Thursday 18th October 2018

OPENING CALL: The Australian market looks to open lower with SPI futures down 25 points.

U.S. stocks edged lower in another volatile session intraday as investors parsed the latest economic and earnings signals amid ongoing jitters about higher interest rates.

Overnight Summary


Market Quotes by TradingView

Each Market In Focus

Australian Market

Australia’s stock benchmark logged its first 1% gain since June as Asia Pacific equities extended Tuesday’s broad gains. The S&P/ASX 200 climbed 1.2% to 5939.1 even as commodities plays lagged. The materials sector eased 0.3% while energy merely rose 0.6%. Conversely, the recently beaten-down health care sector jumped 2.5% and REITs climbed 2.1%.

US Markets

U.S. stocks edged lower in another volatile session intraday as investors parsed the latest economic and earnings signals amid ongoing jitters about higher interest rates. The S&P 500 was recently down 0.2%, after falling as much as 1% earlier in the day. The Dow Jones Industrial Average fell 78 points, or 0.3%, to 25719. The tech-heavy Nasdaq Composite also dipped 0.3%. Major indexes had their best day in six months on Tuesday, paring some of their declines from the past week following robust profit figures. Still, worries about higher rates and whether the U.S. economy might be peaking have swung stocks lately. Volatility has surged, and the S&P 500 and Dow industrials are about 4% off their recent records. Lingering concerns about tariffs weakening the global economy and lukewarm data outside the U.S. also continue to hang over financial markets. With some investors increasingly wary that higher interest rates could crimp profit growth, the Federal Reserve released minutes from its most recent meeting showing it plans to continue gradually tightening financial conditions. Many analysts expect another rate increase in December, and some think clues about the path for 2019 could cause stocks to swing again.

Commodities

IRON ORE: 72.74s + 2.86 (November contract)

Oil Futures
Forex

The U.S. dollar rose intraday amid concerns that possibilities for a trade deal with China remain limited. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, rose 0.2% to 89.63. The gains were led by a 0.4% advance versus the euro and a 0.5% jump against the British pound. Investors have gravitated to the U.S. dollar in periods of turmoil surrounding global trade this year as the currency has benefited from a U.S. economy that has grown at a faster pace than the rest of the developed world. The U.S. and China are the two largest economies and are at the hub of much of the world’s production and consumption. The outlook for the U.S.-China talks remain “all over the place, to be honest,” said Brad Bechtel, head of currency strategy at Jefferies Group. “They just don’t seem to be on the same page.”

European Markets

The Stoxx Europe 600 index ended down 0.4% at 363.54, tracking falls in U.S. stocks and as concerns about Italy resurfaced after a report in Germany’s Der Spiegel magazine that the European Commission is rejecting Italy’s draft 2019 budget. Italian stocks were the biggest fallers, with the FTSE MIB ending down 1.3%. Germany’s DAX and France’s CAC-40 ended down 0.5%, while Spain’s Ibex 35 closed 0.9% lower. Shares in Germany’s Fresenius Medical Care topped pan-European fallers, down 16.5%, after the company cut its 2018 guidance, while weak third quarter sales caused France’s Danone to drop 4.3%. The U.K.’s FTSE 100 closed down 0.1%, outperforming slightly due to a weaker pound.

Asian Markets

It was a second consecutive day of gains for Asia-Pacific stocks, with advances generally bigger than Tuesday’s. Japan, South Korea and the Philippines each rose by more than 1% while Singapore’s benchmark was solidly above that threshold. Investor worries grew last week, stoked by money moving out of momentum plays as traders grew skittish, but have since faded. Taiwan’s market was the only one to have
closed lower, though Chinese indexes hit fresh multiyear lows before staging a late rally to close higher. In quite the up-and-down day for Chinese stocks as most others in the region opened strongly and remained so, mainland shares bounced from session lows to finish solidly higher. The Shanghai Composite closed up 0.6% at 2561.61 after earlier hitting another four-year intraday low. Shenzhen indexes did the same before the Shenzhen Composite ended 0.8% higher and the startup-heavy ChiNext climbed 1.2%. Among big caps, industrials rose more than 1% but health-care and consumer discretionary shares fell as economic worries persisted. Korea’s Kospi ended up 1% at 2167.51 while the Philippine Stock Exchange index ended up 1.6% at 7099.68. The Nikkei Stock Average ended up 1.3% at 22841.12.

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