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Overseas Market Report - International Markets Roundup

Thursday 16 January 2020 | Close

[Morningstar with AAP]: The S&P 500 rallied through the 3300 mark for the first time on Thursday and the other main US indexes also surged to record highs, fuelled by tech stocks, solid retail sales data and upbeat quarterly earnings from Morgan Stanley.

Thursday 16 January 2020 | Close

Foreign Equities Close Change %Change
Dow Jones (US) 29298 267 0.92
S&P 500 3317 28 0.84
NASDAQ 9357 98 1.06
FTSE 100 Index 7610 -33 -0.43
DAX 30 13429 -3 -0.02
CAC 40 6039 6 0.11
Nikkei 225 (Japan) 23933 17 0.07
HKSE 28883 109 0.38
SSE Composite Index 3074 -16 -0.52
NZ 50 11775 37 0.31

Thursday 16 January 2020 | Close

Commodities US$ Close Change %Change
Aluminium /t 1797 22 1.23
Copper /t 6251 -1 -0.02
Nickel /t 13700 -540 -3.79
Gold /oz 1552 -4 -0.25
Silver /oz 17.9 -0.1 -0.33
Oil - West Texas crude /bbl 58.5 0.7 1.23
Lead /t 2000 7 0.36
Zinc /t 2441 43 1.77

Thursday 16 January 2020 | Close

Currency Close Pts Change % Change
$A vs $US 0.6899 -0.0004 -0.06
$A vs GBP 0.5277 -0.0018 -0.34
$A vs YEN 76.00 0.13 0.17
$A vs EUR 0.6195 0.0004 0.06
$A vs $NZ 1.0389 -0.0030 -0.29
$US vs Euro 0.8977 0.0013 0.14
$US vs UK 0.7648 -0.0019 -0.25
$US vs CHF 0.9645 0.0013 0.13

[Morningstar with AAP]: The S&P 500 rallied through the 3300 mark for the first time on Thursday and the other main US indexes also surged to record highs, fuelled by tech stocks, solid retail sales data and upbeat quarterly earnings from Morgan Stanley.

Asia

China's yuan held steady while stocks fell on Thursday after Beijing and Washington signed a phase one deal to defuse their trade war, with financial markets taking on a cautious tone as many thorny issues remained unresolved.

Chinese stocks, which have also rallied on optimism over a trade truce, showed little further enthusiasm on the deal's signing. While the agreement has helped bolster shaky business confidence, it is only expected to give a modest boost to the cooling economy.

The benchmark Shanghai Composite Index, which gained 7.6 per cent from the end of November through to Wednesday's close, opened higher before stalling on profit-taking. It finished the day down 0.52 per cent. The blue-chip CSI300 index fell 0.42 per cent.

In Hong Kong, the Hang Seng also oscillated between small gains and losses, but eked out a 0.38 per cent gain on the day. The Hang Seng China Enterprises index rose 0.29 per cent.

In Japan, shares were little changed after the trade news. The Nikkei share average added 0.1 per cent to 23,933.13, while the broader Topix eased 0.1 per cent to 1728.72.

Europe

European shares rose on Thursday after the US and China signed an eagerly awaited phase-one trade deal, giving some relief to markets that have been roiled by the 18-month standoff between the world's two-largest economies.

The pan-European STOXX 600 index was up 0.3 per cent by 0857 GMT.

The deal, signed in Washington on Wednesday, still raises questions over daunting purchase commitments of US goods by China, while leaving existing tariffs in place.

However, the prospect of no further escalation in the economically damaging trade war encouraged a slight risk-on mode.

European utility stocks touched their highest levels since late-2008 on strength in power generator RWE. Shares of the company rose amid reports that the German government plans to compensate RWE with around 2.6 billion euros ($2.9 billion) for costs related to the country's planned coal exit.

The European retail subindex gained 0.6 per cent, led by an 11 per cent rise in German meal-kit delivery company HelloFresh after it flagged a stronger 2019.

The stock was also the best performer on the STOXX 600.

German shares rose 0.4 per cent after closing lower a day earlier on dismal GDP data.

Economic growth in the euro zone's largest economy slowed sharply in 2019, highlighting the widespread impact of the trade war on demand for exports from the manufacturing-heavy country.

Oil and gas stocks rose, tracking a rise in oil prices as the trade deal pointed to more Chinese purchases of American energy products, while a drop in US crude inventories also helped.

North America

The S&P 500 rallied through the 3300 mark for the first time on Thursday and the other main US indexes also surged to record highs, fuelled by tech stocks, solid retail sales data and upbeat quarterly earnings from Morgan Stanley.

Morgan Stanley jumped 6.6 per cent to lead the S&P 500 after it beat quarterly profit estimates and raised its performance goals, closing out several big US lenders' earnings on a strong note.

Sentiment was further lifted by data that showed US retail sales rose 0.3 per cent in December, in line with economists' estimates.

The retail numbers indicated the US economy maintained a moderate growth pace at the end of 2019 and eased concerns about the sector's health following disappointing holiday sales reports from Target Corp and J.C. Penney Co Inc.

