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Global Market Report - 10 January

Lex Hall  |  10 Jan 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is set to edge higher again as trade optimism between China and the US continues to lift global equities and commodity prices.

The SPI200 futures contract was up 10 points, or 0.17 per cent, to 5,738.0 at 8am Sydney time on Thursday, hinting the benchmark ASX/200 will rise for a fourth straight session for the first time since November.

Yesterday, the ASX closed at an eight-week high, thanks to growing optimism about the US-China trade negotiations and the continued surge in oil prices. The benchmark S&P/ASX200 index closed up 55.9 points, or 0.98 per cent, to 5,778.3 at 4.15pm on Wednesday.

The Aussie dollar has also jumped to a three-week high against the greenback, buying 71.78 US cents from 71.55 US cents on Wednesday.

Wall Street rallied again overnight, led by Apple, chipmakers, and other trade-sensitive stocks, on hopes the US and China may be inching towards a trade deal.

In late trade, the Dow Jones Industrial Average was up 0.39 per cent at 23,879.12 points, while the S&P 500 had gained 0.41 per cent to 2,584.96, and the Nasdaq Composite added 0.87 per cent to 6,957.08.

The extension of US-Sino talks and OPEC-led crude output cuts saw oil prices surge more than four per cent, while copper and palladium also rose on hopes of higher China demand.
Gold is up on a weaker US dollar.

ASIA

Asian markets finished broadly higher with shares in Hong Kong leading the region. The Hang Seng is up 2.27 per cent while Japan's Nikkei 225 is up 1.10 per cent and China's Shanghai Composite is up 0.71 per cent.

Geely Automobile Holdings in Hong Kong rose 8.4 per cent and China’s key appliance maker Midea Group rose 5.8 per cent after planning officials flagged policies to boost consumption of cars and home appliances.

Still, Chinese shoppers bought fewer cars last year as trade tensions and a weaker economy contributed to the first annual sales decline in two decades.

Despite this, carmaker Great Wall Motor surged 9.28 per cent after signing an memorandum of understanding with Israel-based technology firm Mobileye, to develop autonomous driving systems for China.

EUROPE

European markets finished higher today with shares in France leading the region. The CAC 40 is up 0.84 per cent while Germany's DAX is up 0.83 per cent and London's FTSE 100 is up 0.66 per cent.

In the UK, homebuilding supplier Taylor Wimpey rose 6.20 per cent after announcing it was on track to meet expectations, despite increasing caution among UK homebuyers as the March Brexit deadline looms.

Elsewhere, Norway’s TGS NOPEC Geophysical Company ASA rose almost 20 per cent amid strong fourth quarter results.

NORTH AMERICA

Wall Street has rallied for a fourth session, propelled by Apple, chipmakers and other trade-sensitive stocks after signs of progress in trade talks between the US and China.

The benchmark S&P 500, now in its longest daily winning streak in nearly four months, is up about 10 per cent from a 20-month low it touched around Christmas, lifted by hopes for a deal between the world's two largest economies, which eased some worries over the impact of the trade spat on global growth.

Market participants were also encouraged by strong US jobs data and recent indications the US Federal Reserve is in no rush to raise interest rates.

The Fed released minutes showing a range of policymakers said in December they could be patient about future interest rate increases and that a few did not support the central bank's rate increase that month.

China pledged to purchase "a substantial amount" of agricultural, energy and manufactured goods and services from the US, the US Trade Representative's office said, as talks wrapped up in Beijing.

The S&P technology index rose 1.50 per cent, with Apple up 1.70 per cent despite a Nikkei report that the company had reduced planned production for its three new iPhone models for the January-March quarter.

The company's shares tumbled about 10 per cent last week after it warned on holiday quarter sales. Its suppliers, which largely include chipmakers, took another beating on Tuesday after Samsung Electronics flagged weak chip demand.

The Philadelphia Semiconductor index gained 2.52 per cent. Chipmakers are among the US multinationals with the highest revenue exposure to China.

Shares of Boeing, which also has a large exposure to China, climbed nearly 1 per cent, with the S&P industrial index gaining 0.63 per cent.

The energy index led other sectors with a 1.50 per cent jump, helped by oil prices at their highest levels in nearly a month.

The CBOE Volatility index, often referred to as an investor fear gauge, dropped half-a-point to a one-month low of 19.85.

The Dow Jones Industrial Average rose 0.39 per cent to finish at 23,879.12 points, while the S&P 500 gained 0.41 per cent to 2,584.96. The Nasdaq Composite added 0.87 per cent to 6,957.08.

Financial stocks rose 0.52 per cent, with Citigroup climbing 2 per cent.

Echoing the Fed minutes released on Wednesday, many policymakers said they could wait on any further interest rate hikes until they had a better handle on whether growing risks will undercut an otherwise solid US economic outlook.

For the S&P, Wednesday's advance marked the benchmark index's longest streak of gains since mid-September, just before it started retreating from its record high.

is content editor for Morningstar Australia

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