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Market Opener – 28 May 2019

 
Local Markets Commentary
The Australian market opens today’s trade in the absence of overnight international equites and commodities trade leads, due to public holidays in the US and UK. 

Yesterday, iron ore (China port, 62% Fe) continued yet higher, settling beyond $US108.60/t.

Locally today, a weekly consumer sentiment reading is due pre-trade.

The $A was pushed below US69.20c after trading at ~US69.25c early yesterday evening.

Overseas Market Commentary
Major mainland European equities markets largely traded positive overnight, but settled well below early-session gains. 

The automotive manufacturing, oil and pharmaceuticals sectors were variously boosted by corporate news and constrained supply talk.

Markets were closed in both the US and UK, due to public holidays, but disagreements continued between the US and China and US and Iran.

Yesterday, reports emerged high-level US and Taiwan security officials had held discussions in the US during the 13 – 21 May visit by Taiwan security secretary-general David Lee. In particular Mr Lee and US national security advisor John Bolton were reported to have met.

China’s foreign ministry promptly spoke of ‘extreme dissatisfaction’ and ‘resolute opposition’ to such events.

In addition, the US president concluded a Japan visit with a joint news conference with Japan’s PM Shinzo Abe, claiming US sanctions against former Japan oil supplier Iran were crippling Iran and curbing its Middle East military activity.

The president promoted a possible new nuclear deal with Iran, including with support from Japan, but Iran responded with claims nuclear weapons had been prohibited within Iran and that US policy was only serving to ratchet Middle East tensions and hurt Iranians.

Friday, the US administration had confirmed the additional military presence in the Middle East this past month would again be boosted.

Further, the US president yesterday touted a potential ‘good’ outcome with North Korea, again with support from Japan.

The president also claimed progress with trade talks with Japan, in particular with respect to agriculture, a sector struggling in the US due to soured US-China relations, but promised nothing definitive until at least July.

In the UK, jostling continued in the wake of PM Theresa May’s Friday announcement that she would step down from her Conservative leadership role 7 June.

Results from European Parliament elections, favouring pro-EU parties in much of the European Union, and hard-line EU separationists within the UK, appeared to flavour the comments of contenders to be the UK’s next PM.

Tonight in the US, two house price indices, a consumer confidence reading and a Texas region manufacturing index are due.

Elsewhere, European Union (EU) heads of state or government are meeting informally over dinner in Brussels, to commence the process for nominating heads of EU institutions, given the conclusion of European Parliament elections. 

In overnight corporate news, following weekend reports of ‘partnership’ talks, Fiat Chrysler announced it was proposing a merger with Renault in an ~€33B deal that would see shareholders of both groups own 50:50 of the new entity.

Approvals would need to also come from Renault alliance partners Nissan and Mitsubishi Motor plus the French and Italian governments.
 
28/05/2019 8:00:00 AM

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