors seeking yield.
Australian dollar:
The Australian dollar is lower against its US counterpart which has been unable to sustain a rise in the US session.
At 0635 AEDT on Tuesday, the Australian dollar was worth 78.52 US cents, down from 78.78 US cents on Monday.

European Markets

European shares rose on Monday, with gains across bourses and industry sectors, as the focus gradually shifts from the earnings season to monetary policy and politics with Italy’s election on Sunday.
Shares gave up some of their gains after comments by European Central Bank president Mario Draghi suggested the bank was still confident that inflation was on an upward trend, supporting market expectations for the bank to finally end its bond purchase program this year.
The pan-European STOXX benchmark index closed up 0.6 per cent at 383.34 points. A number of shares which investors have often bet against enjoyed strong gains without any corporate announcement to justify the rise.
Germany’s DAX closed 0.35 per cent higher at 12,527.04.
Britain’s top share index rallied on Monday, shaking off last week’s slight decline as firmer commodity stocks and Associated British Foods propped up the FTSE.
The blue chip FTSE 100 index closed up 0.62 per cent at 7,289.58 points, while mid-caps gained 0.1 per cent.

Asian Markets

Asian stocks also gained, with most of the major indexes rising more than one per cent.
Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.7 per cent, while Japan’s Nikkei index closed up 1.19 per cent at 22,153.63.
Hong Kong’s Hang Seng also closed firmly in the green, up 0.74 per cent at 31,498.60.
China stocks extended gains, with major indexes climbing for a sixth session in a row, led by start-ups which saw their best day in seven months on expectations they will benefit from a proposal to delay reforms for initial public offerings (IPOs).
China’s top securities regulator Liu Shiyu proposed to delay a deadline for the government to authorise a registration-based initial public offering mechanism until February 29, 2020, the official Xinhua News Agency reported on Friday.
Market participants were also keeping a close watch on the impact of certain amendments in the wording of China’s constitution.
China’s ruling Communist Party on Sunday set the stage for President Xi Jinping to stay in office indefinitely, with a proposal to remove a constitutional clause limiting presidential service to just two terms in office.
The Shanghai Composite index closed up 1.23 per cent at 3,329.57, while the blue-chip CSI300 index rose 1.16 per cent to 4,118.42.
The S&P/NZX 50 index rose 0.5 per cent, to 8,340.53

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