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Market Opener – 07 Oct 2019

Local Markets Commentary
The Australian market opens a new week’s trade on a public holiday for several domestic States and Territories, with positive international equities leads from overnight Friday, but US futures turning lower this morning.

China’s markets remain closed today, but US-China trade talks are in focus, as high-level face-to-face negotiations are scheduled to resume later this week.

Over the weekend, North Korea announced it had ended formal nuclear discussions between US and North Korean officials in Sweden. For its part, the US declared North Korea's description of the talks was not accurate, and effectively accused North Korea of misrepresenting the US approach.

Locally today AiG’s September construction sector activity index is due pre-trade.

The monthly inflation gauge is due from the Melbourne Institute and TD Securities 11am AEDT.

In overnight Friday commodities trade, oil settled higher.

US gold futures (December) turned to settle slightly lower.

Iron ore (Nymex CFR China, 62% Fe) also settled slightly down, below $IS92.20/t.

LME copper continued to fall and nickel to ascend. Aluminium settled essentially flat.

The $A appreciated to ~US67.70c after trading a little beyond US67.55c early Friday evening, but fell earlier this morning.

China’s markets remain closed today, due to a public holiday. Trade will resume for the first time in a week tomorrow.

Overseas Market Commentary
US equities markets rallied from outset towards close overnight Friday. Major European equities featured vacillating sentiment but were pulled decisively higher in late trade.

The US September jobs report included a 0.2% fall in the employment rate to 3.5%, and the creation of 136,000 jobs, against 168,000 in August.

The unemployment rate was the lowest since December 1969, but the participation rate remained at the same as for August, 63.2%.

Average hourly earnings also came in flat, following a 0.4% August increase and expectations of a 0.3% rise for the month.

Against September 2018, earnings were 2.9% higher.

US August trade statistics included $US297.9B worth of exports, against $US207.4B for July.

Imports tallied $US262.8B, following $US261.4B in July.

The overall trade deficit was estimated at $US54.9B, from $US54.0B.

In other overnight Friday data releases, Germany’s September construction PMI heartened, exceeding expectations by 3.1 points in rising to an expansionary 50.1, from August’s 46.3.

Tonight in the US, August consumer credit is due (5am ADST Tuesday).

Elsewhere, UK and European Union (EU) officials resume formal negotiations regarding plans for the UK to separate from the EU 31 October. The UK’s key negotiator and the PM have each declared over the weekend that the UK is prepared to be flexible and have again expressed optimism in reaching some arrangement with the EU that British parliamentarians might also approve.

In light of a recent spate of disappointing international manufacturing activity releases, Germany’s August factory orders, also due tonight, could influence some trade sentiment.
7/10/2019 8:00:00 AM

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