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Good morning, Australia!

Craig James
Monday, November 26, 2018

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How’dy USA!

In US economic data, the Markit 'flash' manufacturing gauge fell from 55.7 to 55.4 in November (forecast 55.7). The services gauge fell from 54.8 to 54.4 (forecast 54.9).

US share markets were weaker in a shortened trading session on Friday. The energy sector fell by 3.3% in response to a slump in oil prices. The S&P retailing sector fell 0.6% despite reports of long lines at checkouts as buyers embraced Black Friday bargains. At the close the Dow Jones was down by almost 179 points or 0.7%. The S&P500 index was lower by 0.7% and the Nasdaq index was lower by 33 points or 0.5%. Over the week the Dow fell by 4.4% with the S&P 500 index down 3.8% and the Nasdaq fell 4.3%.

US treasury bond prices rose again on Friday (yields lower). Investors to some extent favoured safe-haven assets like bonds over equities. But lower oil prices also pointed to declines in headline inflation rates. US 2-year yields fell by 1 point to 2.816% and US 10-year yields fell 2 points to 3.046%. Over the week US 2-year yields rose by 2 points and US 10-year yields fell by 2 points.

Major currencies were weaker against the US dollar in US and European trade compared with the Asian close. The Euro fell from highs near US$1.1420 to lows near US$1.1320 and was near US$1.1340 in late US trade. And the Japanese yen held between 112.65 yen per US dollar and JPY112.95 and was near the weakest levels in late US trade.

The spot gold price was trading near US$1,222 an ounce in late US trade. Over the week gold fell by US20c. Iron ore fell by US$3.15 or 4.4% to US$68.90 a tonne. Over the week, iron ore fell by US$6.20 or 8.3%.

In the US, the Chicago Federal Reserve national activity index is released with the Dallas Fed manufacturing index.

Global oil prices fell between 6-8% on Friday. While traders expect OPEC oil producers to cut output by 1.4 million barrels per day at a December 6 meeting, they’re less optimistic about the outcome of US-China trade talks. The oil market is estimated in surplus by around 0.5 million barrels per day. Brent crude fell by US$3.80 or 6.1% to US$58.80 a barrel and the US Nymex price fell by US$4.21 or 7.7% to US$50.42 a barrel. Over the week Brent fell by 11.9% and Nymex fell by 10.7% - the largest weekly declines since January 2016.

Guten Morgen, Europe

European share markets were mixed on Friday. The oil and gas index fell 2.9% in response to lower oil prices, but airlines rose. And Italian banks rose 1.3% in response to lower bond yields. Investors digested news that the German economy shrank 0.2% in the September quarter. The pan-European STOXX600 index rose by 0.4% but fell 1.1% over the week. The German Dax index rose by 0.5% on Friday but the UK FTSE index lost 0.1%.

Top of the morning, London

Base metal prices were weaker by up to 2.3% on the London Metal Exchange on Friday with tin down the most. But aluminium rose 0.1%. Over the week metals fell by up to 3.9% with nickel down the most. But aluminium rose 0.9% with copper up 0.2%.

In London trade, shares of Rio Tinto fell by 3.3%. 

The gold futures price fell by US$4.80 an ounce or 0.2% to $1,223.20 an ounce. 

G’day, Australia

The Aussie dollar fell from highs near US72.50 cents to US72.20 cents and was near US72.35 cents in late US trade. In Australia, the RBA Governor is speaking at a Payment summit.

Have a great day, Australia!

Published: Monday, November 26, 2018


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