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Market Opener – 11 Jul 2018

Local Markets Commentary
The Australian market opens mid-week trade amid new tit-for-tat import tax announcements from China and the US, and on largely negative commodities overnight trade leads.

From today, China will impose 33.3% - 78.2% import taxes on select optical fibre products from the US, against previous 4.7% - 18.6% levies.

In overnight commodities trade, Brent crude continued to rally. 

US gold futures closed lower.

Iron ore (China port, 62% Fe) settled flat.

LME copper and aluminium swung lower. Nickel recorded a modest gain. 

The $A has continued significantly lower after falling below US74.40c early yesterday evening.

Locally today, May housing finance is due 11.30am AEST.

Westpac and the Melbourne Institute also publish a monthly consumer confidence report.

Regionally, Japan is reporting June producer prices and May machinery orders this morning, just prior to ASX open.

China’s June lending figures and foreign direct investment are expected anytime from tomorrow.

Meanwhile, plenty of commentary is anticipated as NATO leaders gather in Brussels for a summit which officially commences later today and concludes overnight tomorrow.

Overseas Market Commentary
Major European and US equities markets each opened higher overnight, but most chopped and swung their way to varied settlements. 

Earlier, China had announced significant increases in import taxes for some US optic fibre products.

As anticipated, post-US trade, the US confirmed it was preparing a new list of import tariffs totalling up to $US200B to be imposed on goods from China.

Among a batch of UK data releases, May GDP was estimated to have grown 0.3% following 0.2% growth reported for April. 

May exports and imports reduced the trade deficit to £12.79B from £14.04B at the end of April.

May industrial production improved 0.8% year-on-year after a 1.6% gain in April.

For the month, output declined 0.4% after falling 0.8% in April. Manufacturing output notably rose 1.0% during May.

Construction output rose 2.9% following a 0.5% rise during April.

A BRC retail sales index rose 1.1% year-on-year in June, following a 2.8% gain in May.

The overall euro zone ZEW economic sentiment index fell to -18.7 following -12.6 in June.

Germany’s slid to -24.7 from -16.1. 

In the US, a May job openings report indicated 6.64M vacancies following 6.84M in April, a 2.4% resignation rate and 1.1% layoffs, against 1.2% in April. A 107.2 small business optimism index represented a slight 0.6 decline.

Tonight in the US, May wholesale inventories and June producer prices are due, together with weekly mortgage applications. 

Elsewhere, NATO leaders commence a two-day talkfest in Brussels.

Bank of England governor Mark Carney also speaks publicly.

Companies scheduled to report earnings or provide trading updates include luxury retailer Burberry and Toys R Us.

In overnight corporate news, Lockheed Martin, Northrop Grumman and Raytheon were reported by the US administration to be the winners of a comprehensive $US4B US defence ballistic missile contract.

PepsiCo’s quarterly profit and net revenue, reported pre-trade, exceeded expectations and supported some consumer staples sentiment, the stock gaining ~4.5%. 

Twenty-First Century Fox was reported to be near finalising a new £25B offer for Sky.
11/07/2018 8:15:00 AM

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