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Global Market Report - 11 April

Lex Hall  |  11 Apr 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open lower despite gains on Wall Street overnight as the prime minister announced the election date.

The SPI200 futures contract was down 14 points, or 0.23 per cent, at 6,194.0 at 8am Sydney time, suggesting a dip for the benchmark S&P/ASX200 on Thursday.

The Australian share market finished flat yesterday after a session in which the big banks gained and the miners lost ground, a reversal of recent patterns.

The benchmark S&P/ASX200 index closed up 1.7 points, or 0.03 per cent, to 6,223.5 points, while the broader All Ordinaries was up one points, or 0.02 per cent, to 6,316.5.

Prime Minister Scott Morrison said Australians will vote on 18 May.

On Wall Street, the Dow Jones Industrial Average was up 0.03 per cent, the S&P 500 was up 0.35 per cent and the tech-heavy Nasdaq Composite was up 0.69 per cent.

The Aussie dollar is buying 71.68 US cents from 71.48 US cents on Wednesday.

Asia

China and Hong Kong stocks fell on Wednesday, in line with other Asian markets amid worries over global economic slowdown and trade tensions.

The CSI300 index fell 0.4 per cent, to 4,060.85, at the end of the morning session, while the Shanghai Composite Index lost 0.4 per cent, to 3,226.93.

The largest percentage gainers on the main Shanghai Composite index were Yueyang Forest & Paper Co, up 10.1 per cent, followed by Jiangsu Lianhuan Pharmaceutical Co, gaining 10.06 per cent, and Nanjing Panda Electronics Co Ltd, up by 10.04 per cent.

The Hang Seng index dropped 0.4 per cent, to 30,031.55, while the Hong Kong China Enterprises Index lost 0.7 per cent, to 11,737.96.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.11 per cent, while Japan’s Nikkei index was down 0.67 per cent.

Europe

European shares rose slightly on Wednesday as gains across most sectors offset losses among lenders, which were hit by a lack of detail in European Central Bank comments after the bank left borrowing costs unchanged.

The ECB’s decision on rates matched investors’ expectations but President Mario Draghi’s comments shed very little light on reported plans for a tiered deposit rate and a new round of ultra-cheap bank loans.

The pan-European STOXX 600 index rose 0.3 per cent, although sentiment was capped by threats made by the US earlier this week to slap tariffs on European Union-made goods.
Banks, which were broadly boosted some weeks ago on reports of a planned ECB tiered deposit rate, dropped 0.3 per cent as investors failed to get details on this from Draghi.

Commerzbank slid 2.3 per cent, as German Chancellor Angela Merkel said the result of its merger talks with Deutsche Bank was open and after a report Deutsche Bank’s chief executive told his Commerzbank counterpart that he wants more time to consider a merger.

Rate-sensitive real estate stocks raced up 1.8 per cent in their best one-day showing since early 2019.

The sector index has a dividend yield of 4.15 per cent, according to Refinitiv Eikon data, and each stock on the index ended Wednesday higher.

Unibail-Rodamco-Westfield rose 3.6 per cent. It announced a 850 million euro ($956.25 million) deal to sell an office building in Paris after markets closed on Tuesday.

Retailers gained for the first time in five sessions, with Tesco up 3.6 per cent to lead sector gains after beating full-year operating profit expectations.

European basic resources stocks added 1 per cent, with Norsk Hydro rising 1.3 per cent. JP Morgan raised its price target on the Oslo-listed aluminium giant, which announced a 150 million Norwegian crown ($17.64 million) facility upgrade on the day.

Higher oil prices aided a 0.7 per cent rise in oil and gas stocks.

A 0.4 per cent loss among healthcare stocks tempered the broad benchmark’s gains, with Novartis AG knocked 3 per cent lower on the back of price target cuts by UBS, Independent Research and Barclays.

Morgan Stanley also downgraded the Swiss pharmaceutical giant, putting it at “underweight” and cutting its price target. It said the spin-out of Alcon will “shine a spotlight on the challenges from generic erosion facing Novartis’ pharma business”.

London-listed Indivior dived 71.6 per cent after the US Justice Department announced the indictment of the drugmaker and a unit on charges they engaged in an illegal scheme to boost prescriptions of the film version of its opioid addiction treatment Suboxone.

Reckitt Benckiser Group sought to play down any potential impact to its infant formula business from the indictment of Indivior - which it used to own - saying the risk was theoretical and unlikely. Reckitt’s shares fell 6.5 per cent.

Britain’s FTSE 100 was little changed. European Union leaders will grant Prime Minister Theresa May a second delay to Brexit at an emergency summit but will argue over how long and on what terms.

North America

Technology stocks led Wall Street slightly higher on Wednesday, as US inflation data proved to be benign and the minutes from the Federal Reserve’s March meeting were unsurprising.
The blue-chip Dow, held back by industrial stocks, squeaked into positive territory at the closing bell.

The three major US indexes were relatively unchanged following the release of the Fed’s minutes, which reaffirmed the central bank’s patience regarding future interest rate hikes.

Core US consumer prices, which strip out volatile food and energy segments, rose at the slowest annual pace in over a year, according to the Labor Department’s CPI report. The tepid inflation data further supported the Fed’s decision to suspend its three-year, interest-rate-hike campaign.

Top executives from some of the largest US banks testified before congress for the first time since the 2007-2009 financial crisis, just days before the banks report quarterly results amid lowered expectations by analysts.

Profit forecasts for the first quarter have dropped steadily in the last six months, with S&P 500 earnings now seen falling by 2.5 per cent, which would mark the first year-on-year contraction since 2016, according to Refinitiv data.

The earnings season began in earnest as Delta Air Lines raised its revenue forecast and posted better-than-expected profits, lifting the airliner’s stock by 1.6 per cent.

Levi Strauss & Co posted a 7 per cent rise in revenue in its first earnings report since returning to the public market. Its shares rose 4.0 per cent.

The Dow Jones Industrial Average rose 6.58 points, or 0.03 per cent, to 26,157.16, the S&P 500 gained 10.01 points, or 0.35 per cent, to 2,888.21, and the Nasdaq Composite added 54.97 points, or 0.69 per cent, to 7,964.24.

Of the 11 major sectors in the S&P 500, eight ended the session in positive territory.
Boeing Co weighed on industrials as the plane maker’s shares extended losses, closing down 1.1 per cent.

Tesla got a boost after US politicians introduced legislation that would expand the electric vehicle tax credit. The company’s stock advanced 1.4 per cent.

ConAgra Brands shot up 6.7 per cent after providing upbeat forecasts at its investor day.

First Solar jumped 8.3 per cent after Goldman Sachs added the stock to its conviction list.

Houseware retailer Bed Bath & Beyond shot up more than 8 per cent in after-market trading after posting quarterly results.

is content editor for Morningstar Australia

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