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ASX poised to extend losses, Wall St mixed



The shares in New York were mixed at noon, as the technological actions mostly rebounded. ASX futures pointed to higher losses. The Australian dollar has risen above the US71 ¢ mark.

Dust was beginning to stabilize after heavy losses throughout Asia and less furious losses across Europe. US equities were recovering, somehow, from the shock of the strong lunge of the previous session.

A series of comments from market watchers, from bears to bulls:

Capital Economics: "The 4% decline in S & P 500 This week suggests investors are starting to consider the prospect of a slowdown in the US economy in response to a more restrictive monetary policy, we believe that this will begin to take place in 201

9, causing a further decline in shares in the United States and elsewhere, such as forcing the Fed to stop raising rates and pushing downward Treasury yields. "

While Capital Economics sees investors adjust to the prospect that the highest US rates will undermine economic growth, the latest economic data is still" very strong "and" it is certainly possible that the recent The fall in the stock market is reversed in the coming days or weeks, after all, what happened in February this year, when the S & P 500 dropped 10% in the wake of another strong increase in Treasury yields ". [1 9659002] Advertising

However, Capital Economics said, "we think that a slowdown in the US economy is not more than a few quarters of a dollar, and we ultimately expect Treasury yields and S & S P 500 end up much lower next year, and not foreseeing anything as dramatic as the global financial crisis, we believe that economic growth has clearly declined significantly by mid-2019. Our forecasts are therefore for the future. S & P 500 down about 15% from its recent peak ".

LPL Financial: "The shares suffered their biggest one-day decline since February, as a combination of higher bond yields, US / China tensions, nervousness over the next mid-term elections, six months of margin gains and concerns Peak earnings season has increased to a big sell-off … The S & P 500 index had 74 consecutive days without a move of 1%, the tenth longest strip in history. In other words, equity markets were penalized and some kind of volatility was likely [19659002] "October is known for spectacular incidents (1929, 1987 and 2008), but it is actually on average in terms of returns. What really should be known is volatility. Incredibly, no month has seen more changes of 1% (up or down) than the month of October for the S & P 500 dating back to 1950.

LPL maintains its upbeat optimism: "I pullbacks are normal, gains of 7-8% each year, they also tend to have three or four recoveries each year (5-10% drops) and at least a 10-20% correction. # 39; year, but history tells us we could get more However, we see the potential for a year-end rally. "

Yardeni Research:" Our Bull / Bear (BBR) report has slipped to 3.04 this week, after climbing eight of the previous nine weeks from 2.90 to 3.32, it was the highest reading since mid-March, while the bullish sentiment fell to 56.3% after a 7.3-fold increase (61.8% from 54.5%) of the previous nine weeks, while the corrections count rose to 25.2% after falling to -7.1 points (19.6 from 26.7) for the nine weeks p recedenti: a week ago, the first had reached the highest level since the end of January, while the second was at the lowest since mid-February y 2012. Meanwhile, the bearish sentiment was once again little changed, falling to 18.5 % this week; it has fluctuated in a narrow range between 17.6% and 18.8% from the beginning of June. The AAII report advanced for the third week at 64.5% last week, after rising from 64.0% to 49.4% in the previous two weeks. Bullish sentiment rose to 45.7% for the second week last week after falling from the previous three weeks from 43.5% to 32.0%, while the bearish sentiment fell for the third week to 25, 1%, after a two-week increase from 24.4% to 32.8%. "

Today's agenda

Local Data: BusinessNZ Manufacturing PMI September

Overseas Data: Trade Balance in China September; Industrial production in the euro zone; Prices for import and export to the USA September, Consumer opinion of the University of Michigan

Market highlights

SPI futures down 53 points or 0.9% to 5772 to 3.20 AEDT

AUD + 0.9% to 71.20 US cents

On Wall St at 12.20: Dow -0.2% S & P 500 -0.7% Nasdaq + 0.4%

A New York, BHP + 0.6% Rio + 0.4% Atlassian + 1.1%

In Europe: Stoxx 50 -1.8% FTSE – 1.9% CAC -1.9% DAX -1.5%

Gold spot + 2 , 1% to $ US1219.78 an ounce to 12.08 pm New York

Crude Brent -2.3% to $ US81.20 a barrel

United States Oil -2.2% to $ US71.58 per barrel

Iron ore + 0.2% to $ USA71.30 per tonne

Dalian iron ore + 0.4% to 514 yuan

Yield at 2 years: 2, 85% US 2.82 Australia%

5 Year Return: USA 3.01% Australia 2.22%

10 Year Return: US 3.16% Australia 2.73% Germany 0.52% [19659002] Gap of 10-year US yield at 3.15 AEDT: 43 basis points points

From today's Financial Review

Rich listeners lose $ 382 million in ASX wipeout: three rich listeners who hold b worst market shares have suffered big losses Thursday

Chanticleer: Managing a bank is no longer a banking problem: when the markets fell, Brian Hartzer and Matt Comyn were in Canberra, proving that managing a bank is an 'other' proposal in the current environment.

Hayne's exaggeration could harm the economy: overburdening banking regulation in the wake of Hayne's investigation could exacerbate the housing crisis, Brian Hartzer told parliamentarians.

United States

LPL US Pricing Data: "This morning's inflation figures are helping to ease stock pressure on prices as the consumer price index weakened more than expected. "

The consumer price index rose 0.1% last month after the 0.2% increase August, said the Department of Labor. In the 12 months up to September, the IPC increased by 2.3%, slowing compared to the 2.7% advance in August.

