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Market Opener – 23 May 2018

 
Local Markets Commentary
The Australian market commences midweek trade on negative overnight US equities leads, ahead of key international reports and an anticipated Australia-China speech by the Reserve Bank of Australia governor tonight

In overnight commodities trade, oil settled mixed, WTI crude lower but Brent moderately higher.

US gold futures closed slightly higher.

Iron ore (China port, 62% Fe) was pushed lower for a fourth consecutive session.

LME copper rallied. Nickel turned higher.

The $A slipped to ~US75.80c after trading beyond US75.95c early yesterday evening.

Locally today, the Australian Bureau of Statistics (ABS) is due to report March quarter construction work 11.30am AEST. The Department of Jobs reports skilled vacancies.

A monthly leading indicators report is also due from Westpac and the Melbourne Institute today.

Regionally, an initial May manufacturing PMI is due for Japan 10.30am AEST.

Overseas Market Commentary
Sentiment waned across US equities markets overnight, but major European indices trended higher.

Earlier yesterday, China had announced plans to cut vehicle import tariffs by as much as 10% from 1 July, as part of a continued approach to opening up the nation’s economy to more international business. This supported vehicle manufacturing sector equities trade on both sides of the Atlantic.

The US president in the meantime expressed dissatisfaction with last week’s US-China trade negotiations, and appeared to pull back from earlier enthusiasm regarding restoring exports to ZTE.

The US was also reported to be considering a 10% reduction in the import of steel and aluminium from the European Union.

Earlier proposed tariffs on such EU imports (25% and 10% respectively) were pushed until 1 June.

In addition, US investors were awaiting a pending parliamentary vote on legislation proposed to adjust finance sector regulations introduced following the 2008-09 financial crisis. 

Meanwhile, in overnight US data releases, the Richmond Fed manufacturing index was reported to have jumped 19 points to 16.

In the UK, public sector borrowing was reported to have slowed during April on an annual basis. 

Bank of England governor Mark Carney told parliamentarians that the UK’s planned exit from the European Union has contributed to average household incomes falling £900 more than forecast two years ago.

Tonight in the US, Federal Reserve policy meeting minutes, April new home sales and Markit initial May PMIs are due.

Elsewhere, the UK reports April CPI.

US specialist retailer Lowe’s, UK department store Marks & Spencer, Severn Trent, Target Corp and Vedanta Resources are among companies scheduled to report earnings later today or tonight

In overnight corporate news, BP revealed plans to cut 3% of exploration and production jobs by year’s end, citing efficiency targets.

In the US, the CEO of retailer JC Penney announced he is leaving to become CEO and president at Lowe’s which is reporting tonight. JC Penney was pushed ~4% lower and Lowe’s ~1.5%, both retailers considered strugglers. 

Fellow US retailer, Kohl’s, appreciated ~7% after reporting better-than-anticipated quarterly earnings.
 
23/05/2018 8:05:00 AM

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