Wednesday: 12th September 2018

OPENING CALL: The Australian market looks to open lower with SPI futures down 14 points.

U.S. stocks were higher, with the Dow industrials taking a 266-point swing. U.S. government bonds were lower ahead of two central bank meetings. The dollar was higher on trade concerns. Crude oil prices rallied, due in part to Hurricane Florence. And gold was higher, settling above $1,200.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market
US Markets

The Dow Jones Industrial Average rose more than 100 points, as a surge in energy stocks and Apple helped the blue-chip index overcome another flare-up in trade tensions. The Dow industrials swung 266 points from its low to its high to recoup an early loss and snap a two-session losing streak. Shares of energy companies such as Exxon Mobil and Chevron benefited from a lift in oil prices, which jumped after an attack on Libya’s state-run oil company raised concerns of a possible supply disruption. Some investors also flocked to depressed shares of Apple that had fallen in the wake of comments from President Trump pressing the iPhone maker to shift production to the U.S. While news that China will ask World Trade Organization for permission to impose sanctions on the U.S. rattled stocks around the world, major indexes in the U.S. fared better as investors said they expected corporations to post another quarter of phenomenal earnings growth in the weeks ahead. A humming U.S. economy has helped stave off deeper losses among shares of American companies, investors added. But markets in Europe and Asia haven’t been as fortunate, as a combination of slowing growth and the specter of a trade war have driven stocks down in those regions, so much so that Hong Kong’s Hang Seng Index fell into bear-market territory on Tuesday.

Commodities

Meanwhile, gold shook off earlier weakness to climb back above $1,200 an ounce and notch its first gain in three sessions as the dollar eased back from their best levels of the day. December gold tacked on $2.40, or 0.2%, to settle at $1,202.20 an ounce following two sessions of losses in a row. It turned higher for the week, trading up about 0.2% from a week ago, but has lost about 9.8% year to date. Market participants are focused on a mix of trade headlines and economic data, as the talks with Canada on the future of the North American Free Trade Agreement are in full swing. Reports also said the U.S. and European Union may be getting closer to a trade agreement after recent meetings.

IRON ORE: 67.37s – 0.30 (October contract)

Oil Futures

Crude-oil futures rallied, with the global benchmark inching closer to the key $80 mark, as a hurricane approaching the U.S. East Coast and concerns over renewed sanctions on Iran threatened the flow of oil. Traders also awaited weekly data that are expected to show a decline in U.S. crude inventories. October futures on West Texas Intermediate crude, the U.S. benchmark, rose $1.70, or 2.5%, to $69.24 a barrel. A settlement around this level would be the highest in a week. November Brent crude was up $1.50, or 1.9%, to $78.87 a barrel on ICE Futures Europe, which would be the highest finish for a front-month contract since July, according to FactSet data. Traders continued to keep a close eye on Hurricane Florence as it approaches the U.S. East Coast. Authorities ordered widespread evacuations along the coasts of the Carolinas and Virginia. The storm track could change, but the latest forecasts indicate tropical storm-force winds could begin to hit the Carolinas by early Thursday. Concerns that Florence could weaken energy demand as the East Coast eventually recovers from the storm, contributed to a weaker tone for the U.S. benchmark on Monday, analysts said.

Forex

The U.S. dollar bounced higher versus its major rivals, as trade issues remained center stage and Australia’s currency hit a more than 2 1/2 year low. The Australian dollar hit a session low of $0.7085 – a level not seen since early 2016 for the antipodean currency. It last bought $0.7101, down from $0.7113 late Monday in New York. The Aussie dollar is often seen as a developed market proxy for China’s yuan, which was slightly weaker against the U.S. dollar. Just Friday, U.S. President Donald Trump said import tariffs on another $267 billion of Chinese-made goods could be implemented. China, meanwhile, is seeking permission from the World Trade Organization to impose sanctions on the U.S. as part of a dumping dispute. One dollar last bought 6.8721 yuan in Beijing, up 0.2%, and 6.8796 yuan in the offshore market, also up 0.2%.

European Markets

ING Groep CFO Koos Timmermans Steps Down After Settlement ING Groep said its finance chief Koos Timmermans is stepping down, a week after the Dutch lender agreed to pay a record penalty to settle an investigation on the failure of its money-laundering controls. Deutsche Bank, Commerzbank, ‘Open to Merger’ Says Der Spiegel. Executives from Deutsche Bank and Commerzbank are open to the idea of a potential merger of the two banks, as is German Finance Minister Olaf Scholz, Der Spiegel reports, citing unnamed sources. Alibaba Teams Up With Russian Tech Giant.

Asian Markets

In Asia-Pacific trading, Japan’s Nikkei led gains in the region as the dollar strengthened slightly against the yen and energy companies gained. Hong Kong’s Hang Seng fell into bear market territory, defined as a 20% drop from a recent closing high. Shares of Sands China and Galaxy Entertainment Group, which operate casinos in Macau, were among the biggest fallers amid recent concerns about a slowdown in China and cautious comments about the outlook from Suncity, while Geely Automobile Holdings fell 4.9%. Indian shares extended losses for the second straight session as the rupee’s fresh low and high crude oil prices weighed on sentiment. The S&P BSE Sensex declined 1.3% to 37,413.13, taking losses in two sessions to 2.5%. The rupee hit a new low of 72.73 against the dollar during the day’s trade on fears of weakening macros. Among the major losers, Tata Steel fell 3.5%, Tata Motors declined
3% and ITC ended 2.9% lower.

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