Morning Notes

09/08/2017 Argonaut Morning Note

Market Update & Important Indicators:

The Dow Jones Industrial Average edged lower, putting the blue-chip index's recent record streak in danger of ending. The Index shed 0.1% or 33 points to 22,085. The S&P 500 also lost ground, shedding 0.2%. Major stock indexes traded in a narrow range throughout the day, with financial shares leading advances at the start of the session before paring gains into the last hour. The day's moves extended a streak of listless trade for the stock market, which has largely drifted in recent sessions as the second-quarter earnings season has wound down. Trading volumes have fallen close to their lows of the year, while the S&P 500 has failed to post a 1% daily move in either direction since the middle of May. The U.S. gold price moved upwards overnight, jumping 0.3% to finish at 1,260.70 US$/oz.

European stocks finished the session at a roughly two-week high, as a drop in the euro helped regional equities push past disappointing trade data from Germany and China that cast doubt on the prospects for those powerhouse economies. The Stoxx Europe 600 closed up a modest 0.2% at 382.65, but scored its strongest finish since July 26, according to FactSet data. That move came as the dollar advanced following a U.S. job-openings report that beat expectations. European stocks had a hard time gaining traction early after figures from Germany showed exports fell by 2.8% on the month in June, the first decline in exports this year. Imports also dropped, but at a faster rate of 4.5%, which meant the trade surplus widened slightly. But the Germany's DAX 30 joined other European markets in rising during the session, and ended up 0.3% at 12,292.05.

Stock markets across Asia were mostly lower after recently hitting a series of multi-year highs, with equities in Japan under pressure from a modest decline in the dollar and lower-than-expected trade figures from China. Japan's export-heavy Nikkei Stock Average was down 0.3%, once again dropping under the 20000 mark. The dollar was last down 0.1% against the yen, adding to losses of over 5% so far this year. China's exports increased 7.2% in July from a year earlier, down from an 11.3% gain in June while imports expanded 11.0% from a year earlier, slower than June's 17.2% expansion, the General Administration of Customs said. Reaction to the trade data was muted in China, with the Shanghai Composite Index flat, the Shenzhen Composite Index up 0.2% and Hong Kong's Hang Seng up 0.4%.

Declines from a morning selloff were maintained the rest of the day in Australian stocks, led by a further slide in Commonwealth Bank. The S&P/ASX 200 underperformed the rest of the region in falling 0.5% to 5743.8. The country's biggest bank was among the biggest index drags, falling to a two-month low after reversing Monday's rebound with a 1.1% drop. CBA will remain in focus on Wednesday as it kicks off the Big Banks' earnings season.

The London Metal Exchange's three-month copper contract closed higher overnight, finishing up 1.03% at $6,480/t. The other base metals were mainly higher. Aluminium prices jumped again, rising 3.7% to 20,017/t as China deepened their capacity cuts. Nickel prices rose 2.2% overnight to 10,592/t, whilst zinc prices jumped 2.5% to finish at 2,918/t. The improved zinc price has largely been driven by Chinese steel prices. Lead prices also improved, jumping 0.9% to 2,362/t. Tin prices lost ground overnight, shedding 2.1% to 20,278/t.

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