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Market Opener – 02 Aug 2019
Local Markets Commentary
The Australian market commences Friday trade with key commodity price drops overnight and increasing international and regional tensions, ahead of material domestic data today and influential US data tonight.
New US import taxes were announced overnight on the balance of goods from China, followed by reports of new North Korean missile launches early this morning in apparent protest to South Korea-US military exercises planned for this month.
Locally today, the Australian Bureau of Statistics publishes June retail sales and June quarter producer prices, each report at 11.30am AEST.
Regionally, the Bank of Japan is scheduled to release policy meeting minutes just prior to ASX-open.
In overnight commodities trade, oil plummeted.
US gold futures (December) settled moderately lower, but have traded beyond $US1451.5/oz in post-Comex settlement electronic trade.
Iron ore (Nymex CFR China, 62% Fe) slid to almost $US112.00/t.
LME copper continued lower. Nickel extended Wednesday’s rally. Aluminium fell further.
The $A fell to ~US68.00c after trading at ~US68.50c early yesterday evening.
New US import taxes were announced overnight on the balance of goods from China, followed by reports of new North Korean missile launches early this morning in apparent protest to South Korea-US military exercises planned for this month.
Locally today, the Australian Bureau of Statistics publishes June retail sales and June quarter producer prices, each report at 11.30am AEST.
Regionally, the Bank of Japan is scheduled to release policy meeting minutes just prior to ASX-open.
In overnight commodities trade, oil plummeted.
US gold futures (December) settled moderately lower, but have traded beyond $US1451.5/oz in post-Comex settlement electronic trade.
Iron ore (Nymex CFR China, 62% Fe) slid to almost $US112.00/t.
LME copper continued lower. Nickel extended Wednesday’s rally. Aluminium fell further.
The $A fell to ~US68.00c after trading at ~US68.50c early yesterday evening.
Overseas Market Commentary
Choppy and volatile trade featured variously in overnight major European and US equities markets trade.
A swag of central bank and corporate warnings and reduced forecasts, some disappointing data releases and then a ratcheting of the US-China trade dispute ultimately sapped sentiment.
In second-half US trade, the US president announced a 10% import tax on the balance $US300B worth of imports from China, effective 1 September.
Further, the president warned he could lift the new tariff to greater than 25%.
Earlier the Bank of England (BoE) retained policy status quo in a policy meeting, but cut its 2019 UK GDP growth forecast from 1.5% to 1.3%, and 2020 growth by 0.3% to 1.3%.
Further, it predicted a 33% chance of negative growth in early 2020, citing a ‘material and broad-based slowdown’ in global economic growth plus likely consequences of the UK leaving the European Union (EU) without sufficient arrangements in place. ‘Material risks of economic disruption remain’, the bank concluded.
In a post-meeting press conference, BoE governor Mark Carney warned that a ‘no-deal’ UK separation from the EU would result in a ‘smaller, weaker and poorer’ UK.
The British pound and euro fell further against the $US, the pound notably below $US1.2090.
The $US had appreciated in any case, due to the US Federal Reserve chair’s comments the previous session that this week’s rate cut ought not to be considered as the start of a series of cuts.
The $US has since pulled back, however.
Among overnight releases, the euro zone’s July manufacturing PMI was finalised at 46.5 from 47.6 for June.
Germany’s decidedly contractionary 43.2 represented a 1.8-point fall for the month.
In the UK, the July manufacturing PMI remained on par with June’s, at 48.0.
A swag of US economic indicators included ISM’s manufacturing activity index for July, which slipped 0.5 to 51.2.
Markit’s final US July manufacturing PMI represented a 0.2-point fall for the month, to 50.4.
A job cuts report estimated 38,845 planned cuts in July, against 41,977 for June.
June construction spending dropped 1.3% following a 0.5% May fall.
Weekly new unemployment claims rose by 8000.
In the meantime, the US Senate approved a budget and debt funding deal for the US financial year commencing October. The deal was agreed between the US administration and parliament’s leaders last month, and had been passed by the House of Representatives, meaning it now just requires the signature of the US president.
Tonight in the US, the July employment report is due, together with June trade figures and factory orders, the ISM’s July New York business activity index and a final reading for July consumer sentiment from the University of Michigan.
Elsewhere, June retail sales are anticipated for the euro zone.
Companies scheduled to report earnings later today and tonight include: AIG, Allianz, Asics, Berkshire Hathaway, BT Group, Chevron, Credit Agricole, Exxon Mobil, Ferrari, Honda Motor, Hyundai, Isuzu Motors, Itochu, Kobe Steel, Kraft Heinz, Marubeni Corp, Royal Bank of Scotland, Sumitomo and Toyota Motor.
