Today's Trade: Weakened USD props up resources
- The ASX was up 20 points at the open, with resources showing the lead
- Local and Chinese PMIs today - and a Japanese fiscal announcement this week
- Some fear that these may crimp the ASX - but RBA is widely expected to cut rates
- AUD moves up this morning by 0.10% to around US 0.76 cents
Friday and early trading
At the 1015 AEST (0015 GMT) open, the benchmark S&P/ASX 200 index had lifted 20 points or 0.36 per cent, to 5,582.2 - with the resources sector enjoying the benefits from a sliding US dollar over the weekend.
The big miners were rising in early trade, with BHP Billiton climbing 1.3% to $A19.77 and Rio Tinto advancing 1.5% to $A50.31 after most base metals ended last week on a positive note.
US stocks made most of their advances in the first half of July, as investors bet that global central banks would extend stimulus measures after the UK voted to leave the European Union, and as the June jobs report reassured investors that the economy was improving.
In July, the blue-chip index rose 2.8% after closing at a record seven times, the most for a month since December 2014.
Yet in the last two weeks, the market’s momentum has slowed. The Dow Industrials has moved up or down less than half a percent each trading session this past week. The index fell 24.11 points, or 0.1%, to 18432.24 on Friday, down 0.7% for the week.
On June 30, analysts had expected earnings to fall 5.3%.
The S&P 500 rose 3.54 points on Friday, or 0.2%, to 2173.60 - its second highest close in history - leaving it up 3.6% in July but finishing the week roughly where it started. It also closed at a record seven times during the month.
The UK's FTSE 100 reversed losses to end up 0.05%, with gains capped after two London-listed stocks - Pearson and Essentra - fell to the bottom of the Stoxx 600.
Meanwhile, Germany's Dax jumped 0.61% and France's CAC popped 0.44%. Being the last trading day of the month however, indices showed some stark contrasts.
On the month, the Stoxx 600 jumped 3.64%; the FTSE 100 jumped 3.38%; the French CAC 40 popped 4.77% while the German Dax rose 6.79%.
Statutory group profit before tax was £2.06 billion ($2.71 billion), down 21% from the same period a year ago. Barclays shares however rallied 5.5%.
Rival lender Caixabank posted a 34% rise in profit quarter-over-quarter, also sending shares up 4.5%.
Information sources: Bloomberg, TradingFloor.com
Local markets and commodities
- The S&P/ASX 200 Index futures +0.3%; futures relative to estimated fair value suggest an early gain 0.6%.
- BHP Billiton ADR +0.4% to A$19.54 equivalent, broadly in line with last Sydney close, Rio Tinto ADR little changed at A$43.20 equivalent, 14% discount to last Sydney close.
- Gold futures gained for a second straight week as the dollar weakened and the US economy grew less than expected in the second quarter, boosting demand for the metal as a store of value. Gold futures for December delivery rose 1.2% to settle at $1,357.50/oz on Comex. Prices climbed 2.8% last month. Holdings in exchange-traded funds backed by gold added 2.65 tonnes to 2,002 tonnes on Thursday, data compiled by Bloomberg show.
- Most active silver futures have rallied 9.3% last month. Prices for the September contract added 0.8% Friday to $20.347 an ounce on the Comex. Goldies in Toronto rose 1.67% on Friday. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, SAR, SLR.
- Oil climbed from a three-month low in New York as a weakening dollar bolstered investor appetite for commodities. West Texas Intermediate for September delivery rose 46 cents to close at $41.60/barrel on the New York Mercantile Exchange. Futures touched $40.57/b, the lowest intraday level since April 20. Prices fell 5.9% last week. Total volume traded was 20% below the 100-day average.
- Brent for September settlement, which expired Friday, decreased 24 cents, or 0.6%, to $42.46/b on the London-based ICE Futures Europe exchange. It was the lowest close for a front-month contract since April 8. The more-active October future rose 30 cents to $43.53/b. September Brent closed at a 86-cent premium to WTI. U.S. crude stockpiles increased by 1.67 million barrels last week to 521.1 million as output rose, an Energy Information Administration report showed Wednesday. Supplies remain more than 100 million barrels above the five-year average.
- Gasoline inventories expanded for a third week to 241.5 million barrels, the highest since April. US oil explorers have boosted the number of active rigs by 58 since the start of June to 374, with three added this week, Baker Hughes said on Friday. US producers have expanded drilling in recent weeks after idling more than 1,000 oil rigs since the start of last year. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, DLS, AWE, KAR, ORG, SXY.
- Iron ore price falls 2.2%, according to a price index compiled by Metal Bulletin. Iron-ore stockpiles at ports in China expanded again to cap the biggest monthly increase this year, with holdings piling up in the world’s biggest user of the raw material even as prices increased in July. The stockpiles increased 0.4% to 106.05 million metric tons this week, expanding to the highest level since December 2014, according to Shanghai Steelhome Information Technology.
- The stockpiles are 4.5% higher this month, the biggest increase since December, when they climbed 6.2%. Goldman Sachs flagged last week what it called the “apparent contradiction” of high and rising inventories and resilient prices, and pointed to low stockpiles of steel products in China, according to a report. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, ARI, BCI, SDL.
- Nickel fell as traders awaited further developments on supply disruptions in the Philippines after the metal surged by the most in more than two weeks on Thursday. Nickel, used in stainless steel, fell 0.6% to settle at $10,630/t at 5:57 p.m. on the London Metal Exchange, paring a third straight weekly gain. Copper advanced 0.6% to $4,925 a ton ($2.23 a pound) in London.
- Lead, zinc and tin gained on the LME while Copper futures for September delivery added 0.6% to $2.2215 a pound on the Comex in New York. Copper stocks: PNA, OZL, SFR; Nickel stocks: IGO, WSA; Aluminium stock: AWC.
- In other news: Asciano (AIO): Cut to BBB- from BBB at S&P; outlook stable; ANZ Bank (ANZ), AMP (AMP): AMP may be among potential bidders for ANZ wealth mgmt unit: Australian; BHP Billiton (BHP): Decision to recognise provisions tied to Samarco are credit negative for BHP: Moody’s; Clearview Wealth (CVW): Largest holder Crescent Capital to send out stake sale documents in next 2 weeks: AFR; Commonwealth Bank (CBA), National Australia Bank (NAB), Westpac (WBC): Australian banks tighten lending to property developers: SMH; Fonterra (FSF): Maintains FY17 EPS target NZ50c-NZ60c; NOTE: FY17 Adj. EPS est. NZ$0.518 (6 analysts, range NZ$0.45- NZ$0.56): Bloomberg data; Macquarie Group (MQG): EPH raises bid for OMV’s Gas Connect Austria: Kurier; Mineral Resources (MIN): Shipped 3.06m wmt of ore in 4Q; Northern Star (NST): Set to announce sale of Plutonic mine: Australian; Origin Energy (ORG): Stockyard Hill wind farm auction scheduled to start in Aug.: AFR; Sundance Energy (SEA): Co. in Texas re-fracturing deal with Schlumberger.
Pending orders. See here. Note that we have cancelled the buy limit over IGO (ASX) due to capital raising.
US500.i and EURUSD
The US500 gapped up this morning to make a fresh all time high and the upside momentum is expected to remain strong. The interim support level should now be 2,175 while the next resistance levels could be 2,184 and 2,193. The focus for the Asian indices would be the Chinese manufacturing PMI at 1100 AEST (0100 GMT).
US 500 weekly chart
It looks like a double bottom has been formed above the Brexit low and EURUSD found the interim resistance level at 1.12 handle which is 38.2% Fibonacci retracement level between December 15 low of 1.0525 and the May 16 high 1.1615.
The intersection of the downtrend (from May) and the previous uptrend (from Dec 15) could act as the next key resistance level.
EURUSD monthly chart