Morgans AM: Monday 20 August 2018

Morgans Financial Limited

US equity markets staged a late push higher last Friday (17 August) after an otherwise subdued session, with investors buoyed by news that the US and China were seemingly plotting a course to end their trade battle - Dow up +111-points or +0.43% (to 25,669.32) and its highest close since 26 February. The broader S&P500 +0.33%, with the Real Estate (up +0.96%), Materials (+0.74) and Consumer Staples (+0.67%) helping to bolster the index against sharp falls for chip stocks Applied Materials Inc (down -9.06%) and Nvidia Corp (-3.91%) following disappointing second quarter results. All eleven primary sectors advanced. The technology centric NASDAQ added +0.13%, erasing an earlier session decline. Tesla Inc fell -8.9% after chief executive officer (CEO) Elon Musk described in an interview an “excruciating” year of work at the electric carmaker in the run-up to his controversial tweet last week about taking the company private. For the week, the Dow rose +1.41% and S&P500 +0.59%, while the Nasdaq lost -0.29%. The Russell 3000 Index, which represents ~98% of all investable assets in the US equities markets, logged an all time closing high. Elsewhere in geopolitics, the Turkish lira fell almost 4% against the US dollar after a Turkish appeals court refused to release American pastor Andrew Brunson, who the Trump administration say is being held illegally and a failure to release him would spark further retaliatory sanctions. Ratings agency Standard & Poor's cut Turkey's credit rating to B+ from BB- last Friday (17 August). There were also reports over the weekend that North Korea is to permit the United Nations' International Civil Aviation Organisation to conduct an on-site inspection on missile launch sites beginning in 2019. Washington also plans to impose new sanctions on Russia from this Wednesday (22 August) and is also expected to impose 25% tariffs on an additional US$16B of Chinese imports.