Day Trading Pre Open - 19 March 2018

Good Morning Fellow Traders,

A roller coaster session on the Australian sharemarket finished firmly in the black as Wesfarmers’ Coles demerger plan sparked a flurry of buying activity in hopes the conglomerate might also then go on the acquisition trail.


In a deal worth an estimated $20 billion, Coles’ shares will be listed with Wesfarmers retaining a 20 per cent stake.
“As investors examine Wesfarmers’ proposals its likely traders will leap to speculation about possible acquisitions,” CMC Markets chief strategist Michael McCarthy said. “The diverse portfolio of businesses under the Wesfarmers umbrella mean there are few limits to the range of potential targets.

The Australian dollar tumbled US0.8¢ to US77.90¢ as the US dollar rallied following comments by Larry Kudlow, US President Donald Trumps new economic adviser that he would “buy King Dollar and I would sell gold”.
He added that no-one had ever devalued their currency into prosperity and that he would like to see the dollar a “wee” bit stronger.

Government 10-year yields dropped 2.3 points to 2.682 per cent and US 10-years firmed one pint to 2.83 per cent as global investors assessed the risks for a full blow trade war.

Mr Kudlow noted the “the EU has quotas on cars and the US has to pay high VATs in the EU”, and that China had earned a “tough response” for not playing by the rules of trade.

The Shanghai composite index was marginally weaker at the close of the ASX.

Spot iron ore firmed 0.4 per cent to $US73.01 a tonne .

A reasonable start to the week is expected for the Australian market but much of investors' attention will be focused on the US Federal Reserve's predicted interest rate move.

Australian share futures trading over the weekend pointed to a 25-point gain come Monday's open, after the benchmark S&P/ASX200 index closed 28.5 points, or 0.48 per cent higher at 5,949.4 points on Friday.

That comes on the back of modest gains for the Dow Jones and S&P 500 on Friday local time (Saturday AEDT).
The greenback also improved against the Australian dollar, which dipped to 77.05 US cents.

AMP Capital's chief economist Shane Oliver said this seemed to reflect the market starting to allow for the highly likely rise of US interest rates on Thursday Australia time.

The US Federal Reserve is almost certain to move the cash rate 25 basis points to 1.75 on Wednesday local time.
That'll mean Australia's cash rate - stuck at 1.50 since August 2016 - will be lower than its American counterpart for the first time in more than a decade.

Dr Oliver said attention will be on the Fed's outlook for the US economy and a quarterly survey of its top officials on the number of rate hikes expected in 2018.
The last so-called 'dot plot survey' indicated three rate rises.
That'll be the main focus particularly given the concern in February about rising inflation in the US and rising interest rates, Dr Oliver said.

"Even if the Fed does go to four hikes this year, it will probably still emphasise that it's likely to be gradual."
In the local market, the unemployment rate isn't expected to move when official job figures are released on Thursday.

The anticipated 10,000 extra jobs are expected to be cancelled out by a small boost to the participation rate.

The Reserve Bank on Tuesday is also due to release the minutes from its March meeting a fortnight after it left rates on hold.

The S&P 500 and the Dow Industrials rose, boosted by strong industrial output numbers, though all three of Wall Street's major indexes posted losses for the week.

February industrial production jumped 1.1 per cent, the largest increase in four months.

Energy led the major sectors of the S&P 500 with a 1.0 per cent gain, as oil prices lifted 1.7 per cent.

"Today, there are not a lot of headlines out of Washington, so the focus is more on the economy," said Keith Lerner, chief market strategist at SunTrust Advisory Services in Atlanta.

Friday's gains came at the end of a rocky week dominated by concerns of a US trade war with China and political turmoil, which began with the ouster of Secretary of State Rex Tillerson.

Stocks traded in a narrow range, Lerner said, as investors unwound positions in futures and options contracts expiring on Friday, in a phenomenon known as "quadruple-witching."

The Nasdaq was barely changed at market close.

Investors were also looking ahead to next week, when the Federal Reserve is expected to raise benchmark US interest rates. Rate-sensitive sectors, such as utilities and real estate, rose on Friday, but they could perform poorly if rates increase sharply.

"Many portfolio managers are starting to anticipate that eventually, maybe not at this meeting but in future months, that the Fed will become a little bit more hawkish in its behaviour," said Chad Morganlander, portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey.

The Dow Jones Industrial Average rose 72.85 points, or 0.29 per cent, to end the week at 24,946.51, the S&P 500 gained 4.68 points, or 0.17 per cent, to 2,752.01 and the Nasdaq Composite added 0.25 point, or 0 per cent, to 7,481.99.

For the week, the Dow fell 1.57 per cent, the S&P lost 1.04 per cent, and the Nasdaq dropped 1.27 per cent.


Advancing issues outnumbered declining ones on the NYSE by a 2.01-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favoured advancers.
The S&P 500 posted 25 new 52-week highs and three new lows; the Nasdaq Composite recorded 178 new highs and 50 new lows.
Volume on US exchanges was 9.54 billion shares, compared to the 7.2 billion average over the last 20 trading days.

Source: Netwealth Morning Business Roundup

Feeling like I should hand over my apron to the Master Chefs of the Weekend AM Lounge who obviously have considerable prowess when it comes to cooking poached eggs.

Serving up a belated St Patrick's Day brekkie - Vegetable Omelette, Spinach and Banana Waffles and an All Green Smoothie.







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Happy trading, play nicely and make informed decisions.