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Market Opener – 09 Aug 2019

Local Markets Commentary
The Australian market opens Friday trade ahead of material data out of China and Japan this morning, plus influential statements from the Reserve Bank of Australia (RBA), meaning the $A is expected to be active. 

Overnight international trade leads are positive, but US futures have fallen this morning.

China is scheduled to release July CPI and producer prices 11.30am AEST.

June quarter GDP is also due from Japan, 9.50am AEST.

Locally today, RBA governor Philip Lowe meets with a parliamentary committee. 

In addition, the RBA publishes its quarterly monetary policy statement, including updated forecasts, 11.30am AEST.

Stocks trading ex-dividend today include JHG. Please see p4 for a detailed list.

In overnight commodities trade, oil bounced and iron ore (Nymex CFR China, 62% Fe) turned higher.

US gold futures (December) were pushed lower, but settled above $US1505/oz. 

LME copper, nickel and other base metals rallied.

The $A has traded beyond US68.00c this morning after appreciating to US67.90c early yesterday evening.

Overseas Market Commentary
Major European and US equities markets climbed to settle at or near session highs overnight, investors latching onto international relations appearing more positive than feared, rewarding a batch of high-profile corporate developments and results, and cheering new economic growth indicators, ahead of further material releases tonight.

US trade proved more decisive than that across Europe, however, reflecting regional news and reports.

Yesterday, China had reported better-than-anticipated July trade figures, in particular for exports and the overall surplus.

Select international bond prices were subsequently pushed lower (and yields subsequently moved higher) a risk sentiment improved.

In currency moves, the People’s Bank of China set the yuan at greater than seven yuan-to-one $US (7.0039) yesterday. The offshore currency benefited from the trade statistics, rising ~0.2% against the $US.

Also overnight, the British pound fell to its lowest against the euro in two years following talk of a possible UK November general election, should the PM lose a no-confidence vote following the UK’s planned 31 October separation from the European Union.

In other China news, US data revealed companies from China had purchased additional US agricultural products between the trade talks in Beijing and the US president’s announcement of additional tariffs.

The purchases were reported as relatively small-scale but included pork (1350t), sorghum (50,000t), soybeans (71,200t) and wheat (60,000t).

Greater quantities were actually shipped from the US to China last week but this was in part due to previous orders.

A further 325,000t of soybeans is expected to travel from the US to China in the near-term, again mostly due to earlier purchases.

China’s July trade surplus with the US was notably calculated at $US27.97B, from $US29.92B at the end of June, exports to the US falling 6.5% year-on-year, against a 7.8% June drop and imports tumbling 19.1% year-on-year, following a 31% slump in June.

Meanwhile, the European Central Bank’s economic bulletin contained forecasts of softening growth 

In the US, June wholesale inventories were reported flat following a 0.4% May increase.

Weekly initial jobless claims fell by 8000. 

Tonight in the US, July producer prices are due.

Elsewhere, material economic indicators are due for the UK and Germany, and could impact overall trade sentiment.

Companies scheduled to report earnings later today and tonight include: Korean Airlines, Lotte Shopping, William Hill and WPP.

In overnight corporate news, Broadcom was reported to still be talking with Symantec, regarding a partial Symantec business acquisition, rather than the defunct initially considered total merger. 

This pushed Symantec stock more than 10% higher.

Viacom approached a 4% gain on quarterly profit that pleased, in particular from Paramount studios.

Uber ($US5.24B quarterly loss) and Yelp (reportedly exceeded expectations) have reported post-US settlement and may influence relevant sentiment tonight.
9/08/2019 8:00:00 AM

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