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Global Market Report - 13 February

Lex Hall  |  13 Feb 2020Text size  Decrease  Increase  |  
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Australia

The Australian share market is tipped for another rise after positive sessions on global markets as fears about the economic impact of the coronavirus eased.

SPI200 futures contract was up 42 points, or 0.60 per cent, at 7061 at 8am on Thursday.

Sentiment remained upbeat on Wall Street overnight amid optimism the coronavirus pandemic will be contained and the economic effects temporary, Westpac's financial markets finance AM note says.

Telstra has reported a 7.6 per cent drop in first-half profit to $1.14 billion - in line with guidance and expectations - with the cost of the NBN rollout again weighing significantly on the telco's balance sheet.

AMP has posted a full-year net loss of $2.5 billion, blaming first half impairments costs to address legacy issues and position the company for the future.

AGL Energy's half-year profit has fallen 19.6 per cent and the company has reduced its interim dividend payout, hurt by weaker power prices and an outage at its Loy Yang coal-powered plant.

Australia's S&P/ASX200 benchmark index finished Wednesday up 32.9 points, or 0.47 per cent, to 7088.2, while the broader All Ordinaries index climbed 33.9 points, or 0.47 per cent, to 7185.3.

On Wall Street, the Dow Jones industrial average rose 274.32 points, or 0.94 per cent, to 29,550.66, the S&P 500 gained 0.64 per cent and the Nasdaq Composite added 0.9 per cent.

The Aussie dollar was buying 67.36 US cents at 8am, from 67.29 US cents at Wednesday's close.

Asia

Chinese shares closed higher for the seventh straight session on Wednesday after officials reported the lowest daily increase in coronavirus infection cases in nearly two weeks, calming investor nerves over the epidemic’s economic impact.

At the close, the Shanghai Composite index was up 0.9 per cent at 2926.90. The blue-chip CSI300 index rose 0.8 per cent.

Hong Kong shares rose on Wednesday as a slowdown in the rate of new coronavirus infections in mainland China eased some concerns about the economic impact from the epidemic.

At the close of trade, the Hang Seng index was up 0.9 per cent at 27,823.66. The Hang Seng China Enterprises index rose 0.7 per cent.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.8 per cent, while Japan’s Nikkei index closed up 0.7 per cent.

Europe

A rally in luxury stocks led by Gucci-owner Kering and optimism over fewer new coronavirus cases in China pushed an index of European shares and the German benchmark to new highs on Wednesday.

Kering jumped 6.3 per cent after reporting better than expected quarterly results. The company remained upbeat about its longer-term prospects, despite saying it is halting spending in China on virus fears.

That lifted other luxury stocks such as Louis Vuitton owner LVMH, Christian Dior, Hugo Boss and Burberry, up between 1 per cent and 3 per cent.

Stronger iron ore and base metal prices lifted China-sensitive commodity and auto stocks after the country reported its lowest number of new coronavirus cases in two weeks, bolstering a forecast by Beijing’s senior medical adviser for the outbreak to end by April.

In their second consecutive session of record highs, the pan-European STOXX 600 index closed up 0.6 per cent at 431.16, while Frankfurt's DAX finished 0.9 per cent higher. Investors seemed to look past data that showed the bloc's industrial production fell more then expected in December.

But investors still remained watchful of further international spread of the virus and its net economic impact. Analysts and bankers say opaque Chinese data and lack of precedent hinder clear estimates.

Rating agency S&P Global warned that the likely subsequent slowdown in China’s economy could shave 0.1 to 0.2 percentage points off both euro zone and UK growth this year.

Miner Rio Tinto cited efforts taken to contain the virus’s spread as the reason for a slowing in copper concentrate shipments to China.

On the STOXX 600, Evolution Gaming shot up 14 per cent and engineering company Trelleborg surged 10 per cent after better-than-expected earnings.

Languishing at the bottom was Dutch bank ABN Amro after clocking a weaker-than-expected fourth-quarter net income.

North America

Wall Street closed at record highs on Wednesday as news that the coronavirus outbreak could be running out of steam kept buyers in the ring.

Technology shares led the broad-based rally, which pushed all three major US stock averages to fresh highs. The S&P 500 and the Nasdaq have now set closing highs for three consecutive sessions. The Dow reached its most recent closing record on 6 February.

China reported its lowest number of new coronavirus cases in two weeks, the day after Beijing’s senior Chinese medical adviser said the epidemic could be over by April.

The outbreak has spooked investors amid quarantines, supply-chain disruptions and factory shutdowns, and the World Health Organisation warned that the apparent slowdown in the epidemic’s spread should be viewed with “extreme caution.”

Market participants paid heed to US Federal Reserve Chair Jerome Powell as he wrapped up his semiannual economic report before Congress, during which he said the central bank was closely monitoring the coronavirus and other threats.

Indeed, Powell reiterated his confidence in the sustainability of the current US economic expansion, now in its 11th year.

The Dow Jones Industrial Average rose 274.46 points, or 0.94 per cent, to 29,550.8, the S&P 500 gained 21.63 points, or 0.64 per cent, to 3,379.38 and the Nasdaq Composite added 87.02 points, or 0.9 per cent, to 9,725.96.

Of the 11 major sectors in the S&P 500, all but consumer staples ended the session in the black, with energy, technology and consumer discretionary posting the largest percentage gains.

Fourth-quarter reporting season is over the hump, with 351 companies in the S&P 500 having posted results. Of those, 70.9 per cent have surprised analyst expectations to the upside, according to Refinitiv data.

Aggregate fourth-quarter earnings are now seen growing at an annual rate of 2.4 per cent, a turnaround from the 0.3 per cent year-on-year decrease forecast on Jan 1.

Lyft lost 10.2 per cent after the ride-hailing company forecast slower revenue growth in 2020.

Micron Technology Inc advanced 3.5 per cent after UBS upgraded the chipmaker’s shares to “buy.”

The broader Philadelphia SE Semiconductor index gained 1.4 per cent.

is content editor for Morningstar Australia

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