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Global Market Report - 11 September

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

The Australian share market is tipped to rise in early trade following a late rally by Wall Street's industrial stocks.

The SPI200 futures contract was up 17 points, or 0.26 per cent, at 6,634.0 at 7am Sydney, suggesting the benchmark S&P/ASX200 will climb at Wednesday's open.

The Australian share market suffered its first loss in four days yesterday, with every sector except energy shares and financials in the red.

The benchmark S&P/ASX200 index closed on Tuesday down 33.9 points, or 0.51 per cent, to 6,614.1 points, while the broader All Ordinaries was down 32.1 points, or 0.47 per cent, to 6,728.

The S&P 500 rose late in the overnight US session - edging 0.03 per cent higher to 2,979.39 - but was held back somewhat by technology shares, which dragged in the wake of soft Chinese producer data.

The Dow Jones Industrial Average closed 73.92 points, or 0.28 per cent, higher at 26,909.43, but the Nasdaq Composite dropped 3.28 points, or 0.04 per cent, to 8,084.16, for its third straight decline.

The Aussie dollar is buying 68.60 US cents, down from 68.69 US cents on Tuesday.

Asia

China stocks slipped on Tuesday, snapping a week-long winning streak, after data showed the country’s factory deflation deepened in August amid a protracted trade dispute with the US.

The blue-chip CSI300 index fell 0.3 per cent, to 3,959.27, while the Shanghai Composite Index shed 0.1 per cent to 3,021.20.

Hong Kong stocks closed flat on Tuesday, even as data showed China’s factory deflation deepened in August amid a protracted trade dispute with the United States.

The Hang Seng index was unchanged at 26,683.68, while the China Enterprises Index lost 0.1 per cent, to 10,403.34.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.13 per cent, while Japan’s Nikkei index closed up 0.35 per cent.

Europe

European shares fell in early trading on Tuesday, dragged down by a sell-off in defensive sectors and on disappointing China data that stoked recession worries ahead of the European Central Bank’s monetary policy meeting later this week.

The pan-European stocks benchmark index STOXX 600 fell 0.6 per cent by 0840 GMT with all major country indices in the red. The index was on track to post its worst session in more than two weeks.

Euro zone stocks also weakened as investors focused on the ECB’s meeting on Thursday, when it is widely expected to cut its deposit rate for the first time since 2016 and restart an asset purchase program.

Defensive sectors such as healthcare, utilities and food and beverages were among the biggest losers. The stocks had been in high demand over the past three months amid trade and growth uncertainties.

European banks posted the largest increase, led by London banks Barclays, Standard Chartered Bank and RBS. Swiss bank UBS Group rose 2 per cent after Kepler Cheuvreux upgraded the stock to “buy”.

Euro zone banks were trading flat after rising 1.3 per cent earlier in the session. They have risen 9 per cent in the past five days in one of their strongest rallies since April 2017.

Expectations of a stimulus from global central banks were strengthened on Tuesday after weak factory data from China showed prices shrunk in August at their fastest pace in three years.

Technology stocks, a key growth sector, fell 1.3 per cent, tracking their US counterparts lower.

On the corporate side, JD Sports topped the STOXX 600 after it reported higher first-half pretax profit, helped by more demand for gym apparel and premium branded fashion.

North America

The S&P 500 has ended little changed, with a rally in energy and industrial shares countering a drop in the technology and real estate sectors as investors favoured value over growth.

Industrials pulled the blue-chip Dow slightly higher and led the bellwether S&P 500's nominal advance, while the tech-heavy Nasdaq posted its third straight decline.

China producer prices fell last month at their sharpest pace in three years, hit by Beijing's trade war with Washington.

China is expected to buy more agricultural products to position itself for a better trade deal, according to a report from the South China Morning Post.

The underwhelming data from China weighed on tariff-sensitive technology stocks, which fell 0.5 per cent on Tuesday.

Investors expect the US Federal Reserve and the European Central Bank to cut rates to bolster the global economy.

Germany's finance minister suggested the nation was prepared to fight a possible recession with a stimulus package.

The news from Germany, along with easing US-China tensions, sent US Treasury yields to four-week highs, tracking German bonds.

The Dow Jones Industrial Average rose 73.92 points, or 0.28 per cent, to 26,909.43, the S&P 500 gained 0.96 points, or 0.03 per cent, to 2979.39 and the Nasdaq Composite dropped 3.28 points, or 0.04 per cent, to 8084.16.

Of the 11 major sectors in the S&P 500, six ended the session higher, with energy and industrials seeing the biggest percentage gains.

Interest rate-sensitive real estate stocks were the biggest percentage losers, dropping 1.4 per cent.

Apple edged up 1.2 per cent after announcing the 1 November launch date for its streaming service Apple TV+, and unveiled its latest iPhone and Watch updates.

Wendy's dropped 10.2 after the fast food chain projected a drop in full-year 2019 adjusted earnings.

Wendy's rival McDonald's announced it would buy Silicon Valley startup Apprente. Its stock dipped 3.5 per cent and was the biggest drag on the Dow.

Ford shares fell 1.3 per cent after Moody's downgraded the automaker's bond rating to junk.

Mallinckrodt, beset by opioid litigation uncertainties, announced it would sell BioVectra to private equity firm HIG Capital for up to $US250 million, sending the drugmaker's shares surging 84.8 per cent.

Francesca's Holdings shot up 101.6 per cent after the specialty retailer posted better-than-expected second quarter results.

is content editor for Morningstar Australia

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