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Market Opener – 20 May 2019

 
Local Markets Commentary
The Australian market commences a new week’s trade with the national election returning the coalition government, but counting is yet to confirm whether this will be with a majority.

Elsewhere, since overnight international trade, the US has achieved trade talks progress with Canada and Mexico, the UK PM has announced she will present a new proposal for arrangements governing the planned separation from the European Union, and the Austrian government has been forced to call a national election.

Overnight, the government office and foreign embassy district of Iraq’s capital Baghdad was reported to have sustained a single rocket attack. This is the first reported such attack in this area in ~eight months.

Regionally today, Japan’s initial March quarter GDP estimate is anticipated 9.50am AEST. 

Locally, sector reactions and expectations commentary, in relation to the national election result and further counting determinations, are anticipated to dominate.

A weekly capital city residential property price report is also due pre-trade.

In overnight Friday commodities trade, oil turned to settle lower.

US gold futures (June) extended Thursday’s fall.

Iron ore (China port, 62% Fe) rallied further, trading above $US101/t, exceeding $US100/t for the first time since May 2014. 58% and 65% Fe also continued to rally to new multi-year peaks.

LME copper settled modestly lower. Nickel and aluminium fell.

The $A traded in relatively narrow range after falling below US68.75c early Friday evening. This morning, the $A has headed higher, towards $US69.00.

Overseas Market Commentary
Major European and US equities markets headed lower early overnight Friday, sentiment swinging intra-session amid ongoing US-international trade issues and speculation concerning Middle East scenarios. 

Earlier Friday, China had indicated it was in no hurry to resume trade talks with the US, given the current US stance.

For its part, the US announced it would not yet levy import taxes on vehicles coming from the European Union and Japan.

This, as it continued trade negotiations with Canada and Mexico (please see ‘Tonight’ below).

In the UK, the opposition party (Labor) declared it had stopped negotiating with the PM regarding finding agreement on arrangements governing the UK’s planned withdrawal from the European Union (EU), as no agreement could be reached. 

This created greater fear that the UK-EU separation would happen with no approved deal in place, and sent to British pound to four-month lows.

Among overnight Friday data releases the euro zone final reading of April CPI growth was confirmed at 0.7% for the month and 1.7 year-on-year. Core inflation growth rose 0.1% from the initial year-on-year estimate, to 1.3%, against 0.8% for March.

Construction output rose 6.3% following a 7.6% March jump.

In the US, the University of Michigan’s initial May consumer sentiment estimate was reported at 102.4, 5.2 points higher than the final April reading and the highest in 15 years. 

Conference Board’s April leading index rose 0.2% after a 0.3% March rise. 

Tonight in the US, the Chicago Fed national activity index is due. 

In addition, the US Federal Reserve chair is due to speak publicly, but post-US trade. The vice chair and the Philadelphia Fed president will speak before and during trade, however.

Further, reaction is anticipated to late-weekend news that Canada, Mexico and the US had reportedly agreed a plan for the removal of US import taxes imposed last year on aluminium and steel imports from its bordering neighbours.

Elsewhere, UK parliamentarians will react to the PM’s plan to present a ‘bold’ improvement on previously-rejected proposed arrangements for governing everything from trade to immigration to cross-border finance when the UK leaves the European Union (EU).

This, ahead of a government Cabinet meeting scheduled for Tuesday.

The PM promised the plan over the weekend, ahead of the likely vote during the business week commencing 3 June.

The opposition leader, who called a halt to previous negotiations over a plan, said he would consider any new proposal.

Meanwhile the European Parliament elections, in which the UK must now participate are scheduled for Thursday.

Friday, the UK parliament is set to go into recess until Tuesday 4 June.

In the meantime, Austria will be abuzz with the prospect of electing a new parliament following a bribery scandal which has forced the chancellor to announce a national election would be scheduled ‘as soon as possible’.

Companies expected to report earnings later today or tonight include: Gap, Korea Zinc and Ryanair (full year).

In overnight Friday corporate news, US retailer Walmart reported higher revenue and profit.

Deere & Co undershot expected quarterly profit and reduced its full-year guidance, due to anticipated lower demand from the agribusiness sector struggling during the US-China trade push-and-shove.
 
20/05/2019 8:00:00 AM

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