Today's Trade: Aussie shares tread water
- The ASX 200 index is up 9 points to 5798 after a tepid night on Wall St
- Asian stocks hlook to be on the upside, as JPY drop stimulates shares
- Tech-heavy Nasdaq Composite dropped 59.58 points, or 0.9%, to 6949.23
Overnight and early trading
The S&P 500’s information technology sector has been the index’s worst performer over the past week. The consumer discretionary sector, which houses such tech-focused giants as Amazon.com and Netflix, has also been hit hard.
Those challenges have cropped up at a time when the prospect of higher interest rates and trade disruptions had already made investors nervous about the tech sector, which is still up 24% over the past year.
The Dow closed down 9.29 points, or less than 0.1%, at 23,848.42, while the S&P 500 declined 7.62 points, or 0.3%, to 2605.00.
All three indices have fallen in five of the past six sessions.
Shares of Facebook, which have fallen 14% this month, rose 81 cents, or 0.5%, to $153.03 after the company said it would make it simpler for users to examine and change some of their data tracked by Facebook.
Axios reported President Donald Trump is “obsessed with Amazon” and has discussed changing Amazon’s tax treatment due to concerns about how the company is affecting mom-and-pop businesses.
Dozens of iPhone owners are also taking Apple to court over the company’s disclosure that it slowed down old phones to preserve battery life.
Local markets and commodities
- S&P/ASX 200 Index futures rose 0.1% to 5,772. Futures relative to fair value suggest an early decline of 0.1%.
- Bank of New York Australia ADR Index is down 0.6% to 261.3, BHP Billiton ADRs are down 1.4% to A$28.39 equivalent, a 1.0% discount to last Sydney close, Rio Tinto ADRs are down 1.0% to A$65.52 equivalent, a 10.7% discount to last Sydney close.
- Gold prices fell heavy overnight as investors sold the metal on signs of easing tensions between the U.S. and North Korea and a rally in the dollar. Gold for June delivery closed down 1.3% at $1,330 a troy ounce on Comex. The US Dollar rallied against all G10 pairs with notable performance seen in USDJPY which has put further inverse correlation on gold. Gold stocks were down 1.9% overnight. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SL.
- Oil fell for a third day, the longest losing streak in almost a month, as US crude stockpiles resumed their expansion. West Texas Intermediate crude for May delivery lost 87 cents to settle at $64.38 a barrel on the New York Mercantile Exchange. Brent for May settlement dropped 58 cents to close at $69.53 on the London-based ICE Futures Europe exchange. The stockpile increase was the fourth in five weeks. Before this week, oil had recovered from February’s losses after US President Donald Trump named hawkish officials to his government, signaling the nation may pursue a more hard-line approach toward Opec member Iran. Still, fears remain that surging American shale production could thwart efforts by Opec to reduce a global oversupply. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, AWE, KAR, ORG, SXY.
- Steel and iron ore futures in Asia continues to suffer from weak investor sentiment. Spot price of iron ore shed 3.1% to $63.12/tonne. The physical market also remains weak, with steel mills reluctant to restocking as margins continue to fall amid a cloudy outlook for steel. Losses in the futures markets were heaviest early in the session; however some opportunistic buying emerged late in the session to cut some of those losses. The issues of a two tired market raised its head once again, After Fortescue Metals cut its price guidance once again, highlighting the challenge for producers of lower grade iron ore in China. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL.
- Benchmark copper was down 0.2% at $6,665/t. Total stocks on the LME rose 4200 tonnes to 388,175 tonnes. Inventories on ShFE rose to levels not seen since April 2017, at 307,435 tonnes. The rise in copper inventories has seen the discount of LME cash copper to the three-month contract close to January levels. Zinc added 0.3% to $3,284/t; lead added 0.8% to $2,425/t; tin was flat at $20,890/t; while nickel added 1% to $13,130/t. Copper stocks: OZL, SFR; Nickel stocks: IGO, WSA; Aluminium stock: AW.
- In other news: Ex-Dividend: Adelaide Brighton; Ardent (AAD AU): Ardent Leisure Sees Delay in Sale of Bowling, Entertainment Unit; Vocus (VOC AU): May Be Reconsidering Move to Sell N.Z. Assets: Australian; Fletcher Building (FBU AU): Obtains Extension of Covenant Breach Waivers; Prairie Mining (PDZ AU): JSW, Prairie Sign Confidentiality Deal on Polish Coal Projects.
- Avanco (AVB AU): Downgraded to Hold at DJ Carmichael; Price Target A$0.22
Month/quarter end portfolio rebalancing seemed to be leaning toward heavily oversold US dollar while the anticipated summit talks between North Korea and Japan also should improve the market conditions and sentiments.
US dollar index (DXM8) appears to have found a solid support level near low 88 where 7 year uptrend coincides with 50% retracement (2011 low 72.86 and 2017 high 103.82).
If this continues to hold, we would cautiously add bullish bias on DX.
US dollar yearly chart
-- Edited by Adam Courtenay
Today’s Trade is compiled by the Sydney trading desk at Saxo Capital Markets
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