- ASX drops below 6000, shedding over ten points in early trade
- Genworth shares fell sharply as financials weighed on the market
- US equities slump overnight, with smaller caps leading the losses
- AUDUSD keeps its shape, with the local currency trading at 76.6 US cents
By Saxo Capital Markets
Overnight and early trading
The S&P/ASX 200 index was at 5997 - down around 14 points, or 0.2% in early trading,
mimicking losses overseas.
The banks were the main losers, with the four majors down between 0.4% and 0.8%, but the winners this morning were Transurban, with a 4% rise, Crown up 3.3% and Mayne Pharma also rising over 3%.
The Australian dollar kept its shape at US76.62 cents.
Meanwhile US equities slumped overnight, with small caps leading losses, and the dollar erased a gain as concern mounted that the Republican tax overhaul package may struggle to pass the Senate.
Stocks edged lower Thursday, as Republicans tried to keep their tax overhaul on track.
Major indices pared earlier gains on doubts of whether Republicans would be able to reconcile key items in their tax proposal within a tightly set time frame.
Republicans are now weighing whether to delay votes in the House and Senate next week that would have advanced the plan to the White House after Senator Marco Rubio announced his opposition to the bill until it included bigger child tax credits for low-income families.
The Dow Jones Industrial Average fell 76 points, or 0.3%, to 24,508, while the S&P 500 shed 0.4%. The Nasdaq Composite declined 0.3%.
Shares of financial firms in the S&P 500 declined 0.7%, while the Russell 2000 index of small-capitalisation companies fell 1.2%.
Analysts say they have been tracking the index of smaller businesses, as well as financial stocks, as a proxy for investor reaction to the tax plan.
They expect the proposal to benefit smaller, more domestically focused companies, and banks since they tend to pay a relatively higher tax rate compared with larger multinationals.
Marco Rubio: upsetting the Republican apple cart on tax. Photo: Shutterstock
Other decliners included healthcare companies, with firms like Bristol-Myers Squibb Co. falling 2.1%, and chemical businesses.
That offset gains among media stocks. Several media companies’ stocks got a bump after Walt Disney said it would buy 21st Century Fox’s film and television studio and its international and cable TV businesses.
Disney’s stock jumped 2.8%. Shares of 21st Century Fox surged 6.5%. News Corp, The Wall Street Journal’s parent company, and 21st Century Fox share common ownership.
Airlines also gained. Delta Air Lines climbed 3% after the company said its capacity and passenger unit revenue were on track to rise in the fourth quarter, while also boosting its revenue projection for next year.
Elsewhere, the Stoxx Europe 600 edged down 0.5% after the European Central Bank left interest rates unchanged even as its new economic projections forecast strong growth for the bloc through 2020.
Information sources: Bloomberg, TradingFloor.com, WSJ.com, CNBC
Local markets and commodities
- S&P/ASX 200 Index futures are unchanged at 6,012. Futures relative to fair value suggest an early decline of 0.1%.
- Bank of New York Australia ADR Index is unchanged at 270.1, BHP Billiton ADRs are up 0.2% to A$27.66 equivalent, a 0.2% discount to last Sydney close, Rio Tinto ADRs are down 0.8% to A$62.79 equivalent, a 10.0% discount to last Sydney close.
- Gold vacillated after inching up in early trade on Thursday as the dollar recovered from a dive following the US Federal Reserve's widely expected decision to raise interest rates, although it left the outlook on rates unchanged.
- Spot gold was down 0.17 % at $1,253.20 an ounce, after rising nearly 1 % in the previous session. U.S. gold futures rose 0.55 % at $1,255.50. Gold stocks in Toronto fell overnight by 0.63%. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SLR.
- Crude rose after one of the most-influential voices in world oil markets issued mixed signals about the direction of supply and demand. Futures closed 0.8% higher in New York. The International Energy Agency increased its forecast for 2018 production by nations outside Opec even as it expressed confidence the Saudi Arabia-led group will significantly curb a global oversupply.
- Traders were also confronted with swelling US gasoline stockpiles amid a four-week slide in American crude inventories. The US benchmark has averaged more than $57/barrel since the end of November, when Opec, along with Russia and other major suppliers, agreed to extend production curbs through the end of 2018. Crude inventories in developed nations, the cartel’s key metric for assessing oversupply, have fallen to their lowest level since July 2015, the IEA said.
- In the North Sea, an important source of crude, Ineos Group declared force majeure on its Forties Pipeline System after discovering a hairline crack that forced it to halt oil shipments. West Texas Intermediate for January delivery rose 44 cents to settle at $57.04/b on the New York Mercantile Exchange. Brent for February settlement added 87 cents to end the session at $63.31/b on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $6.23 to February WTI. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, AWE, KAR, ORG, SXY.
- Iron ore prices retreated slightly, as data showed a fall in Chinese steel output. November production fell 8.6% from October to 66.15 million tonnes, although on a year-on-year basis it was up 2.2%.
- This saw steel futures fall in China, with rebar down 1.2% and hot rolled coil marginally lower. However, another fall in inventories softened the blow. According to Steelhome data, rebar stockpiles in China fell to 2.85mt last week, down from 3.0mt the previous week. Coal prices were relatively unchanged. Spot iron ore fell 0.9% or $0.60 to close at $68.93/tonne. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL.
- London Metal Exchange copper closed up 1 % at $US6793 a tonne, having hit the highest since December 4 at $US6847. Copper's chart picture has improved, having closed above the 100-day moving average for two days running. China's primary aluminium production fell for a fifth consecutive month in November, official data showed, as the country's winter restrictions on smelters pushed output to its lowest since February 2015. LME aluminium closed up 2 % at $US2050, its strongest one-day gain since September. Copper stocks: OZL, SFR; Nickel stocks: IGO, WSA; Aluminium stock: AWC.
- In other news: AWE (AWE AU): Mineral Resources Sees Bid for AWE At Top End of Company’s Value; Commonwealth Bank (CBA AU): Head of Strategy Vittoria Shortt Seen as Potential Head for ASB Bank in N.Z.: AFR; Cromwell Property (CMW AU): Senior Secured Rating Cut to Baa3 by Moody’s; Crown Resorts (CWN AU): Unit to Sell Las Vegas Plot for $300 Million; Healthscope (HSO AU): Being pitched as a Potential Takeover Target by Investment Banks: Australian; Macquarie Group (MQG AU), Macquarie Atlas (MQA AU): Selling A$441m Stake in Macquarie Atlas: AFR; News Corp (NWS AU): Disney’s Deal for Fox Gives Rupert Murdoch a $4b Victory; Westfield (WFD AU): Unibail Will Dispose of Some U.S. Regional Malls: CEO Cuvillier; Woolworths (WOW AU): BP Disappointed by Australia Decision on Woolworths Gas Stations; BHP Billiton (BHP AU): Apache, BHP Lead Pack in Plugging Methane Leaks as Chevron Lags;
- Upgraded to neutral at JPMorgan
- Rio Tinto (RIO LN): Rio Tinto downgraded to neutral at JPMorgan
Since USDMXN bounced off $18.50 last month, it has been making solid gains.
USDMXN has recently managed to stay above the 19 handle and it is approaching to retest the key resistance level of $19.20 (38.2% retracement of 2017 high 22.04 and 2017 low 17.45).
The bottoming out price actions (9 months) suggest USDMXN is expected to move higher in the near term.
USDMXN monthly chart
Source: Saxo Bank
Today's Trade information sources: AFR, SMH, CNBC, BBG, WSJ, The Australian, Reuters
-- Edited by Adam Courtenay
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