OPENING CALL: The Australian share market is expected to open higher. The SPI200 futures contract expected to open up 9 points.
California Gov. Gavin Newsom signed legislation intended to classify some independent contractors as employees eligible for legal protections as companies including Uber and Lyft ramp up their resistance to the change.
Trump Orders Treasury Secretary to ‘Substantially Increase’ Sanctions on Iran President Trump said on Twitter that he has ordered Treasury Secretary Steven Mnuchin to “substantially increase” sanctions on Iran in the wake of attacks on Saudi Arabian oil facilities.
Each Market in Focus
Australian shares snapped a five-session winning streak–the longest in over two months–as energy companies pulled back from their recent rally as crude prices retreated. In only its second decline in 10 days, the S&P/ASX 200 fell 0.2% to 6681.6.
The energy subindex leads losses with a 1.8% drop, narrowing this week’s gain to 3.2% following the attacks on Saudi Arabia’s oil facilities. The heavily weighted big banks ceded the ground picked up Tuesday, faltering alongside telecoms, utilities and consumer
staples. For gold miners, overnight strength offered a tailwind.
U.S. stocks wobbled, then pared declines after the Federal Reserve lowered interest rates but signalled a divided outlook for the rest of the year.
Trading was volatile in the hour after the Fed’s rate decision. Stock selling initially accelerated, sending the Dow Jones Industrial Average down more than 200 points, after the Fed’s policy statement showed officials weren’t in agreement about the prospect of further rate cuts in 2019. That may have come as a disappointment to investors who had
been widely expecting another interest-rate cut by the end of the year.
Stocks gradually chipped away at their losses as Fed Chair Jerome Powell said in his post meeting conference that he felt the U.S. economic outlook remained bright. That put stock indexes on track to end the day well off session lows.
The Dow Jones Industrial Average dropped 81 points, or 0.3%, to 27028. The S&P 500 dropped 0.4% and the Nasdaq Composite shed 0.6%.
Risks like slowing global growth and the prolonged U.S.-China trade fight have taken a toll on many investors’ confidence this year. Still, U.S. stocks have held on to double-digit percentage gains, buoyed by a more upbeat view on the domestic economy.
Even with Wednesday’s declines, the S&P 500 remains up 19% for the year and not far from its all-time high.
Meanwhile, falling shares of industrial companies weighed down stock indexes, with FedEx sliding 13% after cutting its profit forecast for the year late Tuesday and citing a worsening economic backdrop. Shares of competitor United Parcel Service also lost ground, down 1.5% in recent trading.
Tech shares also under performed the broader market, with Roku diving 14% after Comcast said it would offer a free streaming device to internet-only customers.
Energy shares were under pressure as oil prices extended a recent streak of volatility. ConocoPhillips fell 2.6% and Exxon Mobil lost 0.9%.
Gold futures finished with a modest gain, logging a third straight session climb, then moved lower in electronic trading after the U.S. Federal Reserve cut the fed funds interest rate by a quarter point to 1.75%-2%.
The ICE U.S. Dollar Index inched higher after the decision, weighing on
dollar-denominated prices for the yellow metal.
December gold was at $1,509.70 an ounce shortly after the Fed policy statement. The contract settled up $2.40, or 0.2%, at $1,515.80 on Comex, ahead of the Fed decision. That was the highest settlement since Sept. 5, according to FactSet data.
U.S. oil prices fell sharply for a second session, ending 2.1% lower at $58.11 after U.S. data showed a surprising rise in weekly U.S. oil and product inventory data as refinery activity declined sharply.
Analysts say oil was also pressured lower after Trump, responding to an attack on Saudi oil facilities that he said was likely done by Iran, ordered increased Iran sanctions. Many expected a more aggressive response.
The dollar held onto its gains after the Federal Reserve cut interest rates by 25bps. Though the 25bps rate cut was expected, traders saw it as a “hawkish cut” in which officials are vague about the timing of future cuts.
That outcome was supportive for the dollar, making the currency more attractive to yield-seeking investors. The WSJ Dollar Index was up roughly 0.34% at 91.45.
European markets are broadly in positive territory as the euro drops 0.2% against the dollar ahead of the U.S. Federal Reserve’s interest-rate decision later. The Stoxx Europe 600 rose 0.02% to 389.41 while the DAX increased 0.14% and the CAC-40 was up 0.1%.
Hong Kong’s Hang Seng Index ended lower, weighed down by oil and property developer groups. Stocks could take a fresh hit in the next sessions if the Fed doesn’t cut interest rates as expected.
The HSI closed down 0.1% at 26754.12 with Chinese oil majors leading declines as oil prices eased on Saudi Arabia’s efforts to restore output to normal after attacks on its facilities. China Petroleum & Chemical falls 2.1%, while PetroChina and CNOOC lost 1.6% and 1.4% respectively.
Hong Kong developers were also broadly lower with Wharf Real Estate Investment sliding 1.1%. Apple supplier AAC Technologies was the top gainer after jumping 10.2% on upbeat pre-order data for the new iPhone.
The Shanghai Composite rose 0.3% and Korea’s Kospi gained 0.4%, while Japan’s Nikkei slipped 0.2%.
Japan’s exports dropped 8.2% on year last month, a more rapid fall than expected, adding to speculation that the central bank may seek to cut interest rates deeper into negative territory. The weak data came as global uncertainty has boosted the yen, regarded as a haven by investors, by around 1.4% against the U.S. dollar so far this year.
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