Wednesday: 20th December 2017

OPENING CALL: The Australian market looks to open lower with SPI Futures down 22 points.

The Australian share market looks set to open firmly lower after Wall Street’s key indexes dipped ahead of the US tax reform bill vote that will slash the US company tax rate by 40 percent.
Wall Street has dipped ahead of a vote on a bill to overhaul the US tax system, with a pullback in technology stocks leading the declines after two strong sessions of gains on hopes that Congress will vote in favor of the bill.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market
The Australian share market looks set to open firmly lower after Wall Street’s key indexes dipped ahead of the US tax reform bill vote that will slash the US company tax rate by 40 percent.
At 0700 AEDT on Wednesday, the share price futures index was down 22points, or 0.36 percent, at 6,055.
No economic or equities news is expected on Wednesday.
The Australian market on Tuesday hit a fresh decade high thanks to strong commodity prices and positive leads from overseas markets.
The benchmark S&P/ASX200 index rose 32.9 points, or 0.54 percent, to 6,071.8 points.
The broader All Ordinaries index gained 33.2 points, or 0.54 percent, to close at 6,163.2 points.
US Markets
Wall Street has dipped ahead of a vote on a bill to overhaul the US tax system, with a pullback in technology stocks leading the declines after two strong sessions of gains on hopes that Congress will vote in favor of the bill.
The House of Representatives is set to vote in the afternoon, followed by the Senate later in evening. The Republican party is confident of the bill being signed into law by the end of the week.
The bill, among other things, proposes lowering corporate tax rates to 21 percent from 35 percent, which investors are betting will boost profits as well as trigger share buybacks and higher dividend payouts.
Apple fell 1.2 percent after broker Instinet downgraded the stock to “neutral,” saying the supply-demand balance for the iPhone X suggested little space to raise sales estimates for the next quarter.
The S&P 500 technology sector fell 0.74 percent, with tech stocks weighing the most on the major indexes.
The Dow Jones Industrial Average was 0.12 percent, to 24,763.09.
The S&P 500 had lost 0.29 percent, to 2,682.44.
The Nasdaq Composite had dropped 0.54 percent, to 6,956.97.
Commodities
Gold prices were slightly lower Tuesday, closely tracking the dollar ahead of a House of Representatives vote on a tax-overhaul bill.
Gold for February delivery inched down 0.1% to $1,264.20 a troy ounce on the Comex division of the New York Mercantile Exchange to end a four-session winning streak.
Among base metals, copper for March delivery swung between small gains and losses and closed up 0.2% at $3.1515 a pound after rising for a 10th straight session. The industrial metal sits near three-year highs, boosted by favorable demand from China, the world’s largest consumer, and supply disruptions.
IRON ORE: $71.60 -0.70( January contract )
Oil Futures
Oil prices rose, helped in part by the continuing outage of a North Sea pipeline and reports that Russia’s largest oil company could envision continuing production curbs past 2018.
U.S. crude futures traded up 30 cents, or 0.52%, at $57.46 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 39 cents, or 0.62%, to $63.80 a barrel on ICE Futures Europe.
Forex
The U.S. dollar rose as climbing bond yields and strong data on the housing market and global trade attracted investors to the currency.
The Wall Street Journal Dollar Index, which measures the currency against a basket of 16 others, rose 0.1% to 86.99.
The dollar’s gains came as the Commerce Department said Tuesday that U.S. housing starts rose 3.3% in November, surpassing forecasts of economists surveyed by The Wall Street Journal, who had expected a 3.1% decrease for starts. Separate data showed home builders are optimistic about the housing market. Home-builder confidence in the market for newly-built single-family homes rose this month to the highest level in more than 18 years, the National Association of Home Builders said Monday.

Australian Dollar:
The Australian dollar is slightly lower against a stronger but pretty subdued US counterpart ahead of the expected Congressional vote on the Republicans’ tax reform package.
At 0635 AEDT on Wednesday, the Australian dollar was worth 76.63 US cents, down from 76.67 US cents on Tuesday.

European Markets
European shares pulled back on Tuesday in a broadly weaker market as a rally inspired by investor optimism about a tax reform in the United States lost its strength.
Expectations that the US tax bill will pass this week lifted the pan-European STOXX 600 benchmark by as much as 0.2 percent in morning trade, before it turned lower in the afternoon, ending down 0.4 percent.
Traders said there was no clear catalyst but that jitters on the bond market, where Germany’s 10-year government bond yield hit a three-week high with its biggest one-day jump in more than three months, had weighed.
Germany’s DAX lost 0.72 percent to close at 13,215.79.
UK shares edged up slightly on Tuesday with Anglo-South African financial services group Old Mutual leading the index after it sold its Buxton UK wealth business for $800 million.
Asian Markets
Asia’s main bourse rose with the notable exception of its biggest – Japan’s Nikkei – which was dragged back by a stronger yen.
MSCI’s Asia ex-Japan stock index was firmer by 0.44 percent while Japan’s Nikkei index fell 0.15 percent to 22,868.00.
Hong Kong’s Hang Seng rose 0.70 percent to 29,253.66. Its top gainer was Ping An Insurance Group Co of China up 3.82 percent, while the biggest loser was Wharf Holdings, down 1.87 percent.
China’s main Shanghai Composite index rose 0.88 percent to 3,296.54 points while its blue-chip CSI300 index gained 1.26 percent to 4,035.33.
The S&P/NZX50 Index gained 0.7 percent, to 8,401.2.

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