Wall Street ends week in the red: Aus shares to defy leads and open higher

Market Reports

by Anna Napoli

The Australian share market looks set to open in positive territory despite weak leads from US and  European markets on the back of concerns about the Turkish currency. On Friday the Turkish lira fell by more than 14 per cent and hit a record low against the US dollar rattling global markets. The three major US indexes closed lower as the Dow erased its gains for the month. The Nasdaq snapped an 8 day winning streak. Bank shares led the downward charge with Bank of America, Morgan Stanley and Goldman Sachs all shedding at least 1 per cent. Tech shares also dropped with Facebook, Amazon and Alphabet all lower.

The Turkish lira has plummeted for a number of reasons including the central bank's refusal to raise interest rates to support it as well as a recent ramp up in U.S. sanctions.

On the commodities front, global oil prices rose on Friday as U.S. sanctions against Iran looked set to tighten supply while gold prices stabilized, with the crisis engulfing Turkey's lira boosting the US dollar. Iron Ore fell by around US65 cents. This morning the futures for iron ore are suggesting a 0.9 per cent fall.

The Australian dollar dropped more than a cent over the weekend to levels last seen in early 2017 following concerns about the Turkish currency.

US economic news

Both headline and core inflation rose by 0.2 per cent in July as expected. Economists say the steady increase in inflation pressures keeps the Federal Reserve on track to gradually raise interest rates. Hourly and weekly earnings decreased 0.2 per cent over the one month period and increased only fractionally on the same time last year.

Local economic news

On Monday the Reserve Bank releases the estimates of credit and debit card lending for June, on Tuesday the NAB Business survey is due, on Wednesday all eyes will be on the Wage price index, an increase in the minimum wage and new Enterprise Bargaining Agreements are expected to push wages up by around 0.6 per cent during the quarter. Also out on Wednesday, the Westpac and Melbourne Institute monthly consumer confidence. Finally, on Thursday we can expect the July employment report from the ABS.

Markets

Wall Street closed lower on Friday. The Dow Jones Industrial Average lost 0.8 per cent to close at 25,313, the S&P 500 fell 0.7 per cent to close at 2,833 and the NASDAQ closed 0.7 per cent lower to 7839.

European markets closed lower on Friday: London’s FTSE fell almost 1 per cent, Paris dropped 1.6 per cent and Frankfurt decreased almost 2 per cent.

Asian markets closed mixed on Friday, Tokyo’s Nikkei closed 1.3% lower, Hong Kong’s Hang Seng fell 0.8 per cent and China’s Shanghai Composite was up 0.03 per cent.

Back home, the SPI futures are pointing to a 11pts gain. On Friday, the Australian share market closed lower with the S&P/ASX 200 Index closing down 19 points to 6278.

Company news

Metcash (ASX:MTS) has announced that the Market Price for its Off-Market Buy-Back is $2.6318. The Market Price is the volume weighted average price of Metcash ordinary shares on the ASX on the five days up to and including last Friday. The wholesaler has invited eligible shareholders to tender some or all of their shares at a discount of between 8 and 14 per cent to the market price. The results of the buy back are due to be announced on the 13th of August. Shares in Metcash (ASX:MTS) closed 3.42 per cent higher to $2.72 on Friday.


Reporting season

Aurizon Holdings (ASX:AZJ), Bendigo & Adelaide Bank (ASX:BEN) and JB Hi-Fi Ltd (ASX:JBH) are set to report earnings  today.

Currencies

One Australian Dollar at 7:40AM was buying US72.85 cents, 57.12 Pence Sterling, 80.54 Yen and 64.01 Euro cents.

Commodities

Iron ore futures are pointing to a 0.9 per cent fall.
Gold has lost $0.90 to $US1219 an ounce.
Silver was down 17 cents to $US15.29 an ounce.
Oil gained $0.80 to $US66.94 a barrel.

Cryptocurrencies

The three most traded cryptocurrencies are trading lower: Bitcoin has lost 1.2 per cent to US$6,340, Ethereum has fallen 1.6 per cent to US$321 and EOS has dropped 2.5 per cent to US$5.06.