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Market Opener – 10 Dec 2018
Local Markets Commentary
The Australian market commences a new week’s trade following influential data out of China and a US-imposed deadline for improved US-China trade relations over the weekend, and an OPEC-led production cut agreement overnight Friday, ahead of a UK parliamentary vote tomorrow night on the UK-EU separation plan.
Over the weekend, China reported November trade, CPI and producer price figures that mostly undershot forecasts.
These included a 5.4% year-on-year rise in exports, against expectations of a 10% increase.
Imports rose 3% year-on-year, following forecasts of a 14.5% rise.
The trade surplus rose to $US44.74B, from $US34.02B.
The CPI rose 2.2%, against 2.5% in October and following forecasts of a 2.4% gain.
For the month, consumer prices fell 0.3%.
Producer prices rose 2.7% year-on-year, against 3.3% in October, and represented the lowest gain in ~two years.
For the month, the PPI slipped 0.2% after a 0.4% October increase.
Since then, the US has nominated 1 March as the new date tariffs would increase on imports from China, if new negotiations did not produce a favourable result.
In overnight Friday commodities trade, oil swung sharply higher.
US (February) gold futures rallied.
Iron ore (China port 62% Fe) slightly extended Thursday’s turn lower.
LME copper turned higher and rallied, as did nickel and aluminium, although nickel’s gain proved relatively constrained.
The $A traded at US72.00c after falling to US72.15c early Friday evening.
This morning, the $A dropped below US71.90c.
Locally today, a weekly capital city residential property price report is due.
The Australian Bureau of Statistics (ABS) reports October housing finance 11.30am AEDT.
This morning, Reserve Bank of Australia (RBA) assistant governor (financial markets) Christopher Kent told attendees at a Sydney Bloomberg event that last week’s September quarter GDP figures highlighted weak consumption, but also that Australia’s banks are not as vulnerable to US rate rises as some assume.
Regionally, Japan publishes a final September quarter GDP reading 10.50am AEDT.
China is scheduled by some to report November lending.
Overseas Market Commentary
US equities markets headed lower from early trade overnight Friday, international and political issues appearing to weigh the most.
Major mainland European equities indices chopped amid data releases and concerns at the economic impact of major protests in France, which spread to Brussels, before being dragged lower by US market signals in late trade.
The FTSE 100 was supported by oil and metals price gains, rallying both early and late, but ultimately losing some gains towards close.
OPEC had announced its members and allies had agreed to an overall 1.2MMbbl/d crude output cut, immediately propelling prices higher.
Despite upbeat China trade talks comments from the US president, US administrative statements were perceived as indicative of no likely near-term progress, bruising large-cap stocks largely reliant on international business.
In addition, an investigation into allegations of collusion with Russia during the 2016 presidential election is expected to report some preliminary findings in the near-term, and the US president’s personal lawyer is expected to be sentenced, following false testimony admissions, Wednesday.
Further, the US president named his new attorney-general nomination.
Among new data releases, US November employment statistics prompted further debate regarding US interest rates and likely moves at next week’s Federal Reserve policy meeting.
155,000 jobs were created, following forecasts of up to 200,000, and against October’s 237,000 (revised from 250,000.
The figures pushed the $US lower early.
Wages grew 0.2% for the month, following a revised (cut by 50%) 0.1% October gain.
Year-on-year, wages were 3.1% higher, the same as for October.
The unemployment rate remained at 3.7%, and the participation rate at 62.9%.
A 97.5 preliminary University of Michigan December consumer sentiment index also represented no change.
Consumer credit jumped $US25.4B against forecasts of a $US15.0B increase.
Earlier, a euro zone final September quarter GDP growth reading came in flat at 0.2% for the quarter. Year-on-year, growth rose 1.6%.
Germany’s October industrial production fell 0.5% for the month, following a 0.2% September rise.
Tonight in the US, an October job openings report is due.
Federal Reserve officials also continue final public addresses ahead of next week’s policy meeting.
Overnight Friday, two regional presidents again indicated next year’s previously expected series of rate rises may no longer be deemed appropriate.
Over the weekend, the US president announced his chief of staff would leave his position by the end of December.
Some of tonight’s trade sentiment could reflect a reaction to the further key US administrative staff changes.
Germany’s markets may also react, following the election of a new ruling party (CDU) leader, to take over from Angela Merkel who stepped down after 18 years in this role.
Ms Merkel remains Germany’s chancellor, however.
Influential data is due in the UK tonight, as UK-EU separation plan debate resumes in parliament, ahead of a scheduled vote tomorrow.
