UNIT University Network for Investing and Trading UniMelb

Market Wrap 26/05/2019

By: Taha Bhatti


Indices

U.S. and Asian stock markets dropped this week as China and the US further escalate their trade-war stances. S&P500 has dropped 1.11% as investors becomes increasingly worried about the future of trade talks. Chinese markets were mixed after a third week of losses. Whilst the Shenzen composite fell 0.48% on Friday, the Shanghai composite closed flat. The ASX records its first loss after a six-day rally since the federal election. The ASX200 Index fell by 0.55 per cent to 6,456, while the All Ordinaries dropped by 0.59 per cent to 6,545. Indian markets rallied with the Nifty 50 up 0.77% and the Sensex up 0.78% after Prime Minister Narendra Modi’s re-election on Thursday. Elsewhere, the Japanese Nikkei 225 fell 0.16% to 21,117.22 and South Korea’s Kospi fell 0.69% to 2,045.31.

Banks

The major banks were the major catalyst for the slide in Australian markets on Thursday. Westpac fell 2.3 per cent to $28.16 following reports of credit tightening for non-institutional property borrowers. Commonwealth Bank dropped 1.1 per cent to $78.15, ANZ shares closed 1.6 per cent lower to $27.94, and NAB decreased 1.4 per cent to $25.78.

Commodities

Commodities slumped across the board this week as traders prepared for an escalating trade war. West Texas Intermediate crude bounced back on Friday after an eight-week low, reaching $68.53 a barrel. Gold remained neutral as it gained less than 0.1% to $1,283.83 an ounce.

Forex

The dollar index last traded at 97.696 on Friday, falling from an earlier high of 97. 906.The onshore Yuan reached its lowest level since 2018, falling almost 2.7% to around 6.9182 per dollar. The Australian dollar rallied to $0.6896 from below $0.6880. The pound weakened against the euro for a record 14th day due to uncertainty over Theresa May’s position in power and the U.K.’s Brexit strategy.

Bonds

The yield on 10-year Treasuries decreased three basis points to 2.36% whilst the yield on two-year Treasuries dipped three basis points to 2.19%. Australian’s 10-year bond yield dropped five basis points to 1.53%.
Other Assets

Bitcoin fell back to an intraday low of $7,530 before rallying again and topping out at $7,940. It is currently trading at $7,850, up almost 3 percent on Friday.


Sources: AFR, Bloomberg, Wall Street Journal, CNBC

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