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Market Opener – 19 Dec 2018

 
Local Markets Commentary
The Australian market commences mid-week trade following a marked drop in overnight oil prices, and falls for the majority of other key commodities, with two major domestic banks hosting AGMs, and ahead of the most market-anticipated US Federal Reserve policy announcement in years before tonight’s US trade closes.

Locally today, Westpac and the Melbourne Institute publish their monthly leading indicators report, 10.30am AEDT.

The Department of Jobs reveals November skilled vacancies. An employment indicator is also due, ahead of tomorrow’s Australian Bureau of Statistics (ABS) release of national November employment statistics.

In overnight commodities trade, oil plummeted.

US (February) gold futures settled slightly higher. 

Iron ore (China port 62% Fe) picked up the pace of Monday’s decline.

LME copper and other key base metals fell.

The $A was pushed back to ~US71.80c after approaching US72.00c early yesterday evening.

Meanwhile regionally, a China Communist Party annual economic policy conference, known as the Central Economic Work Conference, is expected to formally commence today.

Japan reports November trade figures 10.50am AEDT, following yesterday’s reduced GDP and CPI forecasts.

Overseas Market Commentary
Major European equities markets fell on opening overnight, and key US indices decidedly higher, but ensuing chops and swings underscored jittery sentiment ahead of the US Federal Reserve’s highly-anticipated rate and broader policy announcement early tomorrow morning AEDT.

While geopolitical issues remained in focus, oil prices dropped further, data came in mixed, and select corporate announcements pleased.

A midnight Friday US government funding deadline appeared assured of being met after an administrative spokesperson said the president need not rely on Mexico border wall funding to be approved by Congress after officials determined alternative options.

In the meantime, the head of the US Securities and Exchange Commission expressed concern at a possible UK withdrawal from the European Union (EU) in the absence of an approved agreement, and urged authorities in the EU and UK to initiate measures to ensure market operations. 

Earlier yesterday, ahead of this week’s Bank of Japan policy meeting, Japan reduced its GDP and CPI forecasts, citing several natural disasters over recent months and international trade and security change.

Among relatively minimal overnight data releases, US November housing starts and building permits surprised on the upside, this attributed to multi-residential properties rather than single-home activity. 

Starts rose 3.2% for the month, and permits 5.0% following respective 1.6% and 0.4% October declines.

In Germany, IFO’s business climate index slipped from 102 to 101, expectations falling 1.4 to 97.3 and current conditions by 0.8 to 104.7.

The overall climate index represented the lowest reading in more than two years, following four consecutive monthly falls.

Tonight in the US, the Federal Reserve will announce policy meeting outcomes (early tomorrow AEDT) and reveal its latest outlook.

Chair Jerome Powell will also host a press conference.

Scheduled data releases include November existing home sales and weekly mortgage applications.

Blackberry and Paychex are among companies scheduled to report earnings.

Overnight, Boeing announced a 20% higher dividend and $US2B higher, $US20B buy-back.

Johnson & Johnson said it would outlay up to $US5B on a buy-back.

Post overnight US trade, FedEx has reduced earnings guidance.
 
Posted on 19/12/2018 7:00:00 AM

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