Wednesday: 7th February 2018

OPENING CALL: The Australian market looks to open higher with SPI Futures up 99 points.

The Australian share market looks set to open more than 1.5 per cent higher, after Wall Street turned around from the massive global equities sell-off and on track to close off a choppy session well in the green.
US stocks have wavered between gains and losses in volatile trading a day after the biggest one-day drops for the S&P 500 and Dow in more than six years.

Overnight Summary


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Each Market In Focus

Australian Market

The Australian share market looks set to open more than 1.5 per cent higher, after Wall Street turned around from the massive global equities sell-off and on track to close off a choppy session well in the green.
At 0700 AEDT on Wednesday, the share price futures index was up 99 points, or 1.72 per cent, at 5,863.
In economic news on Wednesday, the Australian Bureau of Statistics is expected to release its Selected Living Cost indexes for December.
In equities news, Rio Tinto is slated to release full-year results while Commonwealth Bank, Nick Scali, Murray Goulburn and Carsales.com are expected to post half-year results.
The Australian market on Tuesday suffered its biggest one-day fall since September 2015, wiping around $66 billion from its value, amid a savage global equities sell-off.
The benchmark S&P/ASX200 index dropped 192.9 points, or 3.2 per cent, to 5,833.3 points, while the broader All Ordinaries index shed 198.2 points, or 3.23 per cent, to 5,930.2 points

US Markets

US stocks have wavered between gains and losses in volatile trading a day after the biggest one-day drops for the S&P 500 and Dow in more than six years.
After an initial 2-per cent drop, major Wall Street indexes recovered but did not sustain the rebound, for long before falling again.
However, by 3.11 pm Tuesday EST (0711 Wednesday AEDT) all three major indexes were back in positive territory.
Between the day’s highs and lows, the Dow Jones Industrial Average traded in an almost 1,000-point range
The sharp declines in recent days marks a pullback long-awaited by investors after the market minted record high after record high in a relatively calm ascent.

Commodities

Gold prices fell for the third straight session, as a stronger dollar limited gains in the safe-haven asset for much of the session despite continued volatility in the stock market.
IRON ORE: $74.09 +0.14(March contract)

Oil Futures

A global stock market rout continued to weigh on oil market sentiment intraday, as crude prices edged lower in morning trading.
Light, sweet crude for March delivery lost 27 cents, or 0.4%, to $63.88 a barrel on the New York Mercantile Exchange, on track to close at a two-week low. Brent, the global benchmark, fell 50 cents, or 0.7%, to $67.12 a barrel.

Forex

The dollar shuffled between gains and losses intraday, as stocks gyrated following Monday’s big drop.
The Wall Street Journal Dollar Index, which measures the U.S. currency against a basket of 16 others, was recently down 0.2% at 83.69. The gauge was as high as 84.08 earlier in the session.
Investors seeking shelter from a sharp drop in equity prices have helped boost the dollar in recent days, interrupting a decline that has taken the U.S. currency to its lowest level in more than three years.
While further market volatility is unlikely to keep the Federal Reserve from going through with a widely expected interest-rate increase in March, it could slow the pace at which the European Central Bank unwinds its bond-buying program this year, analysts at Commonwealth Foreign Exchange said in a report.
Australian dollar:
The Australian dollar has crept a little higher against its US counterpart the day after global equity markets plunged amid widespread sell-offs that wiped out $US4 trillion in value – $66 billion of it off Australian shares.
At 0635 AEDT on Wednesday, the Australian dollar was worth 78.78 US cents, up from 78.57 US cents on Tuesday.

European Markets

European and British shares have remained lower after suffering major losses on Tuesday.
Britain’s major share index had its worst day since the Brexit vote on Tuesday as a violent global sell-off in stock markets and a spike in volatility shook investors.
The FTSE 100 on Tuesday closed down 2.64 per cent at 7,141.40 points at the end of a chaotic day of trading which drove volatility sharply higher.
It suffered its worst daily fall since June 24, 2016, when Britain’s vote to exit the European Union roiled global markets. The index touched its lowest level since December of that year as investors rushed out of equities, which have surged since the start of the year.
The stars of the past months’ rally were the worst fallers on Tuesday.

Asian Markets

Asian stocks also couldn’t escape the market turmoil as a global market rout intensified, fuelled by worries that a build-up in inflationary pressures will prompt major central banks to raise interest rates faster than expected.
Japan’s Nikkei fell 4.73 per cent to close at 21,610.24.
Hong Kong’s benchmark Hang Seng Index plummeted 5.15 per cent, its biggest daily percentage drop since August 2015, to 30,595.42. Hong Kong is particularly exposed to US rate moves because its currency is pegged to the US dollar.
The HSCE, an index tracking Hong Kong-listed Chinese firms, tumbled 5.9 per cent, its biggest single-day drop since July 2015.
The market was little helped by a second-day of heavy bargain-hunting from Chinese investors, who on Tuesday spent more than 8 billion yuan ($US1.27 billion) buying Hong Kong stocks via the Stock Connect linking the mainland and Hong Kong.
Albert Xu, Hong Kong-based strategist at Zhongtai International Securities Ltd, said investors had been too complacent and that a correction in global equities was overdue.
China’s indexes followed suit with Shanghai Compsite Index losing 3.35 per cent to 3,370.65 while the blue-chip CSI300 fell 2.93 per cent to 4,418.89.
New Zealand’s benchmark NZX 50 Index fell 2.1 per cent, to 8241.83.

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