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Market Opener – 14 Jun 2018
Local Markets Commentary
ASX futures were down 7 points with the Australian dollar holding steady as the U.S. Federal Reserve raised interest rates by an expected 25 basis points overnight, representing the seventh time the central bank has done so since the global financial crisis.
The Fed flagged two more hikes for the year, which would total four hikes for the year, and reflecting a mood of economic optimism and higher inflation expectations.
The Federal Open Market Committee said in a statement: “The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labour market conditions, and inflation near the Committee’s symmetric 2% objective over the medium term.”
The S&P/ASX 200 index fell 30.9 points dragged down by the four major banks and mining stocks with Commonwealth Bank sliding 1% to $68.18 and ANZ 0.8% to $26.34. BHP Billiton closed 1.3% lower and Rio Tinto shed 1.2% following a bearish iron ore forecast from Deutsche Bank
Overseas Market Commentary
Chinese telecommunications giant ZTE Corp shares lost 41% as trading resumed yesterday after the company had agreed to pay up to US$1.4 billion to the U.S. government for trading illegally with Iran and North Korea.
The second largest telecommunications equipment manufacturer in China was slapped with a seven-year supplier ban by U.S. authorities in April for breaking a 2017 agreement relating to trade with sanctioned Iran and North Korea.
ZTE said it would not be allowed to buy U.S. components it uses to make smartphones and other electronics until it had paid the fine and deposited an additional US$400 million in an escrow account of a U.S. approved bank.
ZTE had been in a two-month trading suspension and said it would fire its entire board within 30 days.
About US$3 billion was wiped off ZTE’s market value as trading resumed with the Hang Seng falling 0.6% and the Hong Kong China Enterprises Index 1%.
In Europe the STOXX 600 closed up 0.2% with the DAX adding 0.4% and the FTSE remaining flat.
Tech stocks starred and were up 1.7% with the spotlight on much-anticipated Adyen’s high-profile listing in Amsterdam, representing one of Europe’s largest tech IPOs.
The financial payments processing company did not disappoint, with its shares soaring up to 90% on its first day of trading in which its IPO did not trade new shares, with existing shareholders rather selling 13.4% of outstanding shares.
Adyen, founded in 2006 in the Netherlands, has been valued at US$8.3 billion.
Sterling gained 0.3% against the dollar to US$1.3424 after the British Parliament voted to support Theresa May on a crucial vote that had threatened to curtail the British Prime Minister’s powers to lead the Brexit process.
Lawmakers had wanted powers to force government back into negotiations should they reject a Brexit deal, but May was able to secure a compromise deal in Westminster.
ASX futures were down 7 points with the Australian dollar holding steady as the U.S. Federal Reserve raised interest rates by an expected 25 basis points overnight, representing the seventh time the central bank has done so since the global financial crisis.
The Fed flagged two more hikes for the year, which would total four hikes for the year, and reflecting a mood of economic optimism and higher inflation expectations.
The Federal Open Market Committee said in a statement: “The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labour market conditions, and inflation near the Committee’s symmetric 2% objective over the medium term.”
The S&P/ASX 200 index fell 30.9 points dragged down by the four major banks and mining stocks with Commonwealth Bank sliding 1% to $68.18 and ANZ 0.8% to $26.34. BHP Billiton closed 1.3% lower and Rio Tinto shed 1.2% following a bearish iron ore forecast from Deutsche Bank
Overseas Market Commentary
Chinese telecommunications giant ZTE Corp shares lost 41% as trading resumed yesterday after the company had agreed to pay up to US$1.4 billion to the U.S. government for trading illegally with Iran and North Korea.
The second largest telecommunications equipment manufacturer in China was slapped with a seven-year supplier ban by U.S. authorities in April for breaking a 2017 agreement relating to trade with sanctioned Iran and North Korea.
ZTE said it would not be allowed to buy U.S. components it uses to make smartphones and other electronics until it had paid the fine and deposited an additional US$400 million in an escrow account of a U.S. approved bank.
ZTE had been in a two-month trading suspension and said it would fire its entire board within 30 days.
About US$3 billion was wiped off ZTE’s market value as trading resumed with the Hang Seng falling 0.6% and the Hong Kong China Enterprises Index 1%.
In Europe the STOXX 600 closed up 0.2% with the DAX adding 0.4% and the FTSE remaining flat.
Tech stocks starred and were up 1.7% with the spotlight on much-anticipated Adyen’s high-profile listing in Amsterdam, representing one of Europe’s largest tech IPOs.
The financial payments processing company did not disappoint, with its shares soaring up to 90% on its first day of trading in which its IPO did not trade new shares, with existing shareholders rather selling 13.4% of outstanding shares.
Adyen, founded in 2006 in the Netherlands, has been valued at US$8.3 billion.
Sterling gained 0.3% against the dollar to US$1.3424 after the British Parliament voted to support Theresa May on a crucial vote that had threatened to curtail the British Prime Minister’s powers to lead the Brexit process.
Lawmakers had wanted powers to force government back into negotiations should they reject a Brexit deal, but May was able to secure a compromise deal in Westminster.