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Market Opener – 22 Jun 2018
Local Markets Commentary
The ASX hit a 10-year high this week and the benchmark top 200 was also up 3%, soaring 150 points to its highest level since January 2008 as Australia appeared somewhat insulated from the trade war carnage rocking world markets.
The Australian market appears to be a beneficiary of global investors fleeing emerging markets in the midst of the trade turmoil, with an appetite for U.S-dollar earning enterprises and the potential for China to divert U.S. exports from additional trade tariffs.
Australia could face a tricky diplomatic balancing act in any future escalation of U.S.-China economic tensions with almost 30% of the countries’ exports going to China, versus 5% from the U.S., which has holds a 22% interest in all direct investment in Australia.
Australian shares were pointing lower ahead of opening this morning with ASX futures down 30 points. The Australian dollar regained some ground against the greenback in the wake of a strengthening sterling and euro overnight.
Overseas Market Commentary
OPEC was close to securing a deal to increase oil output as Saudi Arabia pushed for an additional one million barrels a day from the 14-member oil cartel with only Iran still resisting easing the squeeze on the spigots.
Today’s OPEC meeting in Vienna is expected to reach an agreement on easing supply constraints to cool rising crude prices. However, consensus failed yesterday with Iran’s Oil Minister, Bijan Zanganeh, saying he did not believe a deal was possible.
Analysts are now tipping a likely 600,000-800,000 bpd increase, less than half the target non-OPEC member Russia had lobbied for in recent weeks.
Crude futures recently soared to multi-year highs but Iran, OPEC’s third biggest producer, is unlikely to benefit from rising production as a consequence of U.S.-imposed sanctions.
German car makers all suffered losses overnight as a result of trade tariff fallout that has revised Daimler’s earnings forecast from rising profits to lower than expected yields from a year ago.
Mercedes and BMW are both exposed to tariff increases from the U.S. to China, but Volkswagen is largely insulated as it manufactures mainly in Europe and China.
Analysts are expecting China to encourage car makers to shift production from the United States to China.
Overnight the Dow Jones fell almost 200 points, extending its longest losing streak since March 2017 to eight days in continuation of world trade tensions.
Caterpillar and Boeing, both heavily exposed to overseas markets, dropped 2.5% and 1.5% respectively and auto makers also bled, with General Motors, Ford and Fiat Chrysler all slumping at least 1.5%.
The Nasdaq, in the midst of a bull run to record highs this week, eased back 0.9% on declines from Amazon and Alphabet. Amazon fell 1.1% after a Supreme Court ruling that states can force online shoppers to pay sales tax.
U.S. stocks, however, were faring better than China with the Shanghai Composite tumbling to a 23-month low.
The blue-chip index CS1300 closed 1.2% down and the Shanghai Composite was 1.4% lower with the shares of over 100 companies shedding the daily limit of 10% in Beijing.
Thus far the Shanghai stock index is down 13% this year and the CS133 has fallen 10.9%.
Japan’s Nikkei closed 0.61% up and in Europe the Stoxx 600 was down 0.24% with most sectors in the negative.
The ASX hit a 10-year high this week and the benchmark top 200 was also up 3%, soaring 150 points to its highest level since January 2008 as Australia appeared somewhat insulated from the trade war carnage rocking world markets.
The Australian market appears to be a beneficiary of global investors fleeing emerging markets in the midst of the trade turmoil, with an appetite for U.S-dollar earning enterprises and the potential for China to divert U.S. exports from additional trade tariffs.
Australia could face a tricky diplomatic balancing act in any future escalation of U.S.-China economic tensions with almost 30% of the countries’ exports going to China, versus 5% from the U.S., which has holds a 22% interest in all direct investment in Australia.
Australian shares were pointing lower ahead of opening this morning with ASX futures down 30 points. The Australian dollar regained some ground against the greenback in the wake of a strengthening sterling and euro overnight.
Overseas Market Commentary
OPEC was close to securing a deal to increase oil output as Saudi Arabia pushed for an additional one million barrels a day from the 14-member oil cartel with only Iran still resisting easing the squeeze on the spigots.
Today’s OPEC meeting in Vienna is expected to reach an agreement on easing supply constraints to cool rising crude prices. However, consensus failed yesterday with Iran’s Oil Minister, Bijan Zanganeh, saying he did not believe a deal was possible.
Analysts are now tipping a likely 600,000-800,000 bpd increase, less than half the target non-OPEC member Russia had lobbied for in recent weeks.
Crude futures recently soared to multi-year highs but Iran, OPEC’s third biggest producer, is unlikely to benefit from rising production as a consequence of U.S.-imposed sanctions.
German car makers all suffered losses overnight as a result of trade tariff fallout that has revised Daimler’s earnings forecast from rising profits to lower than expected yields from a year ago.
Mercedes and BMW are both exposed to tariff increases from the U.S. to China, but Volkswagen is largely insulated as it manufactures mainly in Europe and China.
Analysts are expecting China to encourage car makers to shift production from the United States to China.
Overnight the Dow Jones fell almost 200 points, extending its longest losing streak since March 2017 to eight days in continuation of world trade tensions.
Caterpillar and Boeing, both heavily exposed to overseas markets, dropped 2.5% and 1.5% respectively and auto makers also bled, with General Motors, Ford and Fiat Chrysler all slumping at least 1.5%.
The Nasdaq, in the midst of a bull run to record highs this week, eased back 0.9% on declines from Amazon and Alphabet. Amazon fell 1.1% after a Supreme Court ruling that states can force online shoppers to pay sales tax.
U.S. stocks, however, were faring better than China with the Shanghai Composite tumbling to a 23-month low.
The blue-chip index CS1300 closed 1.2% down and the Shanghai Composite was 1.4% lower with the shares of over 100 companies shedding the daily limit of 10% in Beijing.
Thus far the Shanghai stock index is down 13% this year and the CS133 has fallen 10.9%.
Japan’s Nikkei closed 0.61% up and in Europe the Stoxx 600 was down 0.24% with most sectors in the negative.