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Global Market Report - 11 January

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

Australian shares are set for an early lift despite fading trade optimism, with investors awaiting the latest retail data.

The SPI200 futures contract was up 14 points, or 0.24 per cent, to 5749.0 at 8am Sydney on Friday, hinting the benchmark ASX/200 will edge upwards early on.

Yesterday, the ASX finished flat, as a 3.4 per cent fall in BHP shares after market giant went ex-dividend, offset any gains elsewhere. The benchmark S&P/ASX200 index closed up 17 points, or 0.29 per cent, to 5795.3 at 4.15pm on Thursday.

A higher close would be the bourse's fifth straight session in the black in a week where global markets and commodities lifted on trade talks between the US and China.

But that sentiment appears to be fading, with China offering little details on key issues such as forced technology transfers, intellectual property rights, tariff barriers and cyberattacks.

Wall Street rose in a seesaw session, as investors responded to mixed comments by Federal Reserve chairman Jerome Powell, while reports from Macy's and American Airlines added to fears that growth of corporate profits would shrink.

The Dow Jones Industrial Average climbed 0.51 per cent to end at 24,001.92 points, while the S&P 500 gained 0.45 per cent to 2596.64. The Nasdaq Composite added 0.42 per cent to 6986.07.

Oil prices are lower as trade confidence slips, with copper also following suit. Gold is slightly down after a rise for the greenback.

Meanwhile, the Aussie dollar is steady, unchanged from 71.84 US cents on Thursday.
The ABS is set to release retail trade and livestock figures for November at 11.30am Sydney time.

ASIA

Markets in Asia finished the day mixed. The Hang Seng gained 0.22 per cent, while the Nikkei 225 led the Shanghai Composite lower. They fell 1.29 per cent and 0.36 per cent respectively.

Brokerages led the pack of decliners among the mainland's stocks on Thursday after China Merchants Securities said profits for the 20 listed securities firms fell 26 per cent from a year earlier in 2018, the South China Morning Post reported.

Founder Securities fell 6.6 per cent to 6.91 yuan and Sealand Securities slid 6.5 per cent to 5.17 yuan. Southwest Securities sank 5.8 per cent to 4.05 yuan.

EUROPE

European markets finished mixed. The FTSE 100 gained 0.52 per cent and Germany's DAX rose 0.26 per cent. In France, the CAC 40 lost 0.16 per cent.

Britain's largest carmaker Jaguar Land Rover announced it will cut 4500 jobs as part of a plan to cut costs by $3.2 billion. Its sales have suffered amid the Brexit ructions.

NORTH AMERICA

Wall Street has extended its rally into a fifth straight day in a session of whipsaw trading as investors responded to mixed comments by US Federal Reserve chairman Jerome Powell, while a warning from Macy's pummelled retail stocks.

Powell reiterated the views of other policymakers that the Fed would be patient about interest rate hikes. But major stock indexes temporarily moved into negative territory after Powell said the bank's balance sheet would be "substantially smaller," and after he raised concerns about the size of US debt.

The S&P 500 is up over 10 per cent from a 20-month low it touched around Christmas, lifted by hopes for a US-Chinese trade deal, which eased some worries over the impact of the dispute on global growth. The benchmark index's five-day winning streak is its longest since September.

Trade-related optimism faded somewhat as China offered little in the way of details on key issues such as forced technology transfers, intellectual property rights, tariff barriers and cyberattacks.

In the US, reports from Macy's and American Airlines added to concerns that growth of corporate profits would slow.

Macy's stock plunged nearly 18 per cent and pulled down other retailers after the department store operator cut its same-store sales forecast for the full year because of weak demand during mid-December.

S&P 500 companies on average are seen posting 14.5 per cent growth in earnings per share as they report December-quarter results over the next few weeks, according to IBES data.

However, expectations for growth in 2019 are at 6.4 per cent, down from an expectation of 7.3 per cent on January 1.

The Dow Jones Industrial Average climbed 0.51 per cent to end at 24,001.92 points, while the S&P 500 gained 0.45 per cent to 2596.64. The Nasdaq Composite added 0.42 per cent to 6986.07.

Trade-sensitive industrial stocks rose 1.44 per cent, lifted by Boeing Co, which gained 2.55 per cent after the US Air Force accepted its long-delayed KC-46 air tanker.

American Airlines Group fell 4.13 per cent after the No 1 US carrier cut its fourth-quarter profit and unit revenue forecasts. That weighed on other airline shares as well.

Ten out of 11 S&P sector indexes rose, led by a 1.55 per cent increase in real estate, with consumer discretionary ending down 0.23 per cent.

is content editor for Morningstar Australia

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