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Global Market Report - 17 May

Lex Hall  |  17 May 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open higher following gains on Wall Street overnight fuelