Morning report

Morning News Summary

Exercising Central Bank Puts

Global markets burst into life on Tuesday, with Europe and the UK surging early on promises of monetary stimulus from Mario Draghi, before the US joined in and drove higher after Trump spoke of a potential extended meeting with Xi Jinping. Asian markets also gained, bar a dip in Japan.

US stocks driven higher by Trump comments

US stocks charged higher on Tuesday, spurred by US President Trump’s comments on restarting trade talks with China, which brought further optimism to investors who are already giddy with excitement in anticipation that the Federal Reserve will indicate a more accommodative stance on monetary policy following today’s meeting. The S&P 500 rose +1.0% closer to record levels, while the Dow Jones Industrial Average and Nasdaq Composite added +1.4% and +1.6% respectively.

Trump tweeted that he had a ‘very good’ telephone conversation with Chinese President Xi Jinping, and that he wishes to have an extended meeting with Xi. This gave the semiconductor stocks some relief, with the sector comfortably the best performing in the S&P 500, driven by gains from Xilinx (+6.8%), Western Digital (+6.6%), Micron Technology (+6.1%), NVIDIA Corp (+5.9%), Qorvo (+5.5%), Advanced Micro Devices (+5.1%), Broadcom (+5.0%), Applied Materials (+4.7%), Texas Instruments (+3.9%), and Intel (+3.0%). The broader tech sector was also a key contributor, with shares of US-listed Alibaba (+4.2%), Flex (+4.2%), Apple (+2.6%), Netflix (+2.2%), eBay (+2.0%), and Alphabet (+1.6%) all in the green. Shares of Snap surged +10.1% after an analyst expressed increased optimism in the company’s attempts to monetise its Snapchat platform. Boeing continued a recent positive stretch, topping the Dow Jones with a +4.5% surge after securing an order for 200 737 Max jets from IAG (+1.5%) — a key win amid the jet’s ongoing worldwide grounding.

European and UK stocks surge on Draghi promise

European equities were given a boost by comments from ECB President Mario Draghi, promising a stimulus package if economic conditions didn’t improve. The Stoxx Europe 600 rose +1.7%. Shares of Siltronic, a German silicon wafer company, plunged -7.9% lower after the firm cut its outlook for 2019, with sales potentially -10% to -15% lower than previously expected.

The UK’s FTSE 100 gained +1.2%, driven by a rally in the European region following Draghi’s comments, and also by the global push higher. Rolls-Royce (+1.9%) announced it is buying Siemens’s (+2.0%) electric aircraft technology business for an undisclosed sum.

Asian markets broadly higher

Asian markets were broadly higher. Japan was the only major laggard as investors awaited the outcome from the looming central bank meeting. The Hang Seng (+1.0%), Straits Times (+1.0%), Kospi (+0.4%), Taiwan SE (+0.3%) and Shanghai Composite (+0.1%) all rose, while the Nikkei 225 shed -0.7% in a choppy trading session ahead of the BOJ’s meeting.

The ASX 200 added +0.6% after the RBA hinted at further cuts to the cash rate.

Crude and gold up, iron ore down

WTI crude rose +3.4% to US$53.71 and gold rose +0.5% to US$1,345.96, while iron ore fell -US$1.00 to US$108.00/MT.

Today’s events

  • Stats NZ: Balance of payments - March 2019 qtr
  • Pushpay AGM
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