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Morning (AM) Market Report

Wall Street has sunk 0.5 percent as disappointing forecasts from industrial bellwethers Caterpillar and 3M piled on to concerns over Saudi Arabia's diplomatic isolation, Italy's finances and trade war fears.

Wednesday, 24th October, 2018

All the three major Wall Street indexes were trading below their 200-day moving averages, a key technical indicator of long-term momentum and all 11 major S&P sectors were in the red on Tuesday, continuing what has been a punishing month for US stocks. Caterpillar tumbled 8.3 percent after the heavy-duty equipment maker maintained its 2018 earnings forecast, while 3M Co slid 6.4 percent after the company cut its full-year profit forecast over currency headwinds. The forecasts from the two Dow Industrials triggered alarm bells over the impact of rising borrowing costs, wages and tariffs on corporate profits. Industrial stocks slid 1.90 percent.

Technology stocks also buckled and slid 2.14 percent, in tandem with global peers, over concerns of slowing growth in China and a tepid forecast from Apple supplier AMS AG. Profits of S&P 500 companies are expected to have jumped nearly 22 percent in the third quarter, slower than the previous two quarters, according to Refinitiv data. Growth is expected to slow further in the fourth quarter, as the effects of US tax cuts fade and the impact of tariffs and rising costs rise. Amazon, Alphabet, Microsoft and Intel, all due to report this week, were down between 1.7 percent and 2.6 percent. Apple fell 1.6 percent.

The Dow Jones Industrial Average finished down 125.98 points, or 0.50 percent, at 25,191.43, the S&P 500 was down 15.19 points, or 0.55 percent, at 2,740.69 and the Nasdaq Composite was down 31.09 points, or 0.42 percent, at 7,437.54.

All 11 major S&P sectors were in the red, with the smallest losses posted by the defensive utilities, real estate and consumer staples indexes. Energy stocks fell 2.59 percent, the most among the S&P sectors, as oil prices fell after Saudi Arabia said it could supply more crude quickly if needed. Chipmakers, which rely heavily on China for a significant portion of their revenue, lead the losses among tech stocks. All members of the Philadelphia semiconductor index were in the red, led by Nvidia's 4.4 percent slide.

However, all earnings reports on the day were not disheartening. McDonald's rose 4.7 percent after it beat estimates for quarterly same-store sales on strong demand in international markets. Verizon gained 2.8 percent after beating estimates for profit and net new phone subscribers.

Ahead of the local open SPI futures are unchanged at 5,815.

Foreign Equities Close Change % Change 
Dow Jones (US) 

25191

-126

-0.50
FTSE 100 Index 6955 -88 -1.24
HKSE 25347 -807 -3.08
NASDAQ 7438 -31 -0.42
Nikkei 225 (Japan) 22011 -604 -2.67
NZ50 8673 -129 -1.47
S&P 500  2741 -15 -0.55
Commodities US$ Close Change % Change 
Aluminium  /t 3mth 1983 -12 -0.60
Copper  /t 3mth 6195 -48 -0.77
Gold  /oz 3mth 1230 -7 -0.60
Lead  /t 3mth 1999 10 0.52
Nickel  /t 3mth 12291 -157

-1.26

Oil - West Texas Crude  /t 3mth 66.4 -2.9 -4.22
Zinc  /t 3mth 2722 3 0.09
Currency Close Pts Change % Change 
$A vs $US 0.7084 0.0017 0.24
$A vs GBP 0.5457 0.0004 0.07
$A vs EUR 0.6177 0.0012 0.19
$A vs YEN 79.66

-0.06

-0.08
$A vs NZD 1.0812 0.0022 0.20