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Market Opener – 04 Jul 2018

Local Markets Commentary
The Australian market opens mid-week trade on mixed overnight international leads, ahead of a batch of influential domestic and regional data, as the US observes the Independence Day public holiday.

Locally today, May trade balance and retail sales are due from the Australian Bureau of Statistics (ABS) 11.30am AEST.

June new vehicle sales are also expected this morning.

Pre-trade, AiG releases its June services sector activity index. 

Regionally today, Caixin is scheduled to publish its final June services and composite PMIs for China 11.45am AEST

Similar indices are due for Japan, from Nikkei, 10.30am AEST, but a public speech an hour later from Bank of Japan policy board member Yutaka Harada may prove of greater import.

In overnight commodities trade, oil turned higher.

US gold futures also swung so and rallied.

Iron ore (China port, 62% Fe) recorded a small gain. 

LME copper, nickel and aluminium continued lower. 

The $A has been pushed lower again after appreciating to ~US74.00c early yesterday evening.

Overseas Market Commentary
US equities markets opened higher again overnight, in part supported by early oil price gains, but soon headed lower before an earlier-than-usual close ahead of today’s Independence Day public holiday.

Major European indices trended higher before being dragged back some in late trade.

Earlier, China’s yuan had fallen below an influential psychological level, prompting People’s Bank of China governor Yi Gang to assure that the bank would ensure a relatively stable yuan despite forex flux.

In addition, a World Trade Organisation (WTO) Council warning came from 40 members, who officially voiced concern at world markets stability in the face of the proposed US import taxes on vehicles and parts.

US economic indicators came in mixed, May factory orders defying forecasts to rise 0.4% for the month, following a 0.4% fall in April. 

The ISM’s New York business activity index slipped 1.4 to 55.0. 

June vehicle sales tallied 17.47M following 16.91M for May. 

In the meantime, US soybean growers were hit with nine-year low prices, due to a good growing season and US-China tit-for-tat trade tariffs.

May euro zone retail sales were calculated flat, following a mere 0.1% improvement in April. Year-on-year, sales were 1.4% higher.

Producer prices rose 0.8% during May, following no change in April. Year-on-year, prices have grown 3.0%. 

In Italy, the new government announced it would not implement proposed policy designed to reduce the nation’s deficit, at least not before year’s end, due to slower than anticipated growth.

In the UK, a June construction PMI was reported at 53.1 following 52.5 in May. 

Meanwhile in Turkey, a 15% CPI growth reading pushed the lira 1% lower against the $US.

Tonight, the Bank of England is due to publish the minutes of its June policy meeting. 

Services sector PMIs are also expected for the UK and the euro zone.

US markets will not trade, due to the Independence Day public holiday.

UK supermarket chain Sainsbury’s among companies due to provide a trading update.

In overnight corporate news, Facebook was said to be facing more intense investigation regarding data ‘sharing’ in association with the Cambridge Analytica revelations. The stock consequently forfeited more than 2%. 

Glencore dropped more than 10% on allegations of money-laundering legislation breaches by US authorities. 

Three major US airlines suffered analyst downgrades and also traded lower.

Tesla continued to fall, the previous session’s fears, despite output promotion, pushing the stock more than 7% lower.

The UK’s BP and US company ConocoPhillips each gained, not only on early oil price appreciation, but following agreement on a North Sea and Alaska asset swap deal. Under the agreement, ConocoPhillips would boost its Alaska influence and BP its holdings in the North Sea. 

US markets will not trade tonight, due to the Independence Day holiday.
4/07/2018 8:00:00 AM

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