The Monday Report

Daily Market Reports | Sep 11 2017

By Greg Peel

Subdued

The local market appears to have lost interest in pushing higher at present. It’s now been three weeks since the last push towards the 5800 level that since May has been targeted numerous times. Indeed right now it seems former support at 5700 has swung to resistance.

Not only has the result season ended, and a tepid season at that, but the stream of ex-dividends stemming from the season continues to handicap the index. Friday saw a subdued session that reflected more lack of buying than committed selling, as well as ex-divs.

The banks led the index down with a -0.7% fall, following the path of banks in the US. Telcos fell -0.5% as a bounce for Telstra ((TLS)), following an analyst upgrade, again proved fleeting. Energy and materials were lower on dips in commodity prices. On the buy side, the on-again, off-again defensive sector of utilities posted the best performance with a 1.0% gain, probably because it was Friday and there’s much going on in the world at present.

China’s July trade data offered little in the way of support. While Chinese imports rose 13.3% when 10.0% was expected, exports rose 5.5% when 6.0% was expected. Notably, imports of copper were flat for the month, not stronger as the market had been anticipating.

This sparked a profit-taking sell off in copper in London overnight with all base metals following suit.

Irma

Last week in the US was all about the safety trade. The US dollar index has fallen to a new low for the year, as has the US ten-year yield. Gold has risen to a new high. The concern reflected in such moves is mostly to do with North Korea.

It was not a good weekend to go home with a risky position, and a good weekend to play it safe. The major risk was that of North Korea launching another missile to commemorate the national holiday, as this is a popular day for the regime to show off its military might. It didn’t happen, but it was not far from anyone’s thoughts on Friday night.

Front of mind was nevertheless Irma. As the hurricane continued on its path towards Florida, Wall Street was in no mood to make big market plays and instead mostly sat on the sidelines. Coming so soon in the wake of Harvey, the destruction that Irma may bring was all anyone much could talk about.


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