Local Markets Commentary
The Australian market opens a new week’s trade with influential data released by China over the weekend, and key data from Japan this morning, ahead of material economic indicators for the UK and Germany tonight.
In addition tonight, the UK PM is expected to again promote an early election.
Over the weekend, a UK government minister resigned her position, citing the expulsion of other party members who last week voted against the PM’s proposals, and a meagre response to her request for details regarding the PM’s plans to secure a UK-EU separation deal that would satisfy UK parliamentarians and the EU.
Meanwhile, Hong Kong and its economy remain on watch following more violence yesterday during ongoing protests.
Yesterday, China reported a $US34.84B August trade surplus, following $US45.06B at the end of July.
Exports fell 1% year-on-year, against a forecast 2.0% rise, and following 3.3% July year-on-year exports growth.
Imports declined 5.6% year-on-year, after falling 5.3% in July, and against expectations of a 6.0% fall.
Exports to the US notably dropped 16% year-on-year, while imports from the US tumbled 22.4%.
Post-ASX trade Friday, the People’s Bank of China eased, as anticipated last week, capital reserve levels for financial institutions. This, to boost lending.
Regionally today, Japan is expected to publish a final June quarter GDP estimate just prior to ASX-open.
Locally today, the Australian Bureau of Statistics (ABS) is due to release June lending, including housing finance, to households and business 11.30am AEST.
Stocks trading ex-dividend today include CTX and MIN. Please see p4 for a detailed list.
In overnight Friday commodities trade, oil again settled higher.
US gold futures (December) ultimately retreated further.
Iron ore (Nymex CFR China, 62% Fe) also extended Thursday’s fall, to settle below $US89.50/t.
Over the weekend, China’s August iron ore imports were reported 4.2% higher for the month, at 94.85Mt.
For January – August, imports were 3.7% lower year-on-year, at 684.9Mt.
LME copper continued lower. Nickel swung, returning to a rally mode finish. Aluminium also turned, to record a slight fall.
The $A approached US68.45c after trading at ~US68.35c early Friday evening.
Overseas Market Commentary
Vacillating trade featured in various degrees across major European and US equities markets overnight Friday.
China’s central bank announced Friday that it would again ease financial institution reserve requirements in order to support greater lending.
This appeared to underwhelm, however, as China onlookers had been expecting broader stimulus.
In addition, the People’s Bank of China stated it would not be delivering ‘flood-like stimulus’.
Some overnight Friday investors would also have kept in mind there was more to come from China, as in the August trade statistics, scheduled for release Sunday (yesterday).
Among early overnight Friday data releases, the euro zone’s final June quarter GDP growth came in at 0.2% for the three months, following 0.4% for the March quarter.
GDP was 1.2% higher at the end of the June quarter than a year earlier.
Germany’s July industrial production was reported 0.6% lower for the month following a 1.1% June fall.
Later, the US August employment report came in mixed, the monthly new jobs tally estimated at 130,000 rather than the forecast ~160,000 - 175,000.
Hourly earnings were reported 3.2% higher year-on-year.
The participation rate increased by 0.2% to 63.2% and unemployment remained at 3.7%.
A speech by Federal Reserve chair Jerome Powell a few hours later offered a positive view of the US economy, maintaining the bank was neither expecting nor forecasting a domestic recession. At the same time Mr Powell assured the central bank would support the economy if needed.
In the UK, the House of Lords approved a bill previously approved by the Commons, for the PM to request from the European Union (EU) a delay to UK-EU separation plans should there be no arrangements agreed by both the UK parliament and EU by 19 October.
Friday, a legal bid against the planned five-week parliamentary suspension until mid-October was rejected. A decision appeal is anticipated to be heard 17 September.
Over the weekend, a UK government minister resigned her position, ahead of an anticipated new push by the PM later today and tonight for an early election due to the UK parliament UK-European Union separation impasse.
Tonight in the US, July consumer credit is due.
Elsewhere, the UK and Germany report July trade figures.
The UK also publishes a monthly GDP estimate, plus industrial and manufacturing production.