Market Opener – 13 Jun 2018
Local Markets Commentary
The Australian market opened this morning with futures pointing to losses in the morning with the ASX taking its cue from overnight losses in the US by BHP Billiton and Rio Tinto.
However, upside to the start of the trading day was that the ANZ-Roy Morgan Australian Consumer Confidence rebounded following a 1% decline in the previous week.
Confidence is now at its highest since January, on a weekly basis.
Australian Bureau of Statistics figures showed that home loans fell to their lowest in six years in April as mortgage commitments to investors deflated to $10.75 billion from $10.5 billion in March. This represented a ratio of investor loans comprising 33.9% of all new housing loans, 1.2% higher than the lowest proportion of lending for a month dating back to January 2012.
Overseas Market Commentary
Utilities and technology shares led the way as U.S. stocks closed slightly higher with investors generally cautious and eyeing the Federal Reserve, which is expected to raise interest rates for the seventh time since the financial crisis.
The Dow Jones fell 1.58 points, or 0.01% to 25,320.73, the S&P 500 gained 4.85 points, or 0.17% to 2,786.85 and the Nasdaq added 43.87 points, or 0.57%, to 7,703.79.
Economist have predicted that the central bank will lift the benchmark interest rate by another 25 basis points to 1.75%-2%.
The Fed is scheduled to release its policy statement and a series of updated economic forecasts this afternoon. The Fed last raised interest rates in March and subsequent to that decision – in tandem with tax cuts - unemployment in the United States has dropped to a 48-year low of 3.75%. During this period, the U.S. economy has created 537,000 additional jobs.
However, it wasn’t all good news on the jobs front at Tesla as the Californian-based electric car manufacturer announced it would cut 9% of its 46,000-strong work force.
Tesla CEO Elon Musk said in an email to staff that the company had to reduce its costs to drive profits. Tesla has been under pressure this year to ramp up production targets of its Model 3 sedan and is currently targeting 5000 vehicles a week by the end of June.
China led the way in Asian markets that closed higher as the region generally responded favourably to the outcome of the historic Singapore summit meeting between U.S. President Donald Trump and Korean leader Kim Jong Un.
The benchmark Shanghai Composite gained 0.91% to 3,080.55 and the smaller Shanghai composite rose by over 1%. Japan’s Nikkei rose 0.33%, or 74.31 points to 22,878.35 buoyed by gains of more than 1% by the food, retail and land transport subindexes.
South Korea’s Kospi, however, slipped 0.05% in a turbulent days trading which culminated in the U.S. and North Korea signing a pledge to commit to lasting peace on the Korean Peninsula.
The Stoxx 600 closed down 0.11% with a mixed bag of results in a Europe still seething from U.S. President Donald Trump’s clash with G7 leader over the weekend.
At close the FTSE 100 had shed 0.43% to 7703.81, the CAC 40 slipped 0.38% to 5433.37 and the Dax was trading flat at 1284.30 after a day in which investors had focused on the U.S.-North Korean meeting in Singapore and the prospect of “lasting peace on the Korean Peninsula”.
Daimler closed up 1.45% after the car manufacturer recalled 238,000 vehicles to verify unauthorised software issues reported to have enabled favourable emission cheating outcomes.