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Market Opener – 04 Jan 2018

Local Markets Commentary
The Australian market opens today’s trade on positive international equities leads but some key base metals price falls, ahead of final December PMIs for China and Japan. 

Caixin will release its December services and composite PMIs for China 12.45pm AEDST.

Japan’s final December manufacturing PMI is expected 11.30am AEDST. National markets also trade for the first time this year.

In overnight commodities trade, oil swung back to rally mode. Gold futures settled a little higher. Iron ore (China port, 62% Fe) turned lower.

LME copper, nickel and aluminium continued lower.

Locally today, AiG is due to report December services sector activity 9.30am AEDST. December vehicle sales are scheduled for release midday.

The $A effectively marked time overnight, after vacillating trade early yesterday evening, when it fell to ~US78.15c before rising to ~US78.35c.

Overseas Market Commentary
Major European and US equities mostly headed higher from open overnight, some robust data pushing US indices to new record peaks and new 2.5-year highs for oil buoying select stocks. 

Broad new European Union financial sector regulations, including for equities trade, reportedly kept institutional volumes relatively low in relevant markets, due to compliance caution.

US Federal Reserve December policy meeting minutes revealed a degree of uncertainty regarding the ultimate impact of new US tax laws. Consumer spending was generally seen higher, at least initially, and the inflation rate appeared to remain of concern.

Meanwhile, ISM’s 59.7 December manufacturing PMI represented a 1.5-point increase for the month, supported by the new orders component which rose 5.4 points. 

November construction spending improved 0.8% for the month to a record $US1.257 trillion. On an annual basis construction spending has risen 2.4%.

In the UK, the December construction PMI was estimated at 52.2, following 53.1 for November. 

Germany’s December unemployment rate eased 0.1% to 5.5%, representing a 27-year low.

Tonight in the US, private sector employment and job cuts reports are due, ahead of official monthly national employment statistics tomorrow night.Weekly new unemployment claims and Markit’s final December services PMI are also due. 

Monsanto and Walgreens Boots are among companies expected to report earnings. 

In overnight corporate news, UK retailer Next lifted full-year profit guidance £8M to £725M following better-than-anticipated November-December sales.

US December vehicle sales came in mixed, but higher than feared for General Motors (-3.3%), Ford Motor (+0.9%) and Fiat Chrysler (-11%). Outlooks were generally weak.

Toyota Motor reported an 8.3% fall, Honda Motor 7% lower sales and Nissan Motor a 9.5% drop.

Meanwhile, Spotify filed for a NYSE direct listing.

In Brazil, Petrobras revealed it would settle US corruption legal action with a $US2.95Bpayment.
4/01/2018 7:01:00 AM

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