ASX to open flat, Tropical Storm Harvey dampens Wall St and oil markets

Posted

August 29, 2017 08:51:37

The Australian share market is headed for a flat open, following a tepid performance from Wall Street this morning.

Markets at 7:30am (AEST):

  • ASX SPI 200 futures flat at 5,679, ASX 200 (Monday close) -0.6pc at 5,710
  • AUD: 79.39 US cents, 61.38 British pence, 66.26 euro cents, 86.44 Japanese yen, NZ$1.10
  • US: Dow Jones flat at 21,808, S&P 500 flat at 2,444, Nasdaq +0.3pc at 6,283
  • Europe: FTSE -0.1pc at 7,401, DAX -0.4pc at 12,123, Euro Stoxx 50 -0.5pc at 3,421
  • Commodities: Brent crude -0.7pc at $US52.06/barrel, spot gold +1.4pc at $US1,309/ounce, iron ore -1.6pc at $US77.15/tonne

ASX SPI 200 futures are trading steady at 5,683.

While there is no local economic data out being released, Caltex and Downer EDI are due to report their financial results today.

Harvey drags down Wall St

The Dow and S&P, which both finished flat, were weighed down by the energy and financial sectors.

Every other sector finished in positive territory.

The Nasdaq was the only US index to finish higher, boosted by technology and healthcare stocks.

Oil stocks, in particular, fell as Hurricane Harvey (which has been downgraded to a tropical storm) ravaged the Texas refinery sector. How much damage it caused remains unclear at this stage.

But it resulted in US crude prices dropping by more than 3 per cent, while the global benchmark, Brent crude, fell by around 0.7 per cent.

The share prices of oil giants Exxon Mobil and Chevron fell 0.3 per cent and 0.4 per cent respectively.

Harvey, which was the most powerful hurricane to hit Texas in more than 50 years when it came ashore on Friday, dumped more rain on Houston on Monday.

The flooding could also worsen as engineers release water from overflowing reservoirs to keep it from jumping dams and surging uncontrollably.

Gold prices have risen to an almost 10-month high as investors stocked up on safe-haven assets.

Europe weighed down by currency, stalled Brexit talks

European markets finished lower on Monday as investors paid close attention to moves in oil and digested the impact of Tropical Storm Harvey.

Shares in the London, Frankfurt and Paris stock exchanges fell as the euro reached a two-and-a-half-year high.

This came after European Central Bank president Mario Draghi gave two speeches last week in which he gave no clues about the bank’s next moves for monetary policy.

At the Jackson Hole meeting on Friday, Mr Draghi said that protectionist policies could pose a “serious risk” to the global economy’s growth and that global economic recovery appears to be firming up.

In addition, Federal Reserve chair Janet Yellen said in her Jackson Hole speech that actions taken by regulators since the global financial crisis have made the financial system safer — but that further changes to regulations may still be required.

Brexit negotiations are formally resuming this week with four days of talks coming up.

The EU chief negotiator Michel Barnier said he was concerned at the slow progress of Brexit talks.

“To be honest, I am concerned. Time passes quickly,” Mr Barnier said.

“We must start negotiating seriously. The sooner we remove the ambiguity, the sooner we will be in a position to discuss the future relationship.”

Meanwhile, the UK’s Brexit secretary David Davis called for “imagination and flexibility” to move on.

British officials arrived in Brussels on Monday, hoping to push the EU towards talks about their post-Brexit ties.

But the EU bloc refuses to engage in these talks until an agreement has been reached on London’s exit bill and other “divorce” matters.

Topics:

stockmarket,

currency,

money-and-monetary-policy,

economic-trends,

company-news,

australia

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