The Morning Jumpstart

OVERNIGHT MARKET SNAPSHOT

  • SPI200 (Sep) overnight futures up 48 pts to 6540
  • SP500 up 43.23 pts to 2926.32
  • NASDAQ up 152.95 pts to 8016.36
  • Dow Jones up 382.20 pts to 26,279.91
  • FTSE100 up 24.18 pts to 7250.90
  • DAX30 up 70.45 pts to 11,750.13
  • GOLD futures US Session (December) down $4.80 to $1512.40 an ounce
  • COPPER futures US Session (Comex Sept) up $0.0470 to $2.6320 a pound
  • OIL futures US Session (Nymex Sep) up $1.79 to $56.72 a barrel
  • CRB Index up 2.46 pts to 173.09
  • AUDUSD trading at 0.6798
  • EURUSD trading at 1.1172
  • GBPUSD trading at 1.2060
  • USDJPY trading at 106.7400
  • USD Index (ICE Sept) trading at 97.683 up 0.485

US stock markets were lifted by a well timed news release from the Trump and the US Government saying that the new tariffs will be delayed from Sept until mid December. The reaction to the news shows the clear uncertainty in the market which is torn by tariffs and now Hong Kong uncertainty. One thing that investors may also draw conclusions about is that the government is acknowledging that the tariffs are indeed hurting consumers despite their claim that China will bear the brunt of the tariff costs. The DOW closed up 1.44% while the broader SP500 was up 1.50% and the Nasdaq also ended up 1.95%. In Europe, markets managed to catch the start of the rally after the news release to change a negative session into a positive one. The DAX was initially down around 150 points and rallied to close higher while the FTSE rallied 100 points off the lows.

The troubles in Hong Kong still seem to be escalating with further clashes at the airport with police. We expect that the situation will cap the overnight ‘risk on’ mood into equities. One would also expect that China may have the upper hand in the trade war as Trump has shown signs of cracking after giving China good reason to continue to wait it out. Trump has also shown his focus to weakness in the stock market as every time the market heads south, Trump seems to back away and ‘tweeting’ at appropriate times. The problem is that the president’s top priorities — a strong stock market and a tough China trade deal — are at odds. Traders will be eagerly awaiting to see how China reacts.

The USD spiked higher on the back of the news on tariffs as traders went risk on into share markets. Longer dated US bond yields also reversed course to rally after the news as bears locked in some gains on the outside chance that the trade war may be finally heading in the right direction. The Euro fell as the USD suddenly spiked to touch down on support at 1.1170 while the GBP also found further selling pressure but held above support and the psychological 1.2000 level. The AUD lifted off the lows as buyers celebrated the news and projected out to a potentially trade war free future. The USDJPY spiked hard as the USD lifted and safe haven YEN buyers ran for cover to sell out and send the YEN lower.

Gold took a nosedive on the news falling around $50 on the release but managed to limit the damage on a rally into the close. Oil also reacted hard on the news to spike around $3 straight through the $56 resistance zone. The key now is whether the commodity can hold onto the gains. Copper also changed course from sellers in control to buyers ramping price higher through resistance around 2.6130.

Cryptocurrencies fell away with the improved sentiment into the share market with Bitcoin currently trading at $10,891.7 down 5% while Ethereum is at $207.48 down 1.89% and Ripple at $0.29561 down 1.87%.

The ASX200 opened weak and then rallied on the back of positive news regarding Hong Kong but then retreated into the close. In the end the index ended down 21.8 points to 6568.5 with the Healthcare and Consumer Discretionary sectors being the biggest drag on the market. Falling stocks outnumbered advancing ones by 727 to 450 and 368 ended unchanged.

The ASX200 is expected to open up 40 points as the US spiked higher on the open to drag the SPI200 up off the lows.

ECONOMIC DATA OUT TODAY (AEST)

AUD Westpac Consumer Sentiment 10:30am

AUD Wage Price Index 11:30am

CNY Fixed Asset Investment, Industrial Production and Retail Sales 12pm

EUR German Prelim GDP 4pm

AUD RBA Assist Gov Debelle Speaks 5:30pm

GBP CPI and PPI Data 6:30pm

EUR Flash Employment Change and Industrial Production 7pm

USD Import Prices 10:30pm

USD Crude Oil Inventories 12:30am

SPI200 INTRADAY LEVELS TO WATCH