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Market Opener – 08 Aug 2019

Local Markets Commentary
The Australian market commences today’s trade with new data from China in hand, ahead of further influential data expected early afternoon, Rio Tinto (ASX: RIO) trading ex-dividend, and several other major domestic corporate stocks reporting earnings.

China is expected to release July trade figures 1pm AEST.

Yesterday evening, China reported $US3.104 trillion worth of foreign exchange reserves as at 31 July, against $US3.119 trillion at the end of June.

Locally today, Reserve Bank of Australia (RBA) assistant governor (financial system) Michele Bullock has spoken on Financial Stability Through the Lens of Business at a CCI breakfast event in Toowoomba this morning.

In overnight commodities trade, oil resumed sliding mode.

US gold futures (December) continued to appreciate, settling beyond $US1519.50/oz. Silver surged.

Iron ore (Nymex CFR China, 62% Fe) tumbled further.

LME copper extended Tuesday’s gain. Nickel picked up the pace from Tuesday, recording a rally-mode rise.

The $A appreciated to ~US67.61c after trading at ~US67.30c early yesterday evening.

Overseas Market Commentary
Overnight trade across major European and US equities markets largely demonstrated heightened caution ahead of influential economic indicators to come out of Asia, the euro zone, UK and US from today through tomorrow night.

Some market analysts also reported select overnight bargain-hunting however, although in early trade (prices of) government bonds featured in any rallying.

Investors were faced with a series of developments underscoring disquiet at global economic growth prospects.

The Association of China Rare Earth Industry described the US stance regarding trade relations as bullying behaviour, indicating it was prepared to retaliate by restricting supply to the US of rare earths critical in manufacturing all manner of products including component parts of military and general electronics equipment. 

For his part, the US president repeated the US would be better off pushing for a favourable deal with China after years of allegedly suffering trade abuse from China.

Earlier, the Reserve Bank of India had earlier lowered the bank’s overnight cash rate from 5.75% to 5.40%, after yesterday morning’s Reserve Bank of New Zealand’s larger-than-anticipated 0.5% cut to 1.0%. The Bank of Thailand cut its one-day repurchase rate, unexpectedly, by 0.25% to 1.50%.

Further, Chile reported a $US29M July trade deficit, impacted by falling copper exports. Total exports fell 4.6% year-on-year.

Among relevantly scant overnight data releases, Germany’s June industrial production dropped 1.5% lower for the month following a 0.1% May increase.

In the US, June consumer credit came in at $US14.6B from $US17.79B. 

Weekly mortgage applications jumped 5.3% on lower 30-year mortgage rates (4.01%, from 4.08%), refinancing rising 12% for the week, and 116% year-on-year. 

Tonight in the US, June wholesale inventories and weekly new unemployment claims are due.

Elsewhere, the European Central Bank’s economic bulletin will attract close attention, coupled with euro zone industrial production.

Companies scheduled to report earnings later today and tonight include: Activision Blizzard, Adidas, AngloGold Ashanti, Aviva, CBS, Inpex, Keurig Dr Pepper, Kraft Heinz, Merck, News Corporation, Symantec, ThyssenKrupp, Uber, Unilever, Vale, Viacom and Worldpay.

Stocks trading ex-dividend on the FTSE 100 include AstraZeneca, BP, BT Group, Diageo and GlaxoSmithKline.

In overnight corporate news, Marathon Oil reported a 50% rise in quarterly profit, boosted by (US) shale production. 

Walt Disney impacted DJIA sentiment, falling ~5% on disappointing figures released post-Tuesday US trade.
8/08/2019 8:00:00 AM

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