Article / 15 December 2017 at 0:09 GMT

Today's Trade: Downbeat ASX drops below 6000

Trading Desk / Saxo Capital Markets
Australia

  • 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.

xxx
 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; 

Broker regradings 

- Upgraded to neutral at JPMorgan
- Rio Tinto (RIO LN): Rio Tinto downgraded to neutral at JPMorgan

USDMXN

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


Today’s Trade is compiled by the Sydney trading desk at Saxo Capital Markets

Today's Trade is brought to you by Saxo Capital Markets (Australia) Pty Ltd ABN 32 110 128 286, AFSL 280372 (Saxo Capital Markets), in association with TradingFloor.com which is the property of Saxo Bank A/S, the parent company of Saxo Capital Markets. TradingFloor.com is a social trading facility offering clients of Saxo Bank Group access to in-depth market news, commentary, analysis and much more.
The content of Today's Trade should not be considered as a ‘personal’ or specific investment advice catered for your specific need, objectives or financial situation, or be construed as an express or implied promise, guarantee or implication by Saxo Capital Markets that clients will profit from the strategies expressed or that losses in connection therewith can or will be limited.
None of the information contained in the daily outlook constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy. Saxo Capital Markets; TradingFloor.com shall not be responsible for any loss arising from any investment based on any forecast or other information contained in the daily outlook. Past performance is not a reliable indicator of future performance. Information contained in this daily outlook may have previously been distributed to; and acted upon; by other clients and persons who have shown interest in Saxo Capital Markets, as well as internal affiliates/employees of Saxo Capital Markets. Any trade ideas or positions contained herein relating to products or services offered by Saxo Capital Markets may be inconsistent to trades/positions entered into by Saxo Capital Markets and/or its affiliates. Further, any information contained may consist of opinions and views of the ‘Sales Trading Desk’ as a team, however does not reflect the ‘specific’ opinion of Saxo Capital Markets.
Trades in accordance with the information contained in the daily outlook, especially, but not limited to, leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the daily outlook do not occur as anticipated. Prior to making any investment or entering into any transaction, you should carefully consider your financial situation and consult your independent financial expert in order to understand the risks involved and ensure the suitability for you of any investment or transaction decision you enter. Any information or opinions in this material are not intended for distribution to, or use by, any person in any jurisdiction or country where such distribution or use would be unlawful. Please refer to our Combined Financial Services Guide & Product Disclosure Statement available via www.saxomarkets.com.au. Please also consider whether acquiring or continuing to hold financial products is suitable for you, prior to trading and investing.
If you would like to unsubscribe from the Daily Outlook, please reply ‘Opt Out’ to this email with your Client ID.
Terms & Agreement | Disclaimer | Financial Services Guide | Privacy Policy | Contact Us |
SAXO CAPITAL MARKETS (AUSTRALIA) PTY LTD
LEVEL 25, 2 PARK STREET SYDNEY NSW 2000 AUSTRALIA

Relevant articles for you

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail