Overnight: US-China Deal Not Ideal

Investors globally are awaiting the signing of the Phase One deal between China and the USA. Meanwhile, first corporate results did not disappoint.

World Overnight
SPI Overnight (Mar) 6918.00 + 9.00 0.13%
S&P ASX 200 6962.20 + 58.50 0.85%
S&P500 3283.15 – 4.98 – 0.15%
Nasdaq Comp 9251.33 – 22.60 – 0.24%
DJIA 28939.67 + 32.62 0.11%
S&P500 VIX 12.39 + 0.07 0.57%
US 10-year yield 1.82 – 0.03 – 1.62%
USD Index 97.10 – 0.27 – 0.28%
FTSE100 7622.35 + 4.75 0.06%
DAX30 13456.49 + 4.97 0.04%

Greg Peel is still on holidays. In the meantime, Jessica Amir from Bell Direct is providing a snapshot of insights and developments from overseas markets overnight.

By Jessica Amir, Bell Direct

The Australian share market looks set for a very modest open with the futures suggesting a gain of 0.1%/5 points at the open, which should still push the ASX200 to another unprecedented record after it scaled 0.9%/59 pts higher yesterday to its highest level ever 6,962 points.

The subdued start to our session is expected, as the major indices in the US had a choppy and mostly negative session, as news broke that the US won’t be cutting any more China tariffs until after the November presidential election, all the while earnings season kicked off, propping up the blue chip, Dow Jones.

All this comes as the two superpower economies are to ink phase one of the trade agreement on Wednesday in Washington. As part of that deal, Trump said the US would scrap the new round of tariffs and cut existing duties to 7.5% on $120 billion on Chinese goods, while keeping the 25% tax on $250 billion of goods.

J.P. Morgan reported a record annual profit of $36.4 billion with quarterly earnings and revenue beating analyst expectations, with surging bond trading revenue, sending its shares up over 1.5%. Citigroup’s earnings also got a boost from strong fixed-income trading, with the divisions revenue surging 49% sending its shares 2.6% higher.

Those gains helped the Dow end 0.1%/33 points higher while the broader S&P 500 closed -0.2% lower, also bracing for profits this reporting season to fall -2% on a yearly basis in the fourth quarter, according to FactSet research, while the Nasdaq lost -0.24%.

Across the Atlantic Ocean, European stocks wait ever so slightly as traders await phase one of the trade deal being signed. The Stoxx 600 rose 0.3%, the French CAC closed 0.01% higher, the Germany DAX closed flat after gaining 5 points, and FTSE also only modestly rose 0.1% .

Gold slipped -0.2% to US$1,546 an ounce.

Oil rose, snapping its five-day losing streak, adding 0.3% to US$58.39 a barrel.

Iron ore gained 0.5% to US$94.03 a tonne.

Australian dollar tracked steady overnight ahead of the deal being signed and at 69.03 US, holding a week high.

Spot Metals,Minerals & Energy Futures
Gold (oz) 1546.40 – 1.90 – 0.12%
Silver (oz) 17.76 – 0.18 – 1.00%
Copper (lb) 2.82 + 0.02 0.76%
Aluminium (lb) 0.80 + 0.00 0.25%
Lead (lb) 0.87 + 0.01 0.94%
Nickel (lb) 6.23 – 0.13 – 2.01%
Zinc (lb) 1.07 – 0.01 – 0.78%
West Texas Crude 58.23 + 0.15 0.26%
Brent Crude 64.49 + 0.29 0.45%
Iron Ore (t) futures 96.15 + 1.65 1.75%
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
COL COLES GROUP Downgrade to Underweight from Equal-weight Morgan Stanley
DCG DECMIL GROUP Downgrade to Neutral from Buy Citi
EVN EVOLUTION MINING Upgrade to Outperform from Underperform Credit Suisse
Downgrade to Neutral from Outperform Macquarie
NWL NETWEALTH GROUP Upgrade to Buy from Neutral Citi
WOW WOOLWORTHS Upgrade to Equal-weight from Underweight Morgan Stanley
Greg Peel

About Greg Peel

Greg Peel joined Macquarie Bank in 1986 and acquired trading experience in equities, currency, fixed income and commodities derivatives, ultimately being appointed director of equity derivatives trading. He later published In With The Smart Money (a plain English guide to the mysterious world of financial markets and derivatives) and acted as a consultant to boutique investment funds. In 2004 Greg joined FNArena as a contributing writer. He is now a director and principal of the company. Greg compliments the journalistic background of the FNArena team with lengthy experience as a financial markets proprietary trader.

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