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Market Opener – 31 Jul 2019

 
Local Markets Commentary
The Australian market commences mid-week trade on the last trading day of the month, with influential domestic and regional data due late morning, key euro zone data this evening, US-China trade talks expected to continue for a second day through today in Shanghai, and a US Federal Reserve rates decision by early tomorrow (AEST). 

Among regional data updates expected today, China’s official July PMIs are scheduled for release 11am AEST.

Locally, the Australian Bureau of Statistics (ABS) releases June quarter CPI growth 11.30am AEST. 

The Reserve Bank of Australia (RBA) publishes financial aggregates, including private sector credit, also at 11.30am AEST.

Being 31 July, a plethora of June quarter corporate reports will also feature throughout the day.

In overnight commodities trade, oil continued higher, Brent crude returning to a rally-sized gain.

US gold futures (August) rose further, to approach $US1430.0/oz. 

Iron ore (Nymex CFR China, 62% Fe) seesawed slightly higher.

LME copper turned and fell. Nickel and aluminium also settled lower.

The $A traded at ~US68.75c after falling to ~US68.90c early yesterday evening.

Overseas Market Commentary
Major European equities markets trended lower from early overnight trade, settling at or near session lows.

US equities markets subsequently largely trended higher towards sessional peaks, but nonetheless could not reach positive settlements.

International issues remained among investors’ major considerations, despite not inconsiderable anticipation of select major corporate earnings.

US-China high-level face-to-face talks commenced yesterday in Shanghai, as the US president again berated China’s stance (pre-US equities trade), suggesting a deliberate stalling and questioning commitments to purchase US agricultural goods. 

Also yesterday, the Bank of Japan appeared keen to point out it was prepared to introduce easing should international events sufficiently adversely impact its economy.

Meanwhile, the British pound fell further, to $US1.2154, on the chance the UK will leave the European Union (EU) with no key agreed arrangements in place.

The US Federal Reserve also commenced a two-day policy meeting, again under renewed criticism and pressure from the US president.

In overnight data releases, Germany’s preliminary July CPI estimate encouraged, inflation rising 0.5% during the month, following a 0.3% June rise. Year-on-year, July CPI growth was calculated at 1.7%.

A GfK consumer confidence reading slipped from 9.8 to 9.7.

In the euro zone, business confidence was reported at -0.12, from +0.17 a month earlier.

Consumer confidence improved to -6.6 from -7.2.

Among mixed US indicators, June personal income and spending disappointed, Income rising 0.4% for the month but spending growing by only 0.3%. May spending had increased by 0.5% against a 0.4% rise in income. 

June pending home sales improved 2.8% for the month, following a 1.1% increase in May. Year-on-year, sales were 1.6% higher, against May’s 0.7% decline.

The Conference Board’s July consumer sentiment reading jumped to 135.7 from 124.3. 

A Case-Shiller May house price index estimated prices had increased by 0.6% during the month and 2.4% year-on-year, following a 0.8% rise in April.

Tonight in the US, the Federal Reserve concludes a two-day policy meeting, and will announce outcomes early tomorrow (AEST).

In US data releases, (US) a private sector employment report and the July Chicago PMI are due, together with weekly mortgage applications.

Elsewhere, GDP and CPI updates are keenly anticipated for the euro zone.

Companies scheduled to report earnings later today and tonight include: Airbus, Automatic Data Processing, Baker Hughes, BNP Paribas, BAE Systems, Credit Suisse, Fiat Chrysler, General Electric, Lloyds Banking, Mitsubishi UFJ Financial, Mitsui, NEC, Qualcomm, Spotify and Vale. 

Glencore and Next are scheduled to provide trading updates.

In overnight corporate news, Apple Inc’s market cap reached $US1 trillion in post-US settlement trade, following forecast-beating quarterly profit and revenue figures.

Apple’s CEO cited a ‘marked improvement in greater China’ business.

Apple’s China sales were estimated 4% lower at $US9.16B, but had dropped 22% during the previous quarter.

While China iPhone sales continued disappointing, Apple reported 17% overall revenue growth for other China business.

Merck and Procter & Gamble were also cheered, dur to better-than-anticipated figures, plus a guidance boost and stock buy-back respectively.

Earlier, BP reported 6.5% higher June quarter production, but an almost on-par profit with a year earlier, due to reduced oil prices and refiner margins.
 
Posted on 31/07/2019 8:00:00 AM

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