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Global Market Report - 10 July

Glenn Freeman  |  10 Jul 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open higher, despite a mixed session on Wall Street overnight.

The SPI200 futures contract was up 36 points, or 0.55 per cent, at 6,632 at 8am Sydney time, suggesting an early bounce for the benchmark S&P/ASX200 on Wednesday.

On Wall Street, the Dow Jones Industrial Average finished down 0.08 per cent, the S&P 500 was up 0.12 per cent and the tech-heavy Nasdaq Composite was up 0.54 per cent.

Australian shares yesterday extended the declines that began on Monday, as investor sentiment turned cautious due to uncertainty around US Federal Reserve interest rate moves.

The S&P/ASX 200 Index fell 6.6 points, or 0.1 per cent, to 6665.7 on Tuesday. The broader All Ordinaries lost 7.3 points, or 0.1 per cent, to 6750.1.

The Aussie dollar is currently buying 69.29 US cents, from 69.52 US cents on Tuesday.

Ahead today: Westpac - Melbourne Institute consumer confidence figures July; China CPI for June; UK industrial production for May; US Federal Open Markets Committee meeting minutes for June.

Asia

Chinese shares also ended Tuesday lower, in line with Wall Street weakness as US jobs data dims hope of an aggressive Fed rate cut.

Also dented by several IPOs on Shanghai's technology sub-index this week, the blue-chip CSI300 index ended down 0.3 per cent at 3,793.13, while the Shanghai Composite Index closed 0.2 per cent lower at 2,928.23 points.

Investor optimism toward resuming trade talks between Beijing and Washington is also fading, with focus back on China’s economic fundamentals.

The CSI300 financial sector sub-index closed lower by 0.44 per cent, the consumer staples sector was down 0.01 per cent, the real estate index ended down 0.37 per cent and the healthcare sub-index closed 0.28 per cent weaker.

Hong Kong stocks yesterday continued their losses into a fourth day, as the Hang Seng index fell 0.8 per cent to 28,116.28 points, while the China Enterprises Index lost 0.7 per cent to 10,650.63.

Energy shares, IT stocks, financials and property all dipped – by 0.5 per cent, 0.38 per cent, 0.73 per cent and 1.45 per cent, respectively.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.47 per cent, while Japan’s Nikkei index closed up 0.14 per cent to 21,565 points.

The modest gain wasn't enough to offset the broader Japanese market fall, as the broader Topix fell 0.22 per cent to 1,574.89 points, with small caps seeing the biggest declines.

Europe

German shares dragged down European markets, as BASF's share price slumped almost 6 per cent in after the German chemicals giant issued a trade uncertainty-driven profit warning.

The pan-European STOXX 600 index closed 0.5 per cent lower, with most major indices in the red – only Madrid's IBEX managed to outperform.

BASF's profit warning for the second-quarter and full year weighed on both the agricultural and automotive sectors. Several major European companies copped ratings downgrades from brokerages, including Bayer, Covestro, Evonik and Wacker Chemie – and Europe's auto index slipped 1 per cent.

Basic resources stocks led the region's declines, down 2 per cent, as ongoing falls in the copper price and fears around waning China demand knocked miners.

Banks also suffered, as Deutsche Bank extended its losses by falling 4 per cent - having already dropped 5.4 per cent the previous day after it axed 18,000 staff.

Defensive sectors such as real estate were among the few bright spots, as Britain's Ocado jumped 5 per cent to close atop the STOXX 600.

North America

On Wall Street, the S&P 500 ended slightly higher as gains in tech-related shares offset worries about a weakening outlook for earnings.

Gains in Amazon.com, Facebook and Apple gave the biggest boost to the S&P 500 and Nasdaq, which ended Tuesday up 0.5 per cent.

Netflix also rose, ending up 1 per cent, after Cowen and Co said the video streaming services provider would benefit from high viewership for the recently released third series of its original show Stranger Things.

Investors braced for remarks this week from Federal Reserve chairman Jerome Powell during his two-day testimony before the US Congress, which starts on Wednesday. Also due on Wednesday is the central bank's June policy meeting minutes.

Wall Street's main indexes have retreated from their record closing highs after a robust June jobs report on Friday tempered expectations of an aggressive 50-basis-point interest rate cut by the Fed.

The Dow Jones Industrial Average on Tuesday fell 22.65 points, or 0.08 per cent, to 26,783.49; the S&P 500 gained 3.68 points, or 0.12 per cent, to 2,979.63; and the Nasdaq Composite added 43.35 points, or 0.54 per cent, to 8,141.73.

Trade tensions and their effect on corporate America will be front and centre when S&P 500 companies kick off the second-quarter earnings season next week.

The US and China are set to relaunch trade talks this week after a two-month hiatus. White House economic adviser Larry Kudlow said discussions with the European Union on a trade pact were also progressing.

is senior editor for Morningstar Australia

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