‘Technical issue’ shuts ASX on Monday trade

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The Australian Securities Exchange (ASX) closed its trading day earlier on Monday due to technical glitches in the trading platform. Up to $3.5 billion in turnover may have been missed by the Aussie share market after a series of technical difficulties and errors disturbed and ultimately closed the first trading day of the week.

Investors and brokerages can’t help but criticize the exchange’s suspension of the day’s trading session due to the same technical error that caused a 90-minute delay to Monday’s open. The issue was earlier said to have been resolved.

ASX Ltd. gave an earlier announcement in their official website regarding the delay saying, “ASX advises that there will be a delay with the opening of the ASX equities market. We are working to resolve this matter and updates will be provided as they become available.”

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The exchange operator opened at 11:30 a.m. AEST—an hour and a half delay to the usual 10 a.m. opening—because a function that permits it to manage individual shares on its Nasdaq OMX equity trading platform was experiencing a technical issue, according to Matthew Gibbs, a spokesman for ASX in Sydney.

After a 57-minute trading and several reported operational errors, the ASX decided to close for the day. Shares only worth $1.2 billion were traded during the day, which was, according to CommSec market analyst Steven Daghlian, 20 percent of the share value traded the previous Monday.

Even before trading was halted, the ASX’s shares was already sliding by 2.4 percent in Sydney trading, while Australia’s equity gauge, the S&P/ASX 200 Index, experienced modest change.

“It’s been interrupted trade throughout the day so that’s kept the value and volume very light today,” Daghlian said. “From the ASX200 as an index, it’s just below 5,300 points still. So it’s been pretty quiet overall. If we look at the actual percentage moves so far we’re pretty flat and the market is still pretty close to its worst levels in 10 weeks. This is week six now that the market is in the red.”

With the average daily turnover for this year amounting to about $4.6 billion, ASX was unable to estimate the possible cost of the delays or the loss in overall turnover; but CMC Markets chief market analyst Ric Spooner think that traders may not have lost that much amount due to lack of market moving news on Monday morning.

“There are two drivers of how business might be lost, one is how long the market was closed for and secondly is what news has happened during the period it has been closed,” he told AAP.

“I’d say not a great deal has happened this morning, but we’ll never know.”

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With policy meetings by the Bank of Japan and Federal Reserve looming this week, and the release of Reserve Bank of Australia’s (RBA) minutes of its recently held meeting on Tuesday, the glitches’ were very untimely for the investors and traders giving a thorough assessment of their positions.

Australia’s equity market is worth $1.1 trillion, making it the sixth-largest in the Asia-Pacific region.

“I’ve never seen anything quite like this before,” Niv Dagan, the Melbourne-based executive director at Peak Asset Management LLC, said in a phone interview. “It’s frustrating because they said they’d fixed it. We’d hope the ASX sorts things out by tomorrow to allow traders to exit positions before the Fed meeting. You’ve got traders and fund managers looking to change their portfolios before that, and unfortunately, they can’t do that.”

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Dollar Strengthens, Gold Slips on Hawkish Fed comments

The dollar edged higher on Wednesday as the outlook for the U.S. interest rate hike turned positive following the hawkish comments from the Central Bank officials.

The U.S. currency regained its strength after hitting a 7-week low against the yen as the positive views of the Federal Reserve officials boosted the outlook for the greenback.

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Since late last week, the dollar had been on the defensive against other major currencies as weak economic indicators lowered the anticipation for a near-term rate increase.

But it quickly recovered on Wednesday, following the hawkish comments expressed by the Atlanta Fed President Dennis Lockhart, who mentioned that two rate increases this year was a possibility, and by New York President William Dudley, who said there is a likelihood that the Central Bank could boost interest rates as soon as September.

“Hawkish views from Fed officials can prompt short covering in the dollar, but they are not sufficient enough to kick off an uptrend,” said a forex analyst at IG Securities in Tokyo.

“This is because the markets now expect only one or two rate hikes this year, when at the end of 2015 they had expected up to four,” he further added, as he believes that the negative economic developments in Europe and Britain following the Brexit affected the decision of the Central Bank and cancelling out any lift from positive U.S indicators.

The dollar index, which measures the greenbacks strength against other major currencies, was 0.3 percent higher at 95.025, recovering from its seven-week lows of 94.426.

The currency markets will await new hints from comments expected from the St. Louis Fed President James Bullard and the release of the Fed’s July meeting minutes due today at 2 pm Eastern Time.

“I would not rule out September. If the meeting were today, I think the economic data would justify a serious discussion” of whether to increase rates now, the Atlanta Fed President told reporters after his speech on Tuesday.

Gold Edges Lower on Positive Rate Hike Outlook

The price of safe-haven gold weakened on Wednesday, reversing its gains in the previous session as investors await fresh clues from the minutes of the Fed’s July Policy meeting due to be released later in the day.

It pushed the price of the dollar higher, which was up at 101.100 yen on Wednesday, 0.8 percent higher compared to its previous session’s price of 99.550.

The precious metal is very sensitive to the movement of the U.S. rates, as higher interest rates increases the “opportunity cost” of owning gold, which yields no income and costs money to hold.

Spot gold edged lower at $1,343.78 an ounce.

U.S Gold fell 0.67% or $9.10 to trade at $1,347.80 per ounce by 6:41 am ET.

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Greenback Rebounds on Weak GDP Data

The U.S. dollar rebounded from its previous losses after the weak gross domestic product report last week. Following the lost of the greenback was the peak of the Japanese yen as the Bank of Japan disappointed the analysts on their stimulus program.

