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Market Opener – 15 Aug 2019

Local Markets Commentary
The Australian market opens today’s trade with a risk-focused speech from the Reserve Bank of Australia’s deputy governor pre-trade, several domestic large-cap companies having reported earnings, ahead of material domestic data late-morning, and following a decisive demonstration of international economic growth fears across major international equities markets overnight. 

This, ahead of a swag of data releases out of the US tonight. 

Locally today, Reserve Bank of Australia (RBA) deputy governor Guy Debelle was scheduled to speak on Risks to the Outlook at a Risk Australia conference, Sydney, 9am AEST. 

The Australian Bureau of Statistics is due to release July employment figures, including wages and jobs growth, 11.30am AEST.

Meanwhile, GUD trades ex-dividend today. Please see p4 for a detailed list.

Regionally, China’s July home price index is expected 11.30am AEST.

In overnight commodities trade, oil swung lower following four consecutive higher settlements.

US gold futures (December) turned higher, closing above $US1527.5/oz.

Iron ore (Nymex CFR China, 62% Fe) gained.

LME copper was pushed lower. Nickel achieved a positive close.

The $A approached US67.50c after trading at ~US67.35c early yesterday evening.

Overseas Market Commentary
Major European and US equities markets descended overnight, sentiment walloped by a series of concerning data, amid several unresolved geopolitical scenarios. 

Earlier yesterday, China had reported the slowest industrial production growth in 17+ years, later yesterday, Germany’s June quarter GDP was revealed to have retreated over the three months, and then the yield for US two-year bonds traded a little (0.001%) above that for 10-year treasuries for the first time since June 2017.

The bond yield inversion was interpreted, as it has been previously, as one indication of a potential looming recession. 

In addition, 30-year US bond yields dropped to record lows, as investors headed for low-risk assets.

The US president consequently again lambasted the Federal Reserve, claimed the upper hand in China-US trade negotiations, and again expressed concern at Hong Kong – administrative China relations.

Further dampening mood, US commerce secretary Wilbur Ross could not confirm top-level US and China trade negotiators had set a date for a new telephone conference.

In overnight data releases, a final euro zone June quarter GDP reading confirmed 0.2% growth for the three months, following a 0.4% March quarter advance.

Industrial production fell 1.6% during June, against a 0.8% May rise. Year-on-year, June output dropped 2.6%.

Germany’s initial June quarter GDP reading represented a 0.1% contraction for the three months, following 0.4% March quarter growth.

Year-on-year, June quarter GDP was 0.4% higher.

In the UK, July CPI growth was reported as generally expected, remaining flat for the month, but up 2.1% year-on-year. 

The figures immediately pushed the British pound ~0.2% higher against the $US. The pound also ultimately traded ~0.23% higher against the euro.

US import and export prices were each reported to have risen 0.2% during July, following respective 1.1% and 0.6% June falls. July import prices were 1.8% lower year-on-year, and export prices down 0.9%.

Weekly mortgage applications jumped 21.7%, as 30-year rates fell to 3.93% from 4.01%.

Tonight in the US, July retail sales and industrial production, two regional manufacturing indices, June business inventories, a home builders’ housing market sentiment index and weekly new unemployment claims are due.

Elsewhere, UK retail sales are keenly anticipated.

Companies scheduled to report earnings later today and tonight include: Alibaba, Carlsberg, Lenovo, NVIDIA, JC Penney and Walmart. 

AngloAmerican, HSBC, Royal Bank of Scotland and Shell are among companies trading ex-dividend on the FTSE 100.

In overnight corporate news, property specialist WeWork announced an anticipated IPO, ahead of a possible listing by the end of September.

Macy’s dropped more than 10% after underwhelming with quarterly profit and updated full-year outlook. 

Popular cannabis company Tilray was punished ~15% after undershooting quarterly expectations.

Cisco Systems reported post-US trade, guidance appearing to disappoint.
15/08/2019 8:00:00 AM

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