Local Markets Commentary
The Australian market opens today’s trade ahead of a much-anticipated rates announcement from the Reserve Bank of Australia (RBA) this afternoon, but with the $A appreciating overnight amid mixed and vacillating international equities and commodities trade.
The RBA announces the outcomes of today’s policy meeting 2.30pm AEST.
This evening, RBA governor Philip Lowe will also address an RBA and business board dinner, 7.30pm AEST.
Pre-trade, a weekly consumer sentiment reading is due.
The Australian Bureau of Statistics (ABS) is due to publish April retail sales and March quarter balance of payments figures (ahead of March quarter GDP tomorrow), 11.30am AEST.
Meanwhile, IPL trades ex-dividend today. Please see p3 for details.
In overnight commodities trade, oil continued to decline, but at a substantially slower pace.
US gold futures (August) extended the current rally.
Iron ore (China port, 62% Fe) fell below $US99.20/t.
LME copper turned to settle moderately higher.
The $A was pushed to ~US69.75c after trading at ~US69.45c early yesterday evening.
Overseas Market Commentary
Major European equities markets fell on opening overnight, but were dragged higher in tranches, settling at or near session high gains, despite some disappointing data and the finance sector hit by falling bond yields.
US equities markets mostly chopped and swung, closing variously, the NASDAQ in particular impacted by reports of various pending Federal investigations into allegations of competition breaches by Alphabet’s Google, Amazon, Apple and Facebook.
In addition, US trade reacted for the first time to an assessment of the status of US-China trade relations as published late-weekend by China’s State Council Information Office.
The paper advocated avoidance of crossing ‘red lines’, realistic demands regarding China’s US goods purchases, recognition of development needs and a mutually respectful approach to seeking solutions that would satisfy common interests.
Mexico and US officials were scheduled to commence formal discussions in the US regarding the US president’s proposed border security-related ‘import taxes on all goods’ announcement, but Mexico pre-empted these stating it would not agree to any proposals that it become a safe state for central America refugees.
Among overnight data releases, the euro zone’s May PMI was finalised at 47.7, against 47.9 for April. This represented a fourth consecutive month of contraction for the region’s manufacturing sector.
The UK’s May manufacturing PMI fell into contraction mode, estimated at 49.4 from 53.1 in April. The last time the sector was deemed to be contractionary was July 2016.
In the US, the ISM’s influential manufacturing activity index disappointed, slipping by 0.7 to 52.1, following expectations of a modest rise. A final Markit May manufacturing PMI estimate came in at 50.5, against 52.6.
April construction spending was reported flat for the month and 1.2% lower year-on-year.
The March construction spending calculation was revised to a 0.1% increase rather than the initially estimated 0.9% decline.
May new vehicle sales were reported post-US trade at 17.3M, following 16.4M for April.
Tonight in the US, the US Federal Reserve Chicago branch commences a two-day policy conference at which US Fed governor Jerome Powell will deliver opening remarks. The governor is also expected to take questions.
Among US data releases, the ISM’s New York business activity index, plus April factory and durable goods orders are due.
Elsewhere, the US president continues his UK visit.
AO World, POSCO, Ryanair, Salesforce.com (post-US trade) and Tiffany & Co are scheduled to report earnings or provide trading updates.
In post-US overnight trade, Apple began revealing its latest product updates.