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Market Opener – 16 Aug 2019
Local Markets Commentary
The Australian market commences Friday trade following vacillating overnight international equities and commodities trade.
Post-ASX trade yesterday, China confirmed it was planning to retaliate should the US introduce additional import taxes come 1 September, but also promoted a return to consensus negotiations.
Locally today, another batch of high-profile stocks reports earnings.
In addition, ANN, DDR and MFG trade ex-dividend today. Please see pp3-4 for a detailed list.
In overnight commodities trade, oil fell for a second consecutive session.
US gold futures (December) settled slightly higher.
Iron ore (Nymex CFR China, 62% Fe) swung lower.
LME copper closed slightly down. Nickel returned to rally mode.
The $A remained constrained within a relatively narrow range after trading at US67.70c early yesterday evening.
Post-ASX trade yesterday, China confirmed it was planning to retaliate should the US introduce additional import taxes come 1 September, but also promoted a return to consensus negotiations.
Locally today, another batch of high-profile stocks reports earnings.
In addition, ANN, DDR and MFG trade ex-dividend today. Please see pp3-4 for a detailed list.
In overnight commodities trade, oil fell for a second consecutive session.
US gold futures (December) settled slightly higher.
Iron ore (Nymex CFR China, 62% Fe) swung lower.
LME copper closed slightly down. Nickel returned to rally mode.
The $A remained constrained within a relatively narrow range after trading at US67.70c early yesterday evening.
Overseas Market Commentary
Volatile trade featured across major European and US equities markets overnight.
Late yesterday, Chinese officials had confirmed it would retaliate should the US introduce new tariffs on goods exported from China to the US.
At the same time, Ministry of Foreign Affairs officials expressed some hope.
In the meantime, US Department of Agriculture figures, released overnight, indicated Chinese companies had purchased an additional 10,211t of US pork during 2 - August. 5 August, China’s Commerce Ministry stated companies from China were no longer ordering agricultural products from the US.
This, as the Chicago Fed revealed in a new report that regional agribusinesses struggling to repay debt on a ‘major’ or ‘severe’ basis had reached a two-decade peak during the June quarter.
Bond demand remained, US 10-year note yields falling below 1.5% and 30-year yields below 2%.
US sentiment was buoyed in part by some better-than-anticipated reports, including national retail sales figures and select retail company reports.
Among a plethora of mixed overnight US data releases, July retail sales were estimated 0.7% higher, following forecasts of a 0.3% rise and after June’s 0.3% gain.
Year-on-year, sales were 3.4% in front.
Industrial production pulled back by 0.2% during July however, after improving 0.2% in June.
Manufacturing output declined by 0.4%, against a 0.6% June gain.
July industrial production was 0.5% higher year-on-year.
The New York Fed manufacturing index was also calculated 0.5% higher, at 4.8, but the Philadelphia Fed Manufacturing index dropped to 16.8 from 21.8.
June business inventories were estimated flat after swelling by 0.3% in May.
A home builders’ housing market index rose from 65 to 66.
Weekly new unemployment claims rose by 9000.
In the UK, July retail sales rose by 0.2% for the month, following a 0.9% June increase.
Year-on-year, sales were 3.3% higher.
The figures defied generally gloomy forecasts, and consequently helped boost the British pound.
Tonight in the US, a preliminary August reading of the University of Michigan consumer sentiment, July building permits and housing starts are due.
Elsewhere, euro zone June trade figures will attract attention.
Deere & Co is among companies scheduled to report earnings tonight. The stock is expected to further reveal the impacts of the China-US trade dispute and this year's flooding on the agricultural sector.
In overnight corporate news, Alibaba quarterly revenue surprised on the upside, revenue supported more by cloud and e-commerce business than by online retailing.
US retailer Walmart also pleased, with quarterly profit and improved full year profit guidance, and was pushed more than 5% higher.
In addition, JC Penney’s loss was less than feared.
Nvidia has reported post-US trade and appears to have pleased with profit gains.
Cisco Systems, which had reported post-Wednesday US trade, dropped more than 8% after warning the US-China trade restrictions would damage the company’s sales and hence reduce profits.
Meanwhile, Germany’s E.ON announced it was outlaying $US500M to build a wind farm in Texas and had already sold rights to 200MW for 12 years.
Late yesterday, Chinese officials had confirmed it would retaliate should the US introduce new tariffs on goods exported from China to the US.
At the same time, Ministry of Foreign Affairs officials expressed some hope.
In the meantime, US Department of Agriculture figures, released overnight, indicated Chinese companies had purchased an additional 10,211t of US pork during 2 - August. 5 August, China’s Commerce Ministry stated companies from China were no longer ordering agricultural products from the US.
This, as the Chicago Fed revealed in a new report that regional agribusinesses struggling to repay debt on a ‘major’ or ‘severe’ basis had reached a two-decade peak during the June quarter.
Bond demand remained, US 10-year note yields falling below 1.5% and 30-year yields below 2%.
US sentiment was buoyed in part by some better-than-anticipated reports, including national retail sales figures and select retail company reports.
Among a plethora of mixed overnight US data releases, July retail sales were estimated 0.7% higher, following forecasts of a 0.3% rise and after June’s 0.3% gain.
Year-on-year, sales were 3.4% in front.
Industrial production pulled back by 0.2% during July however, after improving 0.2% in June.
Manufacturing output declined by 0.4%, against a 0.6% June gain.
July industrial production was 0.5% higher year-on-year.
The New York Fed manufacturing index was also calculated 0.5% higher, at 4.8, but the Philadelphia Fed Manufacturing index dropped to 16.8 from 21.8.
June business inventories were estimated flat after swelling by 0.3% in May.
A home builders’ housing market index rose from 65 to 66.
Weekly new unemployment claims rose by 9000.
In the UK, July retail sales rose by 0.2% for the month, following a 0.9% June increase.
Year-on-year, sales were 3.3% higher.
The figures defied generally gloomy forecasts, and consequently helped boost the British pound.
Tonight in the US, a preliminary August reading of the University of Michigan consumer sentiment, July building permits and housing starts are due.
Elsewhere, euro zone June trade figures will attract attention.
Deere & Co is among companies scheduled to report earnings tonight. The stock is expected to further reveal the impacts of the China-US trade dispute and this year's flooding on the agricultural sector.
In overnight corporate news, Alibaba quarterly revenue surprised on the upside, revenue supported more by cloud and e-commerce business than by online retailing.
US retailer Walmart also pleased, with quarterly profit and improved full year profit guidance, and was pushed more than 5% higher.
In addition, JC Penney’s loss was less than feared.
Nvidia has reported post-US trade and appears to have pleased with profit gains.
Cisco Systems, which had reported post-Wednesday US trade, dropped more than 8% after warning the US-China trade restrictions would damage the company’s sales and hence reduce profits.
Meanwhile, Germany’s E.ON announced it was outlaying $US500M to build a wind farm in Texas and had already sold rights to 200MW for 12 years.