Excluding the volatile components of food and energy, the IPC increased by 0.1% for the second consecutive month. The so-called core index increased by 0.2 percent in May, June and July.

In the 12 months up to September, the IPC core rose 2.2 percent. The economists interviewed by Reuters predicted that the overall and central CPI index would grow 0.2 percent in September.

Europe

The British shares have closed to a minimum since April as a global sell-off on the stock markets caused by fears of fast-growing rates

The FTSE 100 closed the day down by 1.9. percent, a decline substantially in line with the European benchmarks, all in retreat while the S & P 500 and the Nasdaq were under definition for a second session of heavy losses after their dive on Wednesday.

"The bloodshed for global actions comes as investors adjust to a world of higher US interest rates," said Jasper Lawler of the London Capital Group, explaining that investors were changing bets to so-called growth stocks , like the America of Facebook or Amazon, to "more conservative strategies".

A smaller than expected consumer price increase in the US seemed to weaken the case of an aggressive interest rate hike campaign, but did little to reassure investors on both sides of the market. ;Atlantic.

The unfavorable business news meant that British companies were among the biggest losers in all of Europe.

WH Smith, the best-selling magazine of books and newspapers of the pan-European STOXX 600 index, down 11.5%. He announced plans to restructure his business to cope with lower consumer spending and persistent economic uncertainties.

Third-quarter companies' earnings in Europe are expected to increase by 14% over the previous year, compared to 21.4% expected to increase for the S & P 500, according to IBES Refinitiv.

European equity valuations have fallen to extreme levels. The discount for US equities is close to 20 percent, a gap seen for the last time during the sovereign debt crisis in the period 2009-2012, which has pushed monetary policy upwards in the past few years. euro area.

Asia

China dropped by 5 points, touches four years Threats: heavy losses this week have reignited the specter of market turmoil three years ago that sparked concerns over the stability of the Chinese economy.

The Japanese Nikkei fell to its lowest month on Thursday and suffered its biggest daily drop since March, hit with a sell-off on global stocks, while technology companies and industrial equipment manufacturers underperformed

The Nikkei average fell 3.9% to 22.590.86, the weakest closing level since 10 September.

The benchmark index decreased 8% from a 27-year high of 24,448.07 hits last week.

Analysts have claimed that the Japanese market, which showed signs of overheating, was prone to take profits but, after correction, the market should be supported by sound fundamentals.

"Companies will start to report their July-September earnings soon and positive results should support the downside of the market," said Masahiro Fukuda, director of investment at Fidelity Investments in Japan.

"Increasing returns are not good for stocks, but we will probably see a recovery in the EPS of the companies, which should offset the negative impact of high yields."

While all 33 sub-sectors of Topix were in red, China – related stocks have underperformed others.

SoftBank Corp, which has holdings in global technology companies such as Alibaba, lost 5.8%, reflecting the weakness of global technology stocks.

Currencies

President Donald Trump launched a second day of criticism against the Federal Reserve on Thursday, calling his interest rate increases a "ridiculous" policy that made it more expensive for his administration to finance his growing deficits .

"I'm paying high interest rates because of our Fed. And I wish our Fed does not have to be that aggressive because I think they're making a big mistake," Trump said in a Thursday morning interview on Fox & Friends.

He was also quickly qualified by the director of the National Economic Council Larry Kudlow, who has The Fed was "goal" in policies that responded to a strong economy.

The increase in interest rates is "a sign of economic health, which is something welcome and not feared," Kudlow told CNBC. "The president is not dictating the Fed policy … They are independent, they will do what they will do."

Commodities

China's steel construction futures recovered from the sharp decline observed in all international commodities and on Thursday the equity markets will close higher, while the possible obstacles to Chinese production in view of winter remained in focus

The reference steel futures in Shanghai initially went slightly better, falling 2.1 percent to 3958 yuan ($ 571.12). a ton at the beginning of the session, before closing 0.3% to 4056 yuan per ton.

Hot rolled coil futures plummeted by 3% to 3831 yuan, but gathered to close by 1% to 3909 yuan a ton. [19659002] Markets are still paying close attention to regional plans for winter cuts to industrial production, part of the government's long-running battle against pollution.

The region of the Yangtze River delta in the east of the country, which includes major production centers, is working on a new winter pollution plan similar to that of the northern areas, officials from two local offices said.

"Supply is expected to decline as more regions publish their anti-pollution action plans," said Huatai Futures analysts. in a note.

This week, Shanxi Province, an important coal mining center, promised to cut coking capacity and annual coke production as part of its smog campaign.

Dalian's best-selling coke contract for January delivery closed + 0.4% to 2455 yuan per tonne, while coking coal futures closed at 0.9% to 1366.50 yuan per tonne .

Australian Sharemarket

Australian stocks plunged to record their biggest eight-month decline on Thursday, erasing $ 49.6 billion from the tables as markets sold around the world.

The S & P / ASX 200 index closed 166 points, or 2.7% down to 5883.8, the lowest since April 20 and the worst session since 6 February.

The largest All Ordinaries fell by 170.4 points to 5993.4 after a session on Wall Street.

Street Talk

The construction giant BGC updates the boards, prepares the bankers for sale

IPO wins: the PEXA board votes to bring the company to the ASX

Offers for Blackstone & # 39; s IXOM; $ 1b-plus expected

with Reuters, Bloomberg, AAP

Comments? Questions? Let us know what you think of Before the Bell: timothy.moore@fairfaxmedia.com.au


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