Tuesday: 31st July 2018

OPENING CALL: The Australian market looks to open lower with SPI Futures down 2 points.

U.S. stocks fell as shares of technology companies tumbled and investors braced for a busy week of corporate earnings and central-bank meetings.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market
US Markets

U.S. stocks fell as shares of technology companies tumbled and investors braced for a busy week of corporate earnings and central-bank meetings. The Dow Jones Industrial Average declined 144 points, or 0.6%, to 25307. The S&P 500 slipped 0.6%, and the tech-heavy Nasdaq Composite dropped 1.4%. Tech stocks in the S&P 500 slid 1.8%, with shares of Facebook off 2.2% and Twitter down 8% as last week’s disappointing earnings reports weighed on sentiment. Netflix, meanwhile, dropped 5.7%, bringing its losses for the month to date to 14%. Despite those companies’ high-profile stumbles, the earnings season is shaping up to be strong. As of Friday, 83% of the companies in the S&P 500 that had reported results posted stronger-than-expected earnings and 73% beat estimates on revenue, according to FactSet. Earnings as a whole are on track to rise 21%. Those results, along with positive U.S. economic data, have supported U.S. stocks, with the S&P 500 and Dow industrials both posting gains for four consecutive weeks.
A Friday afternoon slide in the U.S. helped darken the mood for equities to start the week.

Commodities

Meanwhile, gold finished lower, booking a third straight decline, as the precious metal encountered resistance amid rising U.S. government bond yields, even as the dollar softened. December gold, the most active contract, finished $1.20, or less than 0.1%, lower at $1,231.50 an ounce. The decline marked the third consecutive for the precious metal and came even as the dollar weakened, as measured by the ICE U.S. Dollar Index and the Dow Jones Industrial Average DJIA and the S&P 500 index slumped. A weaker dollar usually makes bullion more appealing to buyers using other currencies, and gold tends to rise as stocks, viewed as risky assets, fall. The decline for gold comes a day ahead of a closely watched two-day gathering of the Federal Reserve, which isn’t expected to yield major changes to policy, but may underscore the central bank’s intent to lift rates twice more in 2018.

IRON ORE: 67.25s – 0.50 (August contract)

Oil Futures

Oil futures rose, with the U.S. benchmark pushing back above $70 a barrel for the first time in nearly three weeks on global supply concerns and strong underlying demand. West Texas Intermediate crude-oil futures trading on the New York Mercantile Exchange for September rose $1.41, or 2.1%, to $70.10 a barrel, changing hands above $70 for the first time since July 10. Brent crude, the global benchmark, advanced 88 cents, or 1.2%, to $75.64 a barrel on London’s ICE exchange. The move saw WTI, the U.S. benchmark, narrowing its discount to its global counterpart.

Forex

The U.S. dollar weakened against a basket of its major rivals, as traders prepared for a week filled with monetary-policy updates from Japan, the U.S. and the U.K. The ICE U.S. Dollar Index was down 0.4% at 94.325, while the broader WSJ Dollar Index was down 0.2% at 88.08. This gave the greenback’s main rival, the euro, room to rally to $1.1709 compared with $1.1656 late Friday. The Bank of Japan policy update due early Tuesday Eastern time, followed by the Federal Reserve’s update on Wednesday and the Bank of England on Thursday. While the conclusion of the Fed meeting on Wednesday is expected to be something of a nonevent, Japan’s central bank could lower its inflation target to 1.5%, market participants speculated. There is also speculation that the Bank of Japan could change the yield target for the 10-year Japanese government bond.

European Markets
Asian Markets

Asian stocks largely finished how they started — with broad declines. The worst performer was Chinese small caps, with the startup-heavy ChiNext skidding 2.2% as mainland equities fell for a fourth-straight day. Japan underperformed while many other markets were off less than 0.5%. Meanwhile, the Philippines’ benchmark continued to rebound, rising 0.9% more to put July’s jump at 8.1%. It’s on pace for its best month since March 2016. Vietnam’s benchmark has bounced a further 1.5% and India is looking to set its sixth-straight record closing high. The Shanghai Composite Index fell 0.2%, Japan’s Nikkei lost 0.7% and Hong Kong’s Hang Seng was down 0.2%. Investors will be turning their attention this week to monetary policy, with the Federal Reserve, Bank of Japan and Bank of England holding meetings. Of the three central banks, only the BOE is expected to raise interest rates, in what would be only its second increase in a decade. And while the Bank of Japan is likely to stick to the contours of its current policy, officials are studying some tweaks, including making yield targets more flexible.

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