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Market Opener – 16 Jan 2019

 
Local Markets Commentary
The Australian market commences mid-week trade with new China data in hand, and a UK parliamentary defeat of arrangements proposed to govern the UK’s planned withdrawal from the European Union (EU).

The vote will produce plenty of commentary and speculation through today’s trade, and some potential new developments post-ASX trade.

Post-ASX trade yesterday, China reported 1080B yuan worth of December new lending, following 1250B yuan for November, and forecasts of 1100B. 

In overnight commodities trade, oil swung sharply higher.

Iron ore (China port 62% Fe fines) slipped by US2c/t.

US (February) gold futures settled slightly lower.

LME copper turned modestly higher. Nickel and aluminium also turned, and rallied.

The $A headed back towards US72.0c after trading at ~US72.20c early yesterday evening.

Locally today, the monthly consumer sentiment report from Westpac and the Melbourne Institute is due 10.30am AEDT.

Regionally, December producer prices are expected for Japan.

Overseas Market Commentary
Major European and US equities markets mostly opened higher overnight, and featured ensuing choppy trade, US indices maintaining strong gains through to settlement. 

There was plenty to consider, but repeat confirmation yesterday that China would continue US trade talks this month in Washington, and a reiteration of last week’s promised domestic economic support initiatives, appeared to buoy sentiment.

Overnight, Goldman Sachs warned of a sharp slowdown for the US economy after JP Morgan had earlier ventured all growth could evaporate.

During second-half US trade, the UK parliament’s House of Commons voted down (432-202) arrangements governing the UK’s planned 29 March withdrawal from the European Union (EU).

European Commission president Jean-Claude Juncker was quick to assure the EU would continue with already broadly-discussed contingency plans.

Earlier, European Central Bank (ECB) president Mario Draghi the euro zone commemorated the 20th anniversary of the launch of the euro, confirming views of another regional slow-down.

While stimulus measures were still required, and the slow-down could persist, Mr Draghi asserted the euro zone was not heading into recession.

Among a session of currency swings, the euro subsequently held at ~0.7% down against the $US.

Overnight data releases again largely underwhelmed.

Germany’s 2018 GDP growth was estimated at 1.5%, against 2.2% for 2017.

Euro zone November trade figures, pleased, including a €19B trade surplus against €14.7B at the end of October.

Exports rose 1.9% year-on-year, to €203B, and imports by 4.7%, to €184B.

Meanwhile in Italy, a €10B 15-year bond sale attracted €35B worth of bids.

US data releases included a 0.2% pull back in December producer prices.

A New York region manufacturing index was reported 7.6 point lower, at 3.9.

IBD/TIPP’s business optimism index slipped 0.3 to 52.3.

Tonight in the US, the Federal Reserve’s region-by-region economic report (beige book), December retail sales, import and export prices, November business inventories, and a home builders’ housing market index are scheduled for release. 

Elsewhere, Bank of England governor Mark Carney’s scheduled financial stability remarks are keenly anticipated.

Germany is due to conduct a 10-year bond auction.

Earnings will again feature.

Companies scheduled to report for the December quarter include Alcoa, Bank of America, Bank of NY Mellon, BlackRock, CSX, Goldman Sachs, Kinder Morgan, PNC Financial and US Bancorp.

In overnight corporate news, JP Morgan Chase December quarter revenue failed to meet expectations for the first three-month period in almost two years, in part due to a drop in fixed income trading income 

Banco Santander in the meantime reversed its decision to appoint UBS investment bank head Andrea Orcel as CEO.

Netflix gained ~6.6% after revealing 13% - 18% price rises, further buoying NASDAQ trade.

A cloud services agreement with Walgreens Boots supported Microsoft to an ~3% appreciation.
 
Posted on 16/01/2019 7:00:00 AM

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