Wednesday: 20th June 2018

OPENING CALL: The Australian market looks to open higher with SPI Futures up 36 points.

The Australian share market looks set to open higher despite falls in commodity prices and global equity markets tumbling amid escalating trade tensions between China and the US.

US stocks have fallen as a sharp escalation in the trade dispute between the United States and China rattled markets and put the Dow Jones Industrial Average back in negative territory for the year.

Overnight Summary


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Each Market In Focus

Australian Market

The Australian share market looks set to open higher despite falls in commodity prices and global equity markets tumbling amid escalating trade tensions between China and the US.
At 0700 AEST on Wednesday, the share price futures index was up 36 points, or 0.59 per cent, at 6,142.
The Dow Jones Industrial Average fell 1.15 per cent, to 24,700.21, the S&P 500 lost 0.40 per cent, to 2,762.57 and the Nasdaq Composite dropped 0.28 per cent, to 7,725.59.
The price of iron ore has dropped more than $US2, copper is almost two per cent lower while oil prices are also down with WTI more than one per cent poorer and Brent crude losing nearly half a per cent.
In economic news on Wednesday, Reserve Bank of Australia governor Philip Lowe is slated to participate in a panel discussion at the European Central Bank’s Forum on Central Banking in Portugal.
In equities news, Austrac’s $700 million penalty against Commonwealth Bank is expected to be approved by the Federal Court.

US Markets

US stocks have fallen as a sharp escalation in the trade dispute between the United States and China rattled markets and put the Dow Jones Industrial Average back in negative territory for the year.
President Donald Trump threatened to impose a 10 per cent tariff on another $US200 billion ($A271 billion) of Chinese goods, and Beijing warned it would retaliate.
Trump said his move followed China’s decision to raise tariffs on $US50 billion in US goods, which came after the White House announced similar tariffs on Chinese goods on Friday.
The Dow Jones Industrial Average fell 287.26 points, or 1.15 per cent, to 24,700.21, the S&P 500 lost 11.18 points, or 0.40 per cent, to 2,762.57 and the Nasdaq Composite dropped 21.44 points, or 0.28 per cent, to 7,725.59.

Commodities

The spot price of gold in Sydney at 0700 AEST was $US1,274.43 per fine ounce, from $US1,280.02 per fine ounce on Tuesday.
IRON ORE: $63.98 -1.52(July contract)

Oil Futures

Oil prices fell as trade tensions and expectation of growing production threatened to upset the global supply-and-demand balance.

Forex

The dollar rose to its highest level against basket of currencies in nearly a year, as investors reacted to threats of an intensifying trade conflict between the U.S. and China.
The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, was up 0.2% at 88.23, its highest level since July 2017.
President Donald Trump escalated a trade conflict with China on Monday, asking his administration to identify a new list of $200 billion in Chinese goods that would be penalized with tariffs. Some analysts and investors fear the situation could worsen and spur more market turbulence in the run-up to the implementation of an earlier round of U.S. tariffs, on July 6.
The Australian dollar has retraced some of the ground it has lost against its major currency peers regaining almost a fifth of a cent against the US dollar.
At 0635 AEST on Wednesday, the Australian dollar was worth 73.83 US cents, up from 73.65 US cents on Tuesday.

European Markets

UK shares fell on Tuesday on a global selloff prompted by fears of a
full-blown trade war between the US and China, and disappointing domestic corporate news including a profit warning by Debenhams.
The FTSE 100 ended down 0.36 per cent at 7,603.85 points, while the mid-cap FTSE 250 index fell 0.8 per cent.
Political uncertainty over Prime Minister Theresa May’s Brexit plans are also fuelling anxiety among investors as she prepares to confront pro-EU lawmakers in another test of her ability to lead a minority government.
Exposing troubles in the UK retail sector, Debenhams fell 10 per cent after the department store chain warned on profit for the third time in six months, blaming increased competitor discounting and weakness in key markets.
European shares extended a sell-off on Tuesday as the United States-China trade war excalated, with autos, mining and technology stocks taking the brunt.

Asian Markets

Japanese stocks tumbled to 2-1/2-week lows on Tuesday and posted the biggest daily percentage drop in three months after Chinese stocks were sold sharply amid escalating global trade tussles.
The Nikkei share average ended 1.77 per cent lower at 22,278.48, the lowest closing level since June 1. The index posted the biggest daily percentage drop since mid-March.
The broader Topix declined 1.6 per cent to 1,743.92.
Chihiro Ohta, general manager of investment research at SMBC Nikko Securities, said that developments in the global trade war could keep the Nikkei volatile this week, with the immediate support level seen at a recent low of 21,931.65 hit on May 30.
Hong Kong stocks closed at their lowest in more than four months, tracking other Asian markets roiled by escalating China-US trade frictions.
The Hang Seng index closed down 2.78 per cent at 29,468.15, its lowest since early February, while the China Enterprises Index lost 3.2 per cent to 11,492.77, its lowest in six months.
Shanghai stocks tumbled nearly 4 per cent as Washington’s fresh tariff threats against China raised the spectre of a full-blown trade war.
The Shanghai Composite Index plunged more than 5 per cent at one point in late trade before finishing the session down 3.78 per cent at 2,907.82 points. The blue chip CSI300 index fell 3.53 per cent to 3,621.12.
New Zealand’s S&P/NZX 50 index fell 1.24 per cent, at 8,863.24.

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