The Australian market commences a new week’s trade following influential data out of China and a US-imposed deadline for improved US-China trade relations over the weekend, and an OPEC-led production cut agreement overnight Friday, ahead of a UK parliamentary vote tomorrow night on the UK-EU separation plan.
Over the weekend, China reported November trade, CPI and producer price figures that mostly undershot forecasts.
These included a 5.4% year-on-year rise in exports, against expectations of a 10% increase.
Imports rose 3% year-on-year, following forecasts of a 14.5% rise.
The trade surplus rose to $US44.74B, from $US34.02B.
The CPI rose 2.2%, against 2.5% in October and following forecasts of a 2.4% gain.
For the month, consumer prices fell 0.3%.
Producer prices rose 2.7% year-on-year, against 3.3% in October, and represented the lowest gain in ~two years.
For the month, the PPI slipped 0.2% after a 0.4% October increase.
Since then, the US has nominated 1 March as the new date tariffs would increase on imports from China, if new negotiations did not produce a favourable result.
In overnight Friday commodities trade, oil swung sharply higher.
US (February) gold futures rallied.
Iron ore (China port 62% Fe) slightly extended Thursday’s turn lower.
LME copper turned higher and rallied, as did nickel and aluminium, although nickel’s gain proved relatively constrained.
The $A traded at US72.00c after falling to US72.15c early Friday evening.
This morning, the $A dropped below US71.90c.
Locally today, a weekly capital city residential property price report is due.
The Australian Bureau of Statistics (ABS) reports October housing finance 11.30am AEDT.
This morning, Reserve Bank of Australia (RBA) assistant governor (financial markets) Christopher Kent told attendees at a Sydney Bloomberg event that last week’s September quarter GDP figures highlighted weak consumption, but also that Australia’s banks are not as vulnerable to US rate rises as some assume.
Regionally, Japan publishes a final September quarter GDP reading 10.50am AEDT.
China is scheduled by some to report November lending.
Overseas Market Commentary
US equities markets headed lower from early trade overnight Friday, international and political issues appearing to weigh the most.
Major mainland European equities indices chopped amid data releases and concerns at the economic impact of major protests in France, which spread to Brussels, before being dragged lower by US market signals in late trade.
The FTSE 100 was supported by oil and metals price gains, rallying both early and late, but ultimately losing some gains towards close.
OPEC had announced its members and allies had agreed to an overall 1.2MMbbl/d crude output cut, immediately propelling prices higher.
Despite upbeat China trade talks comments from the US president, US administrative statements were perceived as indicative of no likely near-term progress, bruising large-cap stocks largely reliant on international business.
In addition, an investigation into allegations of collusion with Russia during the 2016 presidential election is expected to report some preliminary findings in the near-term, and the US president’s personal lawyer is expected to be sentenced, following false testimony admissions, Wednesday.
Further, the US president named his new attorney-general nomination.
Among new data releases, US November employment statistics prompted further debate regarding US interest rates and likely moves at next week’s Federal Reserve policy meeting.
155,000 jobs were created, following forecasts of up to 200,000, and against October’s 237,000 (revised from 250,000.
The figures pushed the $US lower early.
Wages grew 0.2% for the month, following a revised (cut by 50%) 0.1% October gain.
Year-on-year, wages were 3.1% higher, the same as for October.
The unemployment rate remained at 3.7%, and the participation rate at 62.9%.
A 97.5 preliminary University of Michigan December consumer sentiment index also represented no change.
Consumer credit jumped $US25.4B against forecasts of a $US15.0B increase.
Earlier, a euro zone final September quarter GDP growth reading came in flat at 0.2% for the quarter. Year-on-year, growth rose 1.6%.
Germany’s October industrial production fell 0.5% for the month, following a 0.2% September rise.
Tonight in the US, an October job openings report is due.
Federal Reserve officials also continue final public addresses ahead of next week’s policy meeting.
Overnight Friday, two regional presidents again indicated next year’s previously expected series of rate rises may no longer be deemed appropriate.
Over the weekend, the US president announced his chief of staff would leave his position by the end of December.
Some of tonight’s trade sentiment could reflect a reaction to the further key US administrative staff changes.
Germany’s markets may also react, following the election of a new ruling party (CDU) leader, to take over from Angela Merkel who stepped down after 18 years in this role.
Ms Merkel remains Germany’s chancellor, however.
Influential data is due in the UK tonight, as UK-EU separation plan debate resumes in parliament, ahead of a scheduled vote tomorrow.