Technology stocks, which have played an outsized part in the recent rally, made fresh gains. The S&P information technology index added 1.4 per cent to a record high, leading gains among the main sectors. Microsoft Corp rose 1.8 per cent and chipmakers also surged after a strong forecast from top contract chip manufacturer TSMC.

The new highs on Wall Street come after Washington and Beijing on Wednesday signed a deal pausing an 18-month long tariff war that had bruised financial markets and crimped global growth.

China is expected to boost purchases of US goods and services in exchange for the rolling back of some tariffs as part of the deal, but several thorny issues remain unresolved.

Analysts expect profits at S&P 500 companies to have dropped 0.4 per cent in the fourth quarter, but full-year 2020 earnings are estimated to grow 9.6 per cent, according to Refinitiv IBES data. Full-year earnings estimates typically decline as the year advances.

The Russell 2000 index of small-cap stocks jumped 1.36 per cent, its strongest session so far in 2020.

The Dow Jones Industrial Average jumped 0.92 per cent to end at 29,297.64 points, while the S&P 500 gained 0.84 per cent to 3316.89.

The Nasdaq Composite added 1.06 per cent to 9357.13, bringing its gain in 2020 to 4.29 per cent.

Among other stocks, Signet Jewelers soared 40 per cent after raising its 2020 adjusted earnings estimate.

Bank of New York Mellon Corp tumbled 7.8 per cent to the bottom of the S&P 500 after the custodian bank missed profit estimates.

Australian Market

Local Markets Are Expected To Open Higher

Ahead of the local open SPI futures were 36 points higher at 7025.

Thursday 16 January 2020 - close [Morningstar with AAP]: The benchmark Australian stock index has smashed past the 7,000-point level for the first time ever on a wave of investor confidence from a signed trade deal between the US and China after two years of hostilities.

The S&P/ASX200 index on Thursday gained 47 points, or 0.67 per cent, to finish at 7,041.8 points, setting a new record for a third straight day.

The broader All Ordinaries gained 45.1 points, or 0.63 per cent, to similarly set a record high of 7,158.6.

"It's amazing, isn't it," IC Markets general manager Nick Twidale said of breaching 7,000.

"We came into the year looking positive, and we've had little blips up and down, obviously, with what happened with the US and Iran, but it's been relatively smooth sailing - and the fundamentals are in place for us to take another step higher."

While there were still risks from the situations in Hong Kong and the Middle East, barring any change there traders should be able to "buy any dips and watch the dollars roll in" - at least for the short term, Mr Twidale said.

But IG market analyst Kyle Rodda in Melbourne warned that markets were showing signs of irrational exuberance and could be ready for a pullback.

"Stock indices are climbing on very little 'new news', and without terribly strong justification," he wrote.

So far the ASX200 is up 5.4 per cent this year, after gaining 18.4 per cent in all of 2019.

CSL breached the $300 mark for the first time on Thursday, finishing up 1.1 per cent to $300.89 after Credit Suisse raised its price target on Australia's third-largest company to $320.

Ten thousand dollars invested in the blood plasma and vaccine biotech when it was privatised in 1994 would be worth $3.9 million today, Burman Investment chief investment officer Julia Lee pointed out in a tweet.

Shares in Brickworks, Aristocrat Leisure, James Hardie, Ansell and Macquarie all also set all-time highs after gaining between 1.0 and 2.6 per cent, while JB Hi-Fi gained 0.6 per cent to set a new closing high of $41.25.

Seven of the ASX's 11 sectors gained on Thursday, with tech stocks up the most at 1.7 per cent, with WiseTech Global gaining 4.1 per cent to $25.32.

Insurance companies rose, with QBE up 3.4 per cent, Suncorp up 1.4 per cent and IAG up 1.5 per cent.

The big banks were also all up, with Commonwealth rising 1.0 per cent to $84.46, NAB up 0.8 per cent to $25.36, Westpac climbing 0.9 per cent to $24.90 and ANZ rising 0.7 per cent to $25.42.

The mining sector was muted, rising 0.1 per cent, as BHP dipped 0.1 per cent to $40.13, Rio Tinto up one cent to $103.40 and South32 flat at $2.85.

Goldminers mixed and muted, although Newcrest rose 1.0 per cent.

Woodside Petroleum helped prop up the energy sector, rising 0.6 per cent to $36 after announcing that oil production was up three per cent in the December quarter.

The Australian dollar was buying 69.05 US cents, up from 68.96 US cents at Wednesday's close.

ON THE ASX:

* The benchmark S&P/ASX200 index closed up 47 points, or 0.67 per cent, at 7,041.8 points.

* The All Ordinaries was closed up 45.1 points, or 0.63 per cent, at 7,158.6 points.

* At 1710 AEDT, the SPI200 futures index was up one point, or 0.01 per cent, at 6,990 points.

The NZX 50 added 35.87 points (0.30%) to 11773.73

Annual General Meetings today (ASX 300)

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