During the weekend, the dollar traded close to its lowest level in July as the investors had an unfavorable response on the possibility of a rate hike  by September 2017.

In line with this, a director of a currency and rates risk-management company claimed that the GDP was a massive miss, thus, the huge dollar sell off that ensued was not a surprise anymore. He also explained that the immediate risk at the moment was for a bit of further weakness in the U.S. dollar on the moderated monetary tightening view.

However, the U.S dollar recovered earlier today advancing 0.4 percent to 102.42 yen while the dollar index rose 0.1 percent at 95.578.

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Last Friday, the Commerce Department reported an annual growth of 1.2 percent of the U.S. gross domestic product from April to June, lower than the expected 2.6 percent increase by the economists.

A currency strategist  noted that the U.S. dollar advance was stopped in its tracks by the disappointingly weak Q2 GDP figures. He added that the  FOMC statement earlier in the week did not leave the impression that a September hike was likely, and with the poor growth numbers, the odds were downgraded further.

Federal Reserve

The U.S central bank left the interest rate unchanged from its previous policy meeting as the committee awaited for a more stable economic report after the impact of post-Brexit. The Fed noted the improvement of the labor market in June compared to the weak growth in the previous month.

Further, the central bank signaled for a gradual increase of the federal funds rate as it looks for steady inflation rate and better economic reports. On Friday, the nonfarm payrolls data will be released most of the economists agreed that there could be an increase of 175,000 jobs.

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Speaking from a conference in Bali,  Federal Reserve Bank of New York President William Dudley said that it’s premature to rule out further monetary policy tightening this year. On the other hand, Dallas Fed President Robert Kaplan mentioned in his interview that the central bank must be more considerate and should not overreact on the weak GDP report in relation to its intention to raise hike soon.

Bank of Japan

The BOJ disappointed the  investors after its underwhelming stimulus program announced after its two-day policy meeting last week. The central bank of Japan decided to double its annual exchange-traded fund (ETF) purchases to $59 billion and held the negative deposit rate.

Due to the statement of the bank, the yen found its strength again, adding to the bullish trend of the currency. Adding to this, Prime Minister Shinzo Abe is expected to announce a $28 trillion yen fiscal stimulus package on August 2, Tuesday.

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Takuya Kanda, a senior researcher at Gaitame.com Research Institute Ltd, said ‘Dollar-yen is rebounding after being sold off too aggressively, But, if upcoming data strengthens the scenario where a rate increase next month isn’t possible, dollar-yen could break 100 this week.’

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Global Stocks Rally Ahead Fed Decision, Tech Up on Pre-Market

As the market waited for more earnings report for the second quarter, global stocks remained moderately higher supported by the forecast that the Federal Reserve may leave the interest rate unchanged after its policy meeting later today.

Nasdaq 100 futures went up 0.63 percent, while the Dow Jones futures increased 0.18 percent. The S&P 500 advanced 0.17 percent after trading bullish for the past few sessions.

The Federal Reserve is expected to keep its rates as the U.S. economy still couldn’t find a decent recovery from its stability. After delaying the rate hike last month, the central bank will likely push the plan in September or before the end of the year.

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Aside from the Fed meeting, the market closely watched the reports of the Commerce Department and the National Association of Realtors regarding the durable good orders and pending home sales data respectively.

After the downbeat report of the American Petroleum Institute on the crude oil stocks, the government Energy Information Administration will release its weekly  crude stockpile and production as well. During the previous sessions, oil futures extended losses as the market remained to be severely over supplied.

Tech Stocks

Apple advanced 7.48 percent in the pre-market session, but it stayed flat after the market closed. Apple recently reported a decline of its iPhone sales on its third quarter earnings report. The tech juggernaut disclosed a revenue of $42.36 billion and an earnings per share of $1.42, beating the analysts’ expectations. The stock remained to be the biggest company by market capitalization globally.

Meanwhile, tech experts remained optimistic in the earnings report of Facebook as the company sounded successful on its venture on WhatsApp and Messenger. Facebook has indicated recently from the previous reports the development of its Facebook Live, encouraging more users for the application.

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Facebook has been changing hands in light volume, climbing 0.99 percent in the pre-market, but stayed flat to $121.22 with a market capitalization of 345.56 billion. The stock has a price earnings ratio of 74.27. Analysts forecasted an increase of 62 percent on its earnings per share in the second quarter and the revenue to jump by 50 percent or $6 billion.

Auto Industry

After finally closing the deal with Malaysia Airlines, Boeing opened 2.19 percent higher before it ended flat to $134.85. The American aircraft manufacturer had a market capitalization of 87.14 billion, with a dividend yield of 3.23 percent.

Market analysts expected the stock to have an adjusted earnings per share of 37 percent to $2.22. However, the revenue was forecasted to plummet by 2 percent or $24.04. Currently, Boeing Co has a price earnings ratio of 18.21.

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Aside from 50 MAX 737 orders from the Malaysia Airlines, the aircraft company was reported of taking $393 million after tax-charge from its KC-46 tanker program intended for the Airforce. Its Commercial sector is also having an after charge of  approximately $814 million on its 747 program and $847 million from its 787 Dreamliner.

Consumer Products

In other news, Pepsi Corporation surpassed the analysts’ expectations and reported quarterly earnings based on the forecasts of the market experts.

Pepsi’s major competitor, Coca-Cola is expected to have $11.64 billion revenue, down by 4.2 percent and an earnings per share dropping for almost 8 percent. Coca Cola lost 2.47 percent to $42.74 in the session earlier with a market capitalization of 186.49 billion. The stock had a dividend yield of 3.20 percent and a price earnings ratio of 26.45.

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