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Global Market Report - 10 January

Lex Hall  |  10 Jan 2020Text size  Decrease  Increase  |  
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Australia

Early gains are expected on the Australian share market amid optimism about a US-China trade deal.

At 7am Sydney time the SPI200 futures contract was up 15 points, or 0.22 per cent, to $68.30, after US investors gained hope from China’s commerce ministry which said Vice Premier Liu will sign a phase one trade agreement in Washington next week.

The Australian share market hit a record closing high yesterday on a relief rally after the US-Iranian conflict de-escalated following days of tension.

The benchmark S&P/ASX200 index closed on Thursday up 56.6 points, or 0.83 per cent, to 6874.2 points, while the broader All Ordinaries was up 61.3 points, or 0.88 per cent, to 6,991.4 points.

Easing tensions between Iran and the US, following attacks from each country in the Middle East, also helped Wall Street share prices.

The Dow Jones Industrial Average rose 0.74 per cent, the S&P 500 gained 0.67 per cent and the Nasdaq Composite added 0.81 per cent.

The Australian dollar this morning was buying US68.51 cents, down from US69.74c at Thursday’s close. 

Asia

China stocks ended higher on Thursday, largely erasing losses from the previous session, as tensions in the Middle East mitigated after remarks from the United States and Iran.

The blue-chip CSI300 index closed 1.3 per cent higher at 4164.37, while the Shanghai Composite Index gained 0.9 per cent to 3094.88.

Hong Kong stocks staged a strong rally on Thursday, erasing all losses from the previous session, as US-Iran drew back from the brink and investors cheered signs of Sino-US trade progress.

The Hang Seng index rose 1.7 per cent, to 28,561.00, while the China Enterprises Index gained 1.8 per cent, to 11,281.26 points.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.42 per cent, while Japan’s Nikkei index closed up 2.31 per cent. 

Europe

European stocks picked up their record rally on Thursday as the US and Iran signalled a desire to avoid further conflict, while rising expectations that a phase one US-China trade deal will be signed next week also provided a lift.

A 1.3 per cent gain for Germany's trade-sensitive DAX stood out among regional peers, also benefiting from data showing better-than-expected industrial output in November that dispelled any remaining worries about a recession in Europe's economic powerhouse.

The pan-regional STOXX 600 hit an intraday record high in Thursday’s session, rising for the third straight day.

The benchmark index saw its best annual percentage gain last year since the global financial crisis, but it had pulled back about as much as 2 per cent from its record levels after last week’s killing of a top Iranian general by the US fanned fears of an all-out conflict in the region.

Mirroring strength in its US peers, technology index touched a near 19-year high and was among the best performing European sub-sectors.

Chipmaker Dialog Semiconductor as well as anti-virus maker Avast gained about 3 per cent each after Bank of America Global Research raised its price objective for both the stocks.

It was a gloomy day for British retailers, however, as a spate of reports reflected a challenging Christmas period.

Marks & Spencer suffered its worst day in a year as it took a hit from waste in its food business and weak menswear and gift sales.

Britain’s biggest retailer Tesco ground out a 0.1 per cent rise in UK sales, enough to beat its main rivals amid the toughest high street conditions in years. Its shares rose about 1 per cent.

Whilst M&S has farther to go to catch-up online than Tesco, online rivals continue to take a toll on both, CityIndex analyst Ken Odeluga wrote in a note.

Brussels-listed Argenx led gains on the STOXX 600 after the antibody therapeutics developer updated its 2020 pipeline and flagged positive results from a midstage study. 

North America

Major US stock indexes registered record closing highs on Thursday as optimism about a US-China trade deal firmed and as Apple and other market heavyweights posted strong gains.

Also helping the market were easing concerns over tensions between the US and Iran. US President Donald Trump refrained from ordering more military action, and Iran’s foreign minister said the missile strikes on Iraqi bases that house US forces had “concluded” Tehran’s response.

Apple Inc gained 2.1 per cent on twin support from data showing iPhone sales jumped more than 18 per cent in China in December, as well as a price target hike by Jefferies on expectations of a strong finish to 2019. The S&P 500 technology sector rose 1.1 per cent, the top gainer among sectors.

The financial index ended up 0.77 per cent after bullish brokerage comments on Citigroup Inc and Goldman Sachs Group Inc ahead of their earnings next week.

On trade, China’s commerce ministry said Vice Premier Liu He will sign a phase one deal in Washington next week.

Trump said his administration will start negotiating the phase two trade agreement soon but that he might wait to complete any agreement until after November’s presidential election.

The Dow Jones Industrial Average rose 211.81 points, or 0.74 per cent, to 28,956.9, the S&P 500 gained 21.65 points, or 0.67 per cent, to 3274.7 and the Nasdaq Composite added 74.18 points, or 0.81 per cent, to 9203.43.

Investors have been closely monitoring tensions between the United States and Iran after the US killing of a top Iranian general last week and Iran’s retaliatory measures this week.

Among the day’s decliners was the department store operator Kohl’s Corp, which slid 6.5 per cent after reporting lower holiday season sales and warning of full-year earnings coming in at the bottom end of an already lowered forecast.

Smaller rival J.C. Penney Co Inc tumbled 10.8 per cent after disappointing same-store sales numbers.

With the fourth-quarter earnings season kicking off next week, analysts expect profits for S&P 500 companies to drop 0.6 per cent in their second consecutive quarterly decline, according to IBES data from Refinitiv. 

 

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