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Morning Market Wrap: US markets appear unfazed by pessimistic trade commentary

19 Nov 2019
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US markets touch on record highs despite reports that Chinese trade officials are concerned about President Trumps refusal to reduce current tariffs…

US

All major US markets closed slightly higher after spending most of the overnight session flat to marginally lower. The rally that drove Wall Street to record highs last week, once again, appeared to pause following reports by CNBC that Chinese trade officials are pessimistic about the likelihood of a trade deal being formed anytime soon due to President Trump’s reluctancy to roll back tariffs. Despite the lacklustre movements seen, the Dow Jones, S&P500 and NASDAQ all managed to reset previous highs late in the session.

It seems markets hold high expectations of a trade deal being completed, so when less than favourable news is released, such as last night’s CNBC report, it seems to have a null effect on markets only causing marginal volatility.

Markets appeared to gain marginal support from the issuing of a 90-day extension of trade licences that allow US companies to continue doing business with Chinese telecom giant Huawei Technologies.

ASX

The ASX200 closed 26 points lower at 6,766 on Monday and experienced broad declines as US manufacturing data missed expectations and offset somewhat positive trade announcements that indicated a “constructive” phone call was held between the US and China over the weekend.

Utilities and Telcos were the worst performing sectors closing 1.18% and 0.94% lower respectively as Telstra corporation (TLS) declined 1.39%. The worst performer on the day was Prospa Group (PGL) which plummeted more than 27% following a trade update that indicated profits levels will fall short of previous expectations.

 

 

Commodities and Currencies

Iron ore climbed 0.9% higher to $US85.77 a tonne as steel margins continued to improve in the wake of declines in prices of raw input such as iron ore and coke. Gold closed 0.24% higher at $US1,470.88 an ounce, perhaps, in response to the less-than-favourable CNBC report, however considering the subtle movements seen there is no indication that the significant risk-on movements seen last week are reversing.

 

This article was written by Thomas Brunton – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3633.

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