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Global Market Report - 1 November

Lex Hall  |  01 Nov 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open lower after a negative lead from Wall Street and pessimism over a long-term trade deal between the US and China.

The SPI200 futures contract was down 22.0 points, or 0.33 per cent, at 6,617.0 at 8am Sydney time, suggesting an early fall for the benchmark S&P/ASX200 on Friday.

The Australian share market fell for a second day yesterday, with ANZ bank dragging down the heavyweight financial sector.

The benchmark S&P/ASX200 index finished Thursday down 26.1 points, or 0.39 per cent, to 6,663.4 points, while the broader All Ordinaries closed down 21.8 points, or 0.32 per cent, to 6,772.9 points.

Mixed signals around trade gave investors reason for caution after a Bloomberg report said Chinese officials have doubts about whether it is possible to reach a comprehensive long-term trade deal with Washington and US President Donald Trump.

But Trump later said the two countries would soon announce a site where a “Phase One” trade deal will be signed after Chile cancelled a planned summit set for mid-November that was to be the venue for a signing.

On Wall Street, the Dow Jones Industrial Average was down 0.52 per cent, the S&P 500 was down 0.30 per cent and the tech-heavy Nasdaq Composite was down 0.14 per cent.

The Aussie dollar is buying 68.94 US cents from 69.22 US cents on Thursday.

Asia

China stocks ended lower on Thursday, as weak manufacturing data raised concerns over the pace of Beijing’s policy support to bolster the economy.

The blue-chip CSI300 index fell 0.1 per cent to 3,886.75, while the Shanghai Composite Index lost 0.3 per cent to 2,929.06.

Hong Kong stocks closed higher on Thursday after the island city’s central bank cut interest rates, mirroring the US Federal Reserve’s rate-cut announcement on Wednesday.

The Hang Seng index rose 0.9 per cent to 26,906.72, while the China Enterprises index gained 0.5 per cent to 10,533.24.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.41 per cent, while Japan’s Nikkei index closed up 0.37 per cent.

Europe

European shares fell on Thursday, hurt by losses for miners and automakers as doubts grew over the prospect of a trade deal between the US and China, with weak earnings from oil major Royal Dutch Shell adding to the gloom.

A Bloomberg report said that China is doubtful of a long-term trade deal with US President Donald Trump, raising fresh uncertainty about progress between the two countries after an interim trade deal was almost finalised.

The report dashed optimism earlier in the session sparked by the US Federal Reserve lowering borrowing costs for the third time this year on Wednesday.

The pan-European STOXX 600 index ended 0.5 per cent lower but logged its second straight monthly gain after an October packed with corporate earnings reports along with some Brexit and trade twists.

Tariff-exposed miners were down 1.4 per cent, while carmakers lost 1.3 per cent.

However, the biggest decliners were oil and gas producers, which fell 1.7 per cent after heavyweight Royal Dutch Shell slid 4 per cent.

Shell warned uncertain economic conditions could slow its $25 billion share buyback plan. That followed warnings from BP and France’s Total earlier this week about lower oil and gas prices hitting margins.

Airlines also posted some disappointing numbers.

Air France-KLM fell 1 per cent after it said slowing travel demand was likely to hurt ticket sales in the remainder of the year, while British Airways owner IAG said industrial action by pilots at the airline had knocked third-quarter profits.

In the auto sector, a deal between Fiat Chrysler and Peugeot owner PSA to create the world’s fourth-largest automaker lifted the shares of Fiat Chrysler 8.2 per cent.

However, PSA fell about 13 per cent, after having risen nearly 5 per cent in the last three sessions in the run-up to the deal.

Spanish utility Enagas jumped 5.5 per cent after a media report said a Spanish regulator was considering softening proposed cuts to gas grid returns.

North America

US stocks fell on Thursday as conflicting tones surrounding a possible trade deal between the US and China eclipsed strong earnings reports from Apple and Facebook.

The decline was the second for the S&P 500 in the past seven days, after the benchmark index notched intraday record highs in the past three sessions and a closing record in two of the past three days.

The trade-sensitive industrials sector lost 1.14 per cent, while China-exposed chipmakers also fell, sending the Philadelphia Semiconductor index down 0.62 per cent.

However, corporate earnings were a bright spot. Apple Inc rose 2.26 per cent after the iPhone maker forecast sales for the holiday shopping quarter ahead of expectations.

Facebook Inc gained 1.81 per cent after reporting an uptick in users in lucrative markets and its third straight rise in quarterly sales growth.

The Dow Jones Industrial Average fell 140.46 points, or 0.52 per cent, to 27,046.23, the S&P 500 lost 9.21 points, or 0.30 per cent, to 3,037.56 and the Nasdaq Composite dropped 11.62 points, or 0.14 per cent, to 8,292.36.

Earnings for the quarter are now expected to decline 0.8 per cent, according to Refinitiv data, an improvement from the 2.2 per cent decline expected at the start of the month.

Data on Thursday showed a marginal rise in consumer spending in September, casting doubts on consumers’ ability to continue driving the economy, a key pillar of the current economic environment.

The Labor Department’s October jobs data on Friday will be closely watched after the Fed signalled on Wednesday there would be no further cuts unless the economy takes a negative turn.

Among other stocks, Estee Lauder Cos Inc fell 3.62 per cent after the cosmetics maker cut its forecast for full-year profit.

Kraft Heinz Co jumped 13.44 per cent as the packaged foods company said it was spending more on marketing key brands next year, after reporting a better-than-expected third-quarter profit.

 

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