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Market Opener – 20 Dec 2018

 
Local Markets Commentary
The Australian market opens today’s trade following an overnight US rate rise, ahead of key domestic data this morning, and central bank policy statements in Japan this afternoon and the UK tonight. 

Locally today, the Australian Bureau of Statistics (ABS) publishes national November employment statistics, 11.30am AEDT.

In overnight commodities trade, oil swung higher.

US (February) gold futures again settled with a slight gain. 

Iron ore (China port 62% Fe) turned slightly higher.

LME copper and nickel swung higher and rallied.

The $A dropped to ~US71.10c after again approaching US72.00c early yesterday evening.

Regionally today, the Bank of Japan announces outcomes of its policy meeting 2pm AEDT. Governor Haruhiko Kuroda also hosts a press conference.

This morning, New Zealand has reported 0.3% September quarter GDP growth, following forecasts of a 0.6% increase.

The nation’s trade deficit came in at $NZ 5.432B, against expectations of $NZ5.443B.

Overseas Market Commentary
US equities markets opened higher overnight, maintaining gains until a marked reversal when the US Federal Reserve had announced a unanimous decision for a 0.25% interest rate rise. 

Fed policy meeting minutes and a post-meeting press conference suggested a slowing of interest rate rises, from four during 2018, but that up to two could be expected for 2019.

The Fed also lowered forecasts (2.3% 2019 GDP; 1.9% CPI growth), ventured no assurance, and spoke of ‘roughly balanced’ economic risk.

Major European equities markets continued to chop overnight, appearing to react mostly to domestic matters.

These included the European Union (EU) assuring implementation was already underway for temporary arrangements should the UK separate from the EU without an approved agreement.

The initiatives were reported to cover personal travel, goods transportation and financial services regulations, and follow draft ‘no-deal’ plans published last month.

Meanwhile, the European Commission confirmed agreement with Italy on a 2019 budget for Italy that has been revised to avoid deficit-GDP ratio – related sanctions.

Across the Atlantic, a midnight Friday US government funding deadline returned to focus, following the administration’s previous day’s revelation that it need not rely on Congress.

Overnight, Congress confirmed it was progressing legislation for funding through to 8 February, and that it did not include a Mexico border wall allowance.

US exporters also backed up reports from the previous day, that China had purchased a second swag of soybeans since the G20 China-US talks, this time 1.5Mt during last week.

Later, the US administration announced military personnel would start leaving Syria.

In Canada, a third citizen was reported to have been detained in China, but reports varied as to whether this person was also accused of China national security offences. Last month, Canada arrested a Huawei executive on a US request and associated allegations of sanctions-related violations.

In US data releases, November existing home sales rose 1.9% for the month, following a 1.4% October gain and defying expectations of a 0.8% fall. 

Year-on-year, November sales represented a 7.0% drop.

Weekly mortgage applications were reported 5.8% lower, after a 1.6% increase the previous week. 

In the euro zone, November construction output was estimated 1.8% higher year-on-year, following 4.8% for October.

For the month, output dropped 1.6%, against a 2.1% October improvement.

In Germany, November producer prices rose 0.1% for the month following a 0.3% October increase. Year-on-year, prices were 3.3% higher, the same as for October. 

The UK’s November CPI was reported 0.2% higher for the month, increasing 2.3% year-on-year. This followed 0.1% and 2.4% respective October growth.

Tonight in the US, weekly new unemployment claims, a leading index and a Philadelphia region manufacturing index are due.

Elsewhere, the Bank of England holds a policy meeting. The post-meeting commentary is keenly anticipated, in particular views and predictions on post-European Union membership scenarios.

Accenture, Carnival, Nike and Walgreen Boots are among companies scheduled to report earnings.

In overnight corporate news, Glaxo Smith Kline (GSK) and Pfizer revealed plans for a consumer health JV, with GSK holding 68%. 

GSK will retain consumer pharma and vaccines, as a standalone business. 

In addition, Bristol-Myers Squibb revealed a $US1.6B sale of its consumer health business to Japanese company Taisho Pharmaceutical Holdings.

Earlier, Japan’s Soft Bank mobile phone business IPO had undershot expectations.
 
Posted on 20/12/2018 7:00:00 AM

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