UNIT University Network for Investing and Trading UniMelb

Market Wrap 17/08/2018

By: Michael Lee


Equities:

ASX 200 closed on a brighter note, up 1% for the week, after the latest positive jobless report showed an improvement in the unemployment rate falling to 5.3% in July, the lowest since 2012, according to Australian Bureau of Statistics. However, Deputy Labor leader Tanya Plibersek expressed concerns over the drop in the participation rate from 65.7% to 65.5%. Market movers for the week included Telstra which jumped almost 6% on Thursday after announcing a decrease of 8.9% in NPAT for 2018 and its plan to increase the cost reduction program to $2.5 billion by 2022. Treasury Wine Estates and CSL followed a similar trajectory, gaining 4.5% and 6.4%. Treasury Wine forecasted a 25% increase in NPAT for the next financial year, while CSL recorded 29% increase in NPAT to $US1.73 billion for FY 2018. Globally, as the confrontation between US and Turkey continued to roil, the global equity market saw more economic uncertainties with S&P500 and DAX falling by 0.8% and 1.6% respectively on Wednesday before recovering. The Emerging market index (MSCI EM) index plunged by over 1%, the most in six months on Wednesday, and approached this year’s low on concerns over capital outflows, due to the combination of continuous rise of the Fed funds rate and the potential spill from the turmoil in the Turkish economy, after President Trump slapped tariffs of 20% and 50% on its aluminum and steel. On the US-China relations front, the meeting between the Chinese delegation led by Wang and an American group led by Malpass marked the first formal talk since early June. This rekindled the hope of relieved trade tensions between the largest two economies.

Commodities:

The Bloomberg Commodity Index recorded its lowest point this year on Wednesday as WTI crude oil dropped by 3% to $US 65.01 and base metal prices plunged even more by 7.3% on the London Metal Exchange. Despite geographical conflicts in US-Turkey and US-China relations, precious metals, such as gold dropped below $US 1176, on the back of a stronger US dollar.

Forex:

After the Turkish Lira shed over 25% of its value on Monday to $US 0.14 per Lira since last week, the currency recovered to $0.17, following the announcement of Qatar assisting funding package of $US15 billion on Wednesday. The AUD continued its slide against the greenback, hitting this year’s low at $0.72 per AUD.

Bonds:

US treasury continued to climb with 3 month yield at 2.06%, the 12 month at 2.45%, the 5 year at 2.75% and 10 year at 2.88%. The flattening of the yield curve in US is evident, compared to the Australian government bond with the 2 year yield at 1.99%, the 5 year at 2.17% and the 10 year at 2.55%.

Other:

Bitcoin recently traded at levels around $6400, after reaching over $8000 in late July. Factors such as falling prices and a rising hash rate — which measures computing power might have squeezed some small cryptocurrency miners. Despite increasing difficulty in mining new coins, major expansions from large, efficient miners continued with strong demand for top-notch technology from semiconductor makers, such as Nvidia and TSMC.


Source: AFR, Bloomberg, Financial Times

Similar Posts