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Market Opener – 12 Aug 2019

Local Markets Commentary
The Australian market commences a new week’s trade following US-China trade relations tit-for-tat talk over the weekend, ahead of another batch of key international economic data releases from tomorrow through the end of the week, and with domestic corporate reporting season warming.

Over the weekend, a former chair of the China Development Bank, described relations as a ‘financial war’, and no longer just a trade dispute, due to last week’s US determination that China was manipulating its currency in response to the latest US tariffs announcement.

Late last week, a researcher with the China Institutes of Contemporary International Relations publicly claimed the US-China relations were bolstering the risk of a US recession.

Locally today, a weekly capital city residential property price report is due pre-trade.

In addition, several high-profile stocks have reported earnings pre-trade.

Also today, the RBA publishes monthly credit and debit card transactions.

In overnight Friday commodities trade, oil extended Thursday’s rally. 

US gold futures (December) settled slightly lower.

Iron ore (Nymex CFR China, 62% Fe) fell below $US93.70/t.

LME copper and most base metals, including nickel, turned variously lower.

The $A slipped below US67.90c after trading at ~US68.10c early Friday evening.

Japan’s markets are closed today due to a public holiday. Singapore’s will remain closed (did not trade Friday).

Overseas Market Commentary
Major European and US equities markets chopped and swung overnight Friday, European indices settling at session lows following some dour data and growing political unrest in economically-vulnerable Italy. 

Broad geopolitical issues were also not let lie, the US president suggesting US-China trade talks, tentatively scheduled for September, may not eventuate.

Meanwhile earlier, UK June quarter GDP was reported to have fallen by 0.2% for the three months, against a 0.5% March quarter increase.

Year-on-year, GDP was 1.2% higher. 

The contraction represented the first three-month contraction since the December quarter 2012.

The British pound subsequently dropped.

A £1.779B June trade surplus was reported, following a £2.002B deficit for May. Imports were down 2.6%, at £53.63B.

June manufacturing production dropped 1.4% year-on-year, following a 0.2% May decline.

Overall industrial production came in 0.6% lower year-on-year.

Additional disappointing indicators came in for Germany, the nation’s trade surplus tumbling to €16.8B from €20.6B during June.

Exports declined 0.1% seasonally adjusted after rising 1.3% in May.

Imports increased by 0.5% after a 0.3% May fall. 

In the meantime, Italy’s deputy PM confirmed his view a snap election was needed to resolve tensions within the ruling coalition.

In the US, July producer prices came in 0.2% higher for the month, following a 0.1% June rise. Prices were 1.7% higher than for July 2018.

Tonight in the US, the July national budget statement is due.

Companies scheduled to report earnings later today and tonight include: Barrick Gold, Kumho Tire, Sysco Corp and Tencent Music Entertainment.
12/08/2019 8:00:00 AM

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