Market Update & Important Indicators
Wall Street stocks have risen, closing the week on a high note following solid US data on wholesale prices and industrial production. US industrial production increased by a greater-than-expected 0.6 per cent in July, while producer prices rose 0.2 per cent, according to government data. Michael James, managing director of equity trading at Wedbush Securities, said US stocks had been in a holding pattern amid mixed signs on the global economy. Friday's US data was a "positive," he added.
Europe's main stock markets fell slightly at the end of a turbulent week for equities and other financial markets, triggered by concerns over the Chinese and Greek economies. "A swathe of disappointing GDP figures from across the eurozone… merely served to compound the current lack of appetite for risk," said Spreadex analyst Connor Campbell. "It's quite likely we will see additional stimulus from Beijing," said Brenda Kelly, head analyst at London Capital Group.
Asian markets have mainly fallen, weighed down by jitters over the impact of China's yuan devaluation and a fall in oil dragged down energy stocks, while Shanghai rose on hopes for more market intervention. "The yuan devaluation and prospects of an impending rate increase by the Fed have created a very volatile market environment," Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank, told Bloomberg.
The Australian market looks set to open higher following gains on Wall Street following solid US data on wholesale prices and industrial production. At 0827 AEST on Monday, the share price index futures contract was up nine points at 5,300. No major local economic news is expected on Monday. In equities news, Newcrest, Aurizon, FlexiGroup and Mesoblast are slated to post full year results.
US oil prices have rallied a bit in a technical bounce after closing at the lowest level in six and a half years in the prior session. Citi Futures analyst Tim Evans said Market fundamentals "remain soft" with most observers concluding the market will become even more glutted in the period ahead. US oil producers added two more rigs to 672 for the week ending August 14, according to Baker Hughes, in a sign that oil production will likely linger at high levels despite lower crude prices.
Gold has turned slightly lower as the US dollar shifts higher on encouraging US data and as investors weigh the impact of China's currency intervention on the timing for the first US interest rate increase in nearly a decade. "I think there were allocation shifts in the market today," said Phillip Streible, senior market strategist at RJO Futures in Chicago, explaining that it appeared some investors re-allocated their money to oil from precious metals. "The market was caught by surprise by the Chinese currency devaluation and there was some safe-haven buying but physical demand is still not strong and only a test of the $US1,110 could change that," MKS SA head of trading Afshin Nabavi said.
Metals on the LME were mixed overnight with Copper and Zinc down slightly, 0.4% to US$5.157/t & 0.2% to US$1,828/t. Tin and Nickel posted the largest gains up 3.2% to US$15,500/t & 1.4% US$10,568/t. Gold was down slightly 0.1%, trading at US$1,115/oz and Brent declined 1.1% to US$48.66/bbl. The AUD/USD is trading at 0.74.
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