The Morning Jumpstart

OVERNIGHT MARKET SNAPSHOT (as at 7am AEST)

  • SPI200 (Sep) overnight futures down 34 pts to 6560
  • SP500 down 27.97 pts to 2917.38
  • NASDAQ down 120.98 pts to 7884.72
  • Dow Jones down 179.32 pts to 26,548.22
  • FTSE100 up 5.74 pts to 7422.43
  • DAX30 down 46.13 pts to 12,228.44
  • GOLD futures US Session (August) up $8.80 to $1427.00 an ounce
  • COPPER futures US Session (Comex Sept) up $0.0250 to $2.7300 a pound
  • OIL futures US Session (Nymex Aug) up $0.84 to $58.74 a barrel
  • CRB Index up 0.89 pts to 180.88
  • AUDUSD trading at 0.6960
  • EURUSD trading at 1.1366
  • GBPUSD trading at 1.2697
  • USDJPY trading at 107.1700
  • USD Index trading at 96.18

US markets went lower as traders locked in some recent gains ahead of the G20 and nervousness on interest rates. Traders focused on Fed Chair Powells comments on interest rates as he said that they were grappling with whether trade uncertainties and other issues warrant rate cuts. He also reiterated the Fed’s independence, a day after Trump tweeted the Fed “doesn’t know what it’s doing.” The DOW closed down 0.67% while the broader SP500 was down 0.95% and the Nasdaq was hit hardest ending down 1.51%. In Europe, major Indexes were generally lower on shaky sentiment on the back of US/China Trade and increased US/Iranian tensions. The FTSE ended with minor gains as energy and material stocks countered losses in most other sectors.

Rate sensitive stocks were down as the tone for a rate cut in July changed. Traders were expecting a rate cut at the next meeting even potentially half a percentage point, but after Powell comments, a rate cut may have to be re-assessed. Also, any positive trade news that comes out of the meeting between the US and China, may see the Fed delaying any potential cut.

The USD Index was generally weaker against major currency pairs until Fed Powells comments hit the market. The comments triggered a USD short covering squeeze as traders adjust their interest rate expectations. The Euro came under pressure during Asian trade as recent buyers locked away some gains. The GBP also spent the European and the US session on the back foot even on early USD weakness. Buyers were happy to lock in as price reacted lower off minor resistance around 1.2760. The AUD did spike down to 0.6941 after Powell comments to squeeze out some late buyers although continued to hold the trend higher off lows down at 0.6835. The USDJPY also squeezed out shorts although safe haven buying into the YEN countered dollar buying for the currency to end slightly lower than the previous close.

Gold continued to move higher as the bulls were out to play. With all the global macro issues and tensions and the USD coming under selling pressure, safe haven buyers are happy to keep stepping into the commodity at elevated prices. Oil again moved higher as tensions between the US and Iran escalated. Trump threatened to obliterate parts of Iran if it attacked ‘anything American’ in a new war of words while Iran responded calling White House action ‘mentally retarded’. Copper had a bullish Asian and European session but was hit early in US trade by the spike in the USD although still managed to end higher from yesterdays US close.

Cryptocurrencies had a positive night with Bitcoin continuing to lead the charge higher. Bitcoin is currently trading at $11412.2 up 4.47% while Ethereum is at $310.05 up 0.78% and Ripple is at $0.46462 up 0.47%.

The ASX200 was up early in the session yesterday but then worked its way lower to end down 7.4 points to 6658 at the close. The Gold sector was the best performer followed by Consumer Staples while Utilities and Info Tech lagged. Falling stocks outnumbered advancing ones by 723 to 516 and 422 ended unchanged.

The ASX200 is expected to open down 35 points as the SPI200 came under selling pressure overnight on weakness in the US.

ECONOMIC DATA OUT TODAY (AEST)

NZD Official Cash Rate and RBNZ Rate Statement 12pm

GBP High Street Lending 6:30pm

GBP Inflation Report Hearings 7:15pm

USD Durable Goods Orders Data, Prelim Wholesale Inventories and Goods Trade Balance 10:30pm

USD Crude Oil Inventories 12:30am

SPI200 INTRADAY LEVELS TO WATCH