Wednesday: 29th August 2018

OPENING CALL: The Australian market looks to open lower with SPI futures down 6 points.

After a week of struggles, the Australian stock market found some footing while climbing for a third-straight day.
U.S. stocks edged higher intraday as the U.S. and Mexico neared a deal to revise the North American Free Trade Agreement.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

After a week of struggles, the Australian stock market found some footing while climbing for a third-straight day. Perhaps gaining some demand as New Zealand’s exchange shut trading in the morning because of a data glitch, the S&P/ASX 200 was among the region’s better performers and finished up 0.6% at 6304.7, moving back toward last week’s latest 10 1/2 year closing high. Financials finally got off the mat, rebounding 0.9%. Materials rose 1.1%. But consumer stocks finished little changed as money rotated out of that strong-of-late sector. Among individual names, vitamin specialist Blackmores jumped 12%, its best day in a year, following its fiscal year report.

US Markets

U.S. stocks edged higher intraday as the U.S. and Mexico neared a deal to revise the North American Free Trade Agreement. The Dow Jones Industrial Average rose 23 points, or 0.1%, to 26073. The S&P 500 rose less than 0.1% and the Nasdaq rose 0.1%, a day after the technology heavy index went above 8000 for the first time. The threat of what many analysts call protectionist U.S. policies has dampened global market sentiment through most of this year. The outcome of the Nafta deal is seen by some as a bellwether for President Trump’s future dealings with China. The prospect of Mr. Trump successfully negotiating new trade deals is likely to be taken by investors as a hopeful sign that a major trade war will be avoided, analysts said. However, some money managers remained unconvinced after Mr. Trump said Monday that Canada would be severed from the North American trade area if necessary.

Commodities

Gold prices ended with a modest loss, finding support with the dollar near a one-month low, but also pressured by a jump in U.S. consumer confidence, which backs up the Federal Reserve’s plan for further interest-rate increases. The U.S. dollar fell against most of its key rivals as investors assess the preliminary trade deal announced Monday between the U.S. and Mexico. The deal generally lifted riskier markets, dulling demand for gold as a perceived investment safe haven, but did little to allay concerns for a continued trade spat between the Trump administration and China. Against this backdrop, December gold fell $1.60, or 0.1%, to settle at $1,214.40 an ounce as the leading dollar index fell 0.2% to 94.554 in dealings, but held on to a slight month to-date gain. Meanwhile, September wheat fell 1 cent to $4.98 1/4. Raw sugar futures were last down 0.86% at 10.43 U.S. cents a pound. Sugar still remained above last week’s levels, when it flirted with 12-year lows. The slight recovery in prices since then came in the wake of the Brazilian Sugarcane Industry Association’s most recent bi-monthly report, according to Kona Haque, head of research at ED&F Man, in a note.

IRON ORE: 66.10s – 0.06 (September contract)

Oil Futures

U.S. oil futures pulled back after two sessions of consecutive gains, but losses were modest as traders fretted over signs of receding output and braced for the latest weekly U.S. crude inventory data. “A series of factors such as a weaker dollar, investor confidence on the U.S. Mexico trade deal and concerns over supply disruptions coming into light again, appear to be supporting these levels right now, before markets turn their focus to the weekly inventory reports due later today and [Wednesday],” said analysts at ICICI Bank in a daily note. West Texas Intermediate crude for October delivery on the New York Mercantile Exchange shed 34 cents, or 0.5%, to settle at $68.53 a barrel, a day after notching the highest finish for a front-month contract since Aug. 7, FactSet data show. Global benchmark October Brent crude lost 26 cents, or 0.3%, to $75.95 a barrel on ICE Futures Europe. It finished Monday at the highest for a front-month contract since July 10, and continues to trade well above the U.S. benchmark price.

Forex

The dollar rose intraday against a batch of emerging-markets currencies, boosted by worries over financial and political turbulence in developing countries. The U.S. currency was recently up 2.2% against the Turkish lira and gained 1.1% against the Brazilian real. It rose 1.9% against the Argentine peso to a fresh all-time high. Turkey and Argentina have been at the forefront of an emerging-markets selloff sparked by concerns that higher U.S. yields will pressure countries that had borrowed heavily in dollars over the past few years. The German government is considering providing emergency financial assistance to Turkey as concerns grow in Berlin that a full-blown economic crisis could destabilize the region, the Wall Street Journal reported. Argentina, a smaller emerging economy facing similar problems, received a $50 billion credit line from the International Monetary Fund in June. Brazil, meanwhile, is facing worries over a presidential election set for later this year, as populist candidate Jair Bolsonaro has struck a chord with a deeply disillusioned public and is threatening to overturn the political status quo. Some analysts believe uncertainties in Turkey and other countries will cast a chill over emerging markets as a whole in coming months.

European Markets

The Stoxx Europe 600 index ended little changed at 385.46, though U.K. stocks outperformed as traders returned from a public holiday on Monday and the pound fell on concerns over a possible no-deal Brexit. Gains for the euro against a broadly weaker dollar weighed slightly on European stocks, though easing concerns about global trade tensions limited any losses. The U.K.’s FTSE 100 index ended up 0.5%, helped by gains in heavyweight mining stocks, while Germany’s DAX closed down 0.1% and France’s CAC 40 was up 0.1%. Italian stocks underperformed as banking stocks fall on concern about Italy’s politics and budget, with the FTSE MIB ending down 0.9%. Spain’s Ibex 35 closed down 0.6%.

Asian Markets

The bears continuedto be in retreat for global equities, with broad gains across Asia except for Chinese indexes essentially flat after 2 3% jumps on Monday. The advances were widely around 0.5%, with Singapore’s benchmark outpeforming at 1% following a late-day fade that ate into Monday’s gain. Most stock indexes in Asia-Pacific gained. Japan’s Nikkei Stock Average edged up 0.1% and Hong Kong’s Hang Seng rose 0.2%. South Korea’s stocks, like Japan’s, also saw gains steadily erode as the trading day progressed. But a 2-point jump in the end-of-day adjustment helped the Kospi’s gain look not so meager. The index finished up 0.2% at 2303.12 in its eighth straight advance, matching the run in July 2017.

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