In overnight corporate news, the London Stock Exchange Group (LSE) confirmed it would acquire data specialist Refinitiv by paying $US14.5B worth of LSE shares and pick up $US12.5B worth of existing Refinitiv debt.
Société Générale reported a 14% fall in quarterly profit, to €1.05B, impacted by restructuring but nonetheless exceeding expectations.
Barclays announced further cost cutting after delivering quarterly improvements.
Germany’s Siemens also reported falling profit and warned that geopolitics was hurting global business.
ArcelorMittal reduced its forecast 2019 international steel demand growth from 1% - 1.5% to 0.5% - 1.5%, this appearing to influence overnight base metals trade.
As did BP earlier this week, Royal Dutch Shell revealed results have been adversely impacted (profit at a 30-month low) by lower oil and LNG prices, despite increased production.
Kellogg popped after pleasing quarterly figures.
Meanwhile, Amazon founder Jeff Bezos was reported to have recently sold $US1.8B worth of Amazon stock.
A swag of central bank and corporate warnings and reduced forecasts, some disappointing data releases and then a ratcheting of the US-China trade dispute ultimately sapped sentiment.
In second-half US trade, the US president announced a 10% import tax on the balance $US300B worth of imports from China, effective 1 September.
Further, the president warned he could lift the new tariff to greater than 25%.
Earlier the Bank of England (BoE) retained policy status quo in a policy meeting, but cut its 2019 UK GDP growth forecast from 1.5% to 1.3%, and 2020 growth by 0.3% to 1.3%.
Further, it predicted a 33% chance of negative growth in early 2020, citing a ‘material and broad-based slowdown’ in global economic growth plus likely consequences of the UK leaving the European Union (EU) without sufficient arrangements in place. ‘Material risks of economic disruption remain’, the bank concluded.
In a post-meeting press conference, BoE governor Mark Carney warned that a ‘no-deal’ UK separation from the EU would result in a ‘smaller, weaker and poorer’ UK.
The British pound and euro fell further against the $US, the pound notably below $US1.2090.
The $US had appreciated in any case, due to the US Federal Reserve chair’s comments the previous session that this week’s rate cut ought not to be considered as the start of a series of cuts.
The $US has since pulled back, however.
Among overnight releases, the euro zone’s July manufacturing PMI was finalised at 46.5 from 47.6 for June.
Germany’s decidedly contractionary 43.2 represented a 1.8-point fall for the month.
In the UK, the July manufacturing PMI remained on par with June’s, at 48.0.
A swag of US economic indicators included ISM’s manufacturing activity index for July, which slipped 0.5 to 51.2.
Markit’s final US July manufacturing PMI represented a 0.2-point fall for the month, to 50.4.
A job cuts report estimated 38,845 planned cuts in July, against 41,977 for June.
June construction spending dropped 1.3% following a 0.5% May fall.
Weekly new unemployment claims rose by 8000.
In the meantime, the US Senate approved a budget and debt funding deal for the US financial year commencing October. The deal was agreed between the US administration and parliament’s leaders last month, and had been passed by the House of Representatives, meaning it now just requires the signature of the US president.
Tonight in the US, the July employment report is due, together with June trade figures and factory orders, the ISM’s July New York business activity index and a final reading for July consumer sentiment from the University of Michigan.
Elsewhere, June retail sales are anticipated for the euro zone.
Companies scheduled to report earnings later today and tonight include: AIG, Allianz, Asics, Berkshire Hathaway, BT Group, Chevron, Credit Agricole, Exxon Mobil, Ferrari, Honda Motor, Hyundai, Isuzu Motors, Itochu, Kobe Steel, Kraft Heinz, Marubeni Corp, Royal Bank of Scotland, Sumitomo and Toyota Motor.
In overnight corporate news, the London Stock Exchange Group (LSE) confirmed it would acquire data specialist Refinitiv by paying $US14.5B worth of LSE shares and pick up $US12.5B worth of existing Refinitiv debt.
Société Générale reported a 14% fall in quarterly profit, to €1.05B, impacted by restructuring but nonetheless exceeding expectations.
Barclays announced further cost cutting after delivering quarterly improvements.
Germany’s Siemens also reported falling profit and warned that geopolitics was hurting global business.
ArcelorMittal reduced its forecast 2019 international steel demand growth from 1% - 1.5% to 0.5% - 1.5%, this appearing to influence overnight base metals trade.
As did BP earlier this week, Royal Dutch Shell revealed results have been adversely impacted (profit at a 30-month low) by lower oil and LNG prices, despite increased production.
Kellogg popped after pleasing quarterly figures.
Meanwhile, Amazon founder Jeff Bezos was reported to have recently sold $US1.8B worth of Amazon stock.