Research

Disclaimer: All information on this section is of a general nature.
Before making any investment decision, you should seek the relevant advice.

Market Opener – 22 Feb 2019

 
Local Markets Commentary
The Australian market commences Friday trade with keenly anticipated comments from the governor of the Reserve Bank of Australia (RBA), ahead of influential regional data and following generally uninspiring overnight international equities and key commodities trade. 

Locally today, reporting season continues, as the RBA governor is quizzed by national MPs.

China’s indefinite ban on imports of Australian coal (mostly expected for coking coal, used in steel marking) at the key five-harbour port of Dalian will impact select stocks and continue to toy with the $A.

The volumes are estimated at just 1.8% of Australia’s coal exports, but industry watchers have voiced fears of broader restrictions.

Stocks trading ex-dividend include ANN, LNK, SUL and WPL. Please see pp4-5 for details.

Regionally, China is due to report January house prices 12.30pm AEDT.

Japan’s January CPI is expected 10.30am AEDT.

In overnight commodities trade, oil settled lower.

US gold futures (April) fell.

Iron ore (China port, 62% Fe) was pushed lower for a second consecutive session.

LME copper and nickel turned lower. Aluminium rallied for a second consecutive session.

The $A traded at ~US70.95 after dropping below US71.0c early yesterday evening.

Overseas Market Commentary
Major European and US equities markets again chopped through overnight trade, investors faced with geopolitical developments and a batch of mixed economic indicators from both sides of the Atlantic. 

Indications out of China-US trade talks, which yesterday featured the head trade negotiators for each side, suggested both the US and China were prepared to offer further concessions.

Each side spoke of a start to draft wording for potential structural changes, touted conditions including the US approach to Huawei 5G products and services, and China’s energy, agriculture, and tech component buying.

Meanwhile the UK PM and European Commission (EC) head promoted ‘constructive’ talks on definitive legal Ireland-UK border arrangements for the planned separation of the UK from the European Union (EU). 

Talk of a possible ‘no-deal’ scenario, and associated contingencies, firmed in the UK and from corporate entities, however.

European Central Bank (ECB) January policy meeting minutes confirmed concerns at an extended regional economic slowing, and growing expectations that banks could need liquidity boosts. 

Mixed US data releases included: December durable goods orders, which were reported 1.2% higher for the month (boosted by commercial aircraft business); a 21.1-point slide for the Philadelphia Fed manufacturing index to -4.1; February Markit manufacturing and services PMIs at 53.7 (-1.2) and 56.2 (+2; carries heavier weight in GDP calculations); a 1.2% fall in January existing home sales (following a 4% December drop); and a flat, -0.1 Conference Board leading index. 

Weekly new unemployment claims fell 23,000.

Initial February PMIs for the euro zone came in at 49.2 (-1.3, into contraction mode) and 52.3 (+1.1) respectively for the manufacturing and services sectors. 

Germany’s manufacturing PMI fell 2.1 points to 47.6.

The services sector activity index, however, rose 2.1 points to 55.1. 

In the meantime, a final January CPI reading for Germany came in as 0.8% deflation for the month, following a 0.1% December rise.

Year-on-year January CPI represented a 1.4% gain.

In the UK, January public sector finances revealed a £14.9B surplus, against £9.3B at the end of January 2018 and a record for UK January surpluses. 

Tonight in the US, seven Federal Reserve officials are scheduled to speak publicly, at a monetary policy forum.

Elsewhere, a final January CPI for the euro zone is due and a final December quarter GDP reading for Germany are keenly anticipated following last night’s data.

ECB president Mario Draghi is scheduled to speak publicly, at an awards function.
 
Posted on 22/02/2019 7:00:00 AM

Back to top