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State One Market Opener - 28 Oct 2016

Local Markets Commentary

The Australian market opens Friday’s trade on negative US equities leads ahead of key, early-session data out of Japan and a US GDP reading tonight. Locally today, the ABS releases September quarter producer prices and the HIA September new home sales.

In addition, MQG interim results are in, and WOW’s September quarter sales.

Japan reports September CPI ~10.30am AEDST, ahead of next week’s Bank of Japan policy meeting. Workforce statistics and trade figures are also due.

In overnight commodities trade, US gold futures and oil swung higher. Copper rallied. Iron ore (China port, 62%) slipped a little.

The $A fell beneath US76.0c after slipping to ~US76.2c early yesterday evening.

Overseas Market Commentary

Major European and US equities markets chopped and swung overnight, amid mixed data reports and another downpour of corporate earnings.

More attractive bond yields also hurt defensive stock sentiment.

UK September quarter GDP growth was reported at 0.5%, 0.2% above forecasts, but following 0.7% for the June quarter. The annual rate rose 0.2% to 2.3%.

In US data releases, capital goods orders undershot expectations, falling 1.2% in September, after rising the previous three months. Durable goods orders slipped 0.1%, following forecasts of a 0.2% improvement.

Pending home sales rose 1.5% however, exceeding expectations by 0.3%.

Weekly new unemployment claims fell 3000, but double that fall had been anticipated following last week’s increase. The four-week moving average rose 1000.

A Kansas City region manufacturing index was reported steady, at six, following forecasts of a fall to three after last month’s encouraging gain. Employment, output and orders components all rose.

Tonight in the US, a preliminary September quarter GDP estimate is keenly anticipated, ahead of the Federal Reserve’s policy meeting next week. The University of Michigan’s final October consumer sentiment reading is also due.

Agricultural Bank of China, Anheuser-Busch InBev, BNP Paribas, Bright Dairy & Food, Chevron, Electrolux, Exxon Mobil, Hyundai Steel, Industrial & Commercial Bank of China, IAG, Komatsu, Mitsubishi Corp, Phillips, Royal Bank of Scotland, Total, UBS, Yanzhou Coal and Yunnan Copper are among companies scheduled to report earnings and/or provide trading updates today and tonight.

Overnight, Samsung Electronics reported a 30% drop in quarterly profit, impacted by Galaxy Note 7 battery issues.

Deutsche Bank surprised however, with a quarterly profit - €256M against a €6B loss a year ago - although also boosted provisions for legal costs.

A Barclays profit also pleased with a 35% profit appreciation, and as with Deutsche, boosted its provision (£600M) in the face of ongoing costs regarding payment protection insurance (PPI) breaches.

In the mining sector, Brazil’s Vale also unexpectedly announced a swing to a quarterly profit.

Meanwhile, Qualcomm revealed a plan to outlay ~$US38B for NXP Semiconductors.

A Chinese express delivery firm, ZTO, secured $US1.4B for its New York listing, but failed to impress in initial trade.

Apple remained in the news, launching a new laptop featuring a touch panel in addition to the keyboard.

28/10/2016 7:02:02 AM

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