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Good morning, Australia!

Craig James
Monday, December 03, 2018

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China and the US have agreed to halt additional tariffs in the hope of securing a broad trade agreement within 90 days. The White House said China will buy a "very substantial" amount of agricultural, energy, industrial and other products. US and China will begin negotiations on issues such as technology transfer, services and agriculture. If the two countries are unable to reach an agreement in 90 days, the 10% tariffs will be raised to 25%. 

How’dy USA!

In US economic data, the Chicago purchasing managers index rose from 58.4 to 66.4 in November (forecast 58).

US share markets ended firmer on Friday. Investors awaited the result of US-China trade talks. The energy sector eased but airlines rose in response to weaker oil prices. Shares in General Electric fell 5.5% on reports of a federal investigation. The Dow Jones rose by almost 200 points or 0.8%. The S&P500 index rose by 0.8% and the Nasdaq index gained 57.5 points or 0.8%. Over the week the Dow rose 5.1%, S&P 500 rose by 4.8% and the Nasdaq rose 5.6% - the biggest weekly gain in over seven years. Over the month the Dow rose 1.7%, S&P 500 rose 1.8% and Nasdaq gained 0.3%.   

US treasury bond prices were higher again on Friday (yields lower). Investors favoured equities over safe-haven bonds and gold. US 2-year yields fell by 2 points to 2.80% and US 10-year yields fell by 4 points to near 2.99%. Over the week US 2-year yields fell by 4.5 points and US 10-year yields fell by 6 points.

Major currencies were mixed against the US dollar in US and European trade compared with the Asia close. The Euro eased from US$1.1395 to US$1.1305 and was near US$1.1315 in late US trade. The Aussie dollar held between US72.85 cents and US73.15 cents and was near US73.18 cents in late US trade. And the Japanese yen eased from 113.35 yen per US dollar to near JPY113.65 and was near JPY113.45 in late US trade. This morning, the Euro is US$1.1355; Aussie at US73.75 cents and Japanese yen at JPY113.46.

Global oil prices fell by over 1% on Friday, largely reversing Thursday's gains. Brent crude fell by US80 cents or 1.3% to US$58.71 a barrel and the US Nymex price fell by US52 cents or 1.0% to US$50.93 a barrel. Over the week Brent lost 0.2% and Nymex rose 1.0%.

Bonjour, Europe

European share markets were weaker on Friday ahead of the US-China meeting on trade issues. The pan-European STOXX600 index fell by 0.2%. The German Dax index lost 0.4% and the UK FTSE index fell by 0.8%. In London, trade, shares of Rio Tinto fell by 1.7% and shares in BHP were down by 1.9%.

Top of the morning, London

Base metal prices were firmer by up to 3.4% on the London Metal Exchange on Friday, with zinc up the most but tin lost 0.7% and copper lost 0.3%. Over the week metals were mixed with nickel up 2.6% and tin lost 2.2%. The gold futures price fell by US$4.40 an ounce or 0.4% to $1,226 an ounce. The spot gold price was trading near US$1,222 an ounce in late US trade. Over the week gold rose by US$2.80 or 0.2%. Iron ore fell by US20 cents or 0.3% to US$65.45 a tonne. Over the week, iron ore fell by US$3.45 or 5%.

G’day, Oz

In Australia, data on home prices is released with the purchasing manager indexes, job ads and Business Indicators publication. In the US, data on vehicle sales and construction spending are released with the ISM manufacturing survey.

Published: Monday, December 03, 2018


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