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Market Opener – 26 Nov 2018

 
Local Markets Commentary
The Australian market opens the last week of November trade with a new economic forecast for China and key weekend developments elsewhere, following largely negative overnight Friday international equities and commodities trade leads. 

Yesterday, China’s Renmin University School of Economics issued a report forecasting 6.6% 2018 China GDP growth and 6.3% for 2019.

Other 2019 predictions included a 16.1% rise in imports, against 6.1% for 2018, and nine percent higher consumer spending.

Also over the weekend, European Union (EU) leaders agreed the draft text for proposals governing the UK’s separation from the EU.

In Australia, Victoria’s State election delivered an increased parliamentary majority for the previous Labor government, at the expense of the Liberals and Greens, spawning plenty of speculation regarding the national government, for which an election is due within a few months.

In overnight Friday commodities trade, oil slid.

US (December) gold futures settled modestly lower. 

Iron ore (China port 62% Fe) dropped further. 

LME copper turned lower and nickel continued so. Aluminium turned higher, but recorded only a slight gain.

The $A ultimately changed little after trading at ~US72.35c early Friday evening.

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

Reserve Bank of Australia (RBA) governor Philip Lowe has been speaking this morning on cashless payment systems at a Sydney summit.

Assistant RBA governor (financial markets) Christopher Kent is also speaking today, 2pm AEDT, on finance and the housing market, at another Sydney conference. 

Regionally, a November manufacturing PMI is due for Japan, 11.30am AEDT.

Overseas Market Commentary
Choppy, swinging trade featured across major European and US equities markets overnight Friday, the S&P 500 and DJIA opening lower and never seriously looking like recovering during Thanksgiving season-truncated trade. 

Investors faced disappointing data and awaited further developments across several geopolitical issues. 

Oil prices slid again, Brent crude settling below a key psychological level.

Over the weekend, European Union (EU) leaders signed off on the draft proposals for the UK’s separation from the EU.

In addition, the European Commission (EC) and Italy agreed to further talks regarding Italy’s proposed budget, deemed non-compliant with EC regulations.

Following a Saturday evening meeting with the EC president, however, Italy’s PM announced he gave no ground on major budget reforms and that the nation’s deficit target was not discussed.

Late this week, expectations remain for attempts by the leaders of the US and China to discuss trade policy while attending the two-day G20 summit in Buenos Aires.

In overnight Friday data releases, Markit’s US initial November manufacturing and services sector PMIs respectively slipped 0.3 to 55.4 and 0.4 to 54.4.

In Germany, a final September quarter GDP reading represented a 0.2% decline for the three months, following a 0.5% June quarter rise. 

Year-on-year, GDP grew 1.1%.

An initial 51.6 November manufacturing PMI was also reported for Germany, down 0.6 from October’s final estimate. 

The services sector PMI fell 1.4 to 53.3

The overall euro zone manufacturing and services sector PMIs came in at 51.5 and 53.1 respectively, down 0.5 and 0.6. 

Italy’s central bank warned of financial sector stability due to prolonged high bond yields. 

Tonight in the US, the Chicago Fed’s October national activity index is due, together with a Texas region manufacturing index. 

Elsewhere, European Central Bank (ECB) president Mario Draghi is speaking to a European Union parliament economic committee.

In overnight Friday corporate news, retailers reported pleasing ‘Black Friday’ retail sales, in particular online buying.

This has pushed higher expectations for today and tonight’s ‘Cyber Monday’ sales.

Sales tallies are traditionally viewed as an indication of retail sector fortunes across the festive season.
 
26/11/2018 7:00:00 AM

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