May 20, 2019
OVERNIGHT MARKET SNAPSHOT (as at 7am AEST)
In the US, shares ended the session lower Friday as negative trade talk re-ignited skepticism that a deal is near. Markets got a lift earlier after the US and Canada announced a deal to remove tariffs on Canadian steel and aluminum but headlines from news sources in China and reports from CNBC saying talks have stalled, brought in the bears. The DOW closed down 0.38% while the broader SP500 was down 0.58% and the Nasdaq also closed down 1.04%. In Europe, major indexes were hurt by trade news and also as Brexit talks fell apart and traders assessed the impact a likely Prime Minister May resignation will have on an exit from the EU.
Tensions between the US and Iran increased over the weekend after the US recently pulled some diplomatic staff from its Baghdad embassy following attacks on oil tankers in the Gulf. Saudi Arabia said on Sunday it wanted to avert war in the region but stood ready to respond. The US has beefed up military presence in the Gulf in response to what it said were Iranian threats to US troops and interests.
The USD rallied during trade Friday more on selling pressure into other major currencies than safe haven dollar buying. The Euro fell as concern about next week’s European parliamentary elections dented demand for the euro. The AUD continued to come under pressure friday on interest rate and trade issues although has opened stronger after the Libs unexpectedly won the election. The GBP continued to move lower on ‘hard’ Brexit Concerns. The USDJPY continued to rally as dollar buying pressure outweighed safe have buying into the YEN.
Gold fell as the dollar gained and a safe haven bid disappeared. The allure of Gold as a safe haven has potentially faded and become more an investment as traders search for yield. Oil ended the session flat at the end of the week but has gained on open as the potential for conflict in the Gulf supports higher prices. Copper ended the session weaker although saw a choppy US session with buyers holding support into the close.
Cryptocurrencies bounce back over the weekend after some profit taking and corrective action at the end of last week. Bitcoin is currently trading at $8045.6 up 8.94% while Ethereum is at $259.21 up 7.87% and Ripple is trading at $0.41623 up 9.66%.
The ASX200 opened up strong Friday but then faded into the close. The Index managed to end up 37.5 points to 6365.3 at the close as traders prepared themselves for elections. Biggest moving sectors were Consumer Staples, Metals and Mining and Resources. Rising stocks outnumbered declining ones by 684 to 465 and 402 ended unchanged.
The ASX200 is expected to up 5 points as the SPI200 remained in positive territory after the selloff in the US Friday night. The unexpected election results may see the bulls come out on the open as they look to reposition themselves into the market. Expecting the Financial sector to open strong with current pre-market prices well in the green. Property stocks and some health insurers may come under fire also as positions entered prior to elections may be unwound.
ECONOMIC DATA OUT TODAY (AEST)
JPY Prelim GDP Data 9:50am
JPY Revised Industrial Production 2:30pm
EUR German PPI 4pm
EUR German Buba Monthly Report 8pm
GBP MPC Member Broadbent Speaks 2:30am
USD FOMC Member Clarida Speaks 3:05am
SPI200 INTRADAY LEVELS TO WATCH
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