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Market Opener – 18 Sep 2019

Local Markets Commentary
The Australian market opens mid-week trade with improved sentiment towards US-China trade negotiations, and forecasts for the restoration of regular oil production in Saudi Arabia, ahead of the US Federal Reserve’s post-policy meeting statement tonight, following an overnight Federal Reserve $US75B injection into the US financial system.

Locally today, the monthly leading index report from Westpac and the Melbourne Institute is due 10.30am AEST.

PEA, SGF and WEB are among stocks trading ex-dividend today. Please see p4 for a detailed list.

Regionally, Japan is scheduled to release August trade figures 9.50am AEST.

In overnight commodities trade, oil receded by more than 5%.

US gold futures (December) closed slightly higher.

Iron ore (Nymex CFR China, 62% Fe) continued moderately lower, falling towards 94.00/t.

LME copper and nickel extended this week’s falls. Aluminium settled essentially flat.

The $A appreciated to ~US68.65c after falling to US68.35c early yesterday evening.

Overseas Market Commentary
Major European equities markets chopped and swung overnight.

Key US equities indices settled at or near session peaks however, sentiment having benefited from some encouraging comments out of Saudi Arabia, the US and China, together with some better-than-anticipated US data, and anticipation of further supportive comments from the US Federal Reserve tonight.

In addition, the US Federal Reserve announced it was boosting the financial system by $US75B, following a steep rise in costs for short-term funding.

The Federal Reserve reported costs to swap US government bonds for cash overnight jumped as much as 10%. This was partly attributed by financial experts to businesses needing to pay taxes.

Saudi Arabia helped assuage some fear, asserting normal levels of production might be achievable by month’s end, following the past weekend’s attacks on key Saudi oil operations.

In addition, both Saudi Arabia and the US appeared to tone down allegations against, and possible reactions to, Iran.

Earlier, China and the US confirmed face-to-face US-China trade talks would resume in Washington this week, albeit at a ‘deputy’ level.

China’s key representative for these talks, the vice finance minister, was described as a ‘problem solver’.

In the UK, arguments continued in the Supreme Court in an appeal regarding the legitimacy of the current suspension of parliament, until a couple of weeks before the UK is scheduled to leave the European Union.

Among overnight data releases, an economic sentiment index for the euro zone improved to -22.5 from -44.1.

Germany’s current economic conditions index fell to -19.9 from -13.5, however.

In the US, August industrial production was estimated 0.6% higher for the month following a 0.1% July slip which was initially estimated as a 0.2% pull back.

Compared with August 2018, output was 0.4% higher.

A national home builders’ housing market index rose by a point to 68, an equal best result over the past year.

Tonight in the US, the Federal Reserve announces outcomes from this week’s two-day policy meeting (early tomorrow AEST).

In addition, August housing starts and building permits are due, together with weekly mortgage applications.

Elsewhere, the UK reports August CPI. A final August CPI reading is due for the euro zone.
18/09/2019 8:00:00 AM

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