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Good morning, Australia

Craig James
Monday, August 19, 2019

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In US data, housing starts fell by 4.0% in July to a 1.191 million annual rate (forecast 1.257m). But building permits rose by 8.4% to a 1.336m annual rate (forecast 1.27m). Consumer sentiment fell from 98.4 to 92.1 in August (forecast 97.2).

US share markets rose on Friday with investors encouraged by hopes of German fiscal stimulus. Shares in chipmaker Nvidia rose 7.3% after its earnings result. Shares in General Electric rose by 9.7% after Chief Executive Officer Larry Culp bought nearly $2 million in shares. So far 459 of the companies in the S&P 500 have posted earnings results. Of those, 73% beat Street estimates, according to Refinitiv data. Second quarter earnings are up 2.9% on the year. The Dow Jones rose by almost 307 points or 1.2% with the S&P500 up by 1.4%, while the Nasdaq gained 129 points or 1.7%. Over the week the Dow lost 1.5%, the S&P 500 index fell 1.0% and the Nasdaq fell by 0.8%.

US treasuries were mixed on Friday as traders squared positions and booked profits at the end of the week. Equities and commodities rose but economic data was mixed. US 2-year yields fell by 2 points to near 1.48% and US 10-year yields rose by 1 point to near 1.54%. Over the week US 2-year yields fell by 15 points and US 10-year yields fell by 9 points.

Bonjour Europe

European share markets rose on Friday. There were reports in Der Spiegel magazine that the German coalition government would be prepared to ditch its balanced budget rule and take on new debt to engage in fiscal stimulus. Banks rose by 2.4%. The pan-European STOXX600 index rose by 1.2%, the German Dax rose by 1.3% and the UK FTSE gained 0.7%. In London trade, shares of Rio Tinto fell by 0.5% and BHP lost 1.0%.

Hello World!

Major currencies were mixed against the US dollar in US and European trade compared with the end of Asian trade. The Euro rose from near US$1.1065 to US$1.1105 and was near US$1.1090 in late US trade. The Aussie dollar held between US67.70 cents and US67.95 cents and was near US67.80 cents in late US trade. The Japanese yen eased from near 106.05 yen per US dollar to JPY106.48 and was near JPY106.35 in late US trade.

Global oil prices rose by 0.7% on Friday on expectations of stimulus by global central banks. But OPEC cut its forecasts of global oil demand. And the number of oil rigs in operation in the US rose from 764 to 770 in the past week. The Brent crude price rose by US41 cents or 0.7% to US$58.64 a barrel. And the US Nymex price rose by US40 cents or 0.7% to US$54.87 a barrel. Over the week Brent rose by 0.2% and Nymex rose by 0.7%.

Base metal prices fell by up to 3.4% on the London Metal Exchange on Friday. Tin fell the most while zinc and copper eased up to 0.2%. But aluminium rose by 0.5%. Over the week metals were mixed with nickel, aluminium and zinc higher - nickel rose by 4.6%. Other metals fell with tin down 2.1%.

The gold futures price fell by US$7.60 or 0.5% to US$1,523.60 an ounce. The spot gold price was trading near US$1,514 an ounce in late US trade. Over the week gold rose by US$15.10 or 1.0%. Iron ore rose by US75 cents or 0.8% to US$89.55 a tonne. Over the week iron ore fell by US$5.25 or 5.5%.

G’day Australia

In Australia, no major economic data is expected. In the US, no major economic data is expected.

Published: Monday, August 19, 2019

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