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Market Opener – 26 Aug 2019
Local Markets Commentary
The Australian market commences a new week’s trade with:
• a weekend escalation of US-China trade argy-bargy;
• central bankers citing increased geopolitical burden in association with monetary policy formulation;
• acknowledged tensions at the ongoing G7 leaders’ summit in France; and
• an $A fall this morning.
G7 leaders began a summit in France late-weekend. This year’s summit is scheduled to continue until mid-week, but prior to the official commencement of proceedings, European Union (EU) leaders expressed dismay at the likelihood of any agreed outcomes.
The UK PM described the prospects of a UK-EU separation without agreed arrangements in place as ‘touch and go’, but also labelled EU nations as ‘friends and partners’.
Iran’s foreign minister met with the French foreign minister on the sidelines of the summit, but reportedly did not hold any meetings with US officials.
Also over the weekend, Reserve Bank of Australia (RBA) governor Philip Lowe told an annual central bankers’ symposium that ‘political shocks are turning into economic shocks’.
This echoed the US Federal Reserve chair’s comments post-ASX trade Friday that geopolitical events across several regions were proving a growing risk to international economic growth and were demanding increased attention from those considering optimal monetary policies.
Meanwhile, pro-democracy protests in Hong Kong attracted a stronger response from authorities over the weekend.
Locally today, the domestic corporate major 30 June reporting season enters its last week.
Several high-profile and large-cap stocks also trade ex-dividend today. Please see pp3-4 for a detailed list.
In overnight Friday commodities trade, oil fell.
US gold futures (December) turned and rallied.
Iron ore (Nymex CFR China, 62% Fe) settled slightly higher.
LME copper fell further. Nickel swung to close with a small gain.
The $A remained within a relatively narrow range after trading at US67.60c early Friday evening, but this morning has traded below US67.00c.
Also this morning, New Zealand has reported a $NZ685M July trade deficit, against expectations of $NZ254M.
• a weekend escalation of US-China trade argy-bargy;
• central bankers citing increased geopolitical burden in association with monetary policy formulation;
• acknowledged tensions at the ongoing G7 leaders’ summit in France; and
• an $A fall this morning.
G7 leaders began a summit in France late-weekend. This year’s summit is scheduled to continue until mid-week, but prior to the official commencement of proceedings, European Union (EU) leaders expressed dismay at the likelihood of any agreed outcomes.
The UK PM described the prospects of a UK-EU separation without agreed arrangements in place as ‘touch and go’, but also labelled EU nations as ‘friends and partners’.
Iran’s foreign minister met with the French foreign minister on the sidelines of the summit, but reportedly did not hold any meetings with US officials.
Also over the weekend, Reserve Bank of Australia (RBA) governor Philip Lowe told an annual central bankers’ symposium that ‘political shocks are turning into economic shocks’.
This echoed the US Federal Reserve chair’s comments post-ASX trade Friday that geopolitical events across several regions were proving a growing risk to international economic growth and were demanding increased attention from those considering optimal monetary policies.
Meanwhile, pro-democracy protests in Hong Kong attracted a stronger response from authorities over the weekend.
Locally today, the domestic corporate major 30 June reporting season enters its last week.
Several high-profile and large-cap stocks also trade ex-dividend today. Please see pp3-4 for a detailed list.
In overnight Friday commodities trade, oil fell.
US gold futures (December) turned and rallied.
Iron ore (Nymex CFR China, 62% Fe) settled slightly higher.
LME copper fell further. Nickel swung to close with a small gain.
The $A remained within a relatively narrow range after trading at US67.60c early Friday evening, but this morning has traded below US67.00c.
Also this morning, New Zealand has reported a $NZ685M July trade deficit, against expectations of $NZ254M.
Overseas Market Commentary
Major European and US equities markets returned to no-risk trade overnight Friday, China-US trade developments and international monetary policy commentary unsettling investors.
US Federal Reserve chair Jerome Powell told the international central bankers’ annual symposium that international trade battles were posing a new challenge to those determining monetary policy.
Earlier, China had revealed plans to introduce additional import taxes of 5% and 10% on $US75B worth of goods from the US from September.
This drew the ire of the US president, preparing to influence the G7 leaders’ summit hosted by France.
The president had again berated the US Federal Reserve, but now warned US companies to seek other nations to do business with, rather than China.
He subsequently (post-US trade) announced goods from China that were to attract a 10% US import tax from 1 September (Sunday next week) would now be taxed 15%, and that $US250B worth of goods from China, already taxed at 25%, would attract a 30% tariff from 1 October.
In scant new data releases, US July new home sales tumbled 12.8% for the month, after jumping 20.9% in June, and came in 4.3% higher than a year earlier.
Tonight in the US, the Chicago Fed national activity index, a Texas region manufacturing index and July durable goods orders are due.
UK markets, including the London Metals Exchange (LME), will not trade tonight due to a public holiday.
US Federal Reserve chair Jerome Powell told the international central bankers’ annual symposium that international trade battles were posing a new challenge to those determining monetary policy.
Earlier, China had revealed plans to introduce additional import taxes of 5% and 10% on $US75B worth of goods from the US from September.
This drew the ire of the US president, preparing to influence the G7 leaders’ summit hosted by France.
The president had again berated the US Federal Reserve, but now warned US companies to seek other nations to do business with, rather than China.
He subsequently (post-US trade) announced goods from China that were to attract a 10% US import tax from 1 September (Sunday next week) would now be taxed 15%, and that $US250B worth of goods from China, already taxed at 25%, would attract a 30% tariff from 1 October.
In scant new data releases, US July new home sales tumbled 12.8% for the month, after jumping 20.9% in June, and came in 4.3% higher than a year earlier.
Tonight in the US, the Chicago Fed national activity index, a Texas region manufacturing index and July durable goods orders are due.
UK markets, including the London Metals Exchange (LME), will not trade tonight due to a public holiday.