Market Update: Quick View of the US Markets

  • Oct 18, 2018 AEDT
  • Team Kalkine
Market Update: Quick View of the US Markets

The minutes of the Federal Reserve meeting has been released proving the expectations of the market participants right. The released minutes mainly reflected that the US economy needs to brace itself for one more hike in the December meeting. This decision was widely expected by the market players as the global macro events continue to support the US economy. The strong economic environment, increased salaries, corporate borrowing as well as asset values have prompted the Federal Reserve to remain hawkish. The Federal Reserve needs to be kept aside from the political space and talks. The US President Donald Trump has been criticizing the apex bank for being hawkish and adopting quantitative tightening. For more information please click here.

However, Federal Reserve would be working to control inflation and to support measures which would be beneficial for the overall economy. Since the markets are more concerned about the inflows and outflows, they are likely to react negatively to the news of the Fed being hawkish. As a result, Dow Jones Industrial Average, witnessed the negative momentum as the index shed 91.74 points or 0.36% to close at 25,706.68. It seems like the impact of the earnings season is fading which was expected by the market players.

Oil Prices Falls, A Matter of Concern? The emerging markets have witnessed several impacts from the macroeconomic standpoint. The stronger US dollar, higher oil prices have severely impacted the Indian economy. The oil prices have now witnessed the downward trend primarily because of the increased US crude inventories. However, an upward momentum in the US dollar was also witnessed on the heels of the Fed’s decision of raising the interest rates. A rise in the US crude inventories was witnessed even after the US crude production witnessed a decline. Talking about the currency markets, the stronger US dollar might negatively impact the emerging markets’ currencies.

Australian Markets Flat, Employment Data Released: Even though the US markets witnessed a decline, the Australian markets remained more or less flat. S&P/ASX200 ended the session at 5942.4 implying a marginal rise of 3.3 points or 0.1%. Afterpay Touch Group Limited (ASX: APT) and Steadfast Group Limited (ASS: SDF) ended the day higher as these stocks advanced 14.097% and 7.664%, respectively. However, Bellamy's Australia Limited (ASX: BAL) and Orocobre Limited (ASX: ORE) ended the day by declining 7.516% and 7.068%, respectively.

Further, Australian Pharmaceutical Limited (ASX: API) reported their FY 2018 presentation today. Its NPAT in FY 2018 amounted to $54.7 million.

Perseus Mining Limited (ASX: PRU) reported results for three months ending September 2018 today. The company’s gold sales in September quarter stood at 98,361 ounces. For more details click here.

The financial index witnessed the marginal improvement. However, the concerns related to the stricter lending guidelines might impact the overall Australian economy. Another major event today was that the jobs report for September 2018 has been released.

As per the data which was published, the unemployment rate in September 2018 stood at 5% while the expectations were of 5.3%. An important factor which market participants need to know is that the unemployment rate is currently at a level at which the apex bank anticipates that the inflationary, as well as wage pressure, might come up. This level is also known as NAIRU or non-accelerating inflation rate of unemployment. It would interest the investors to know that the Reserve Bank of Australia was not expecting the unemployment rate to reach at this level so early. It was expected that the rate would touch this level by 2020 end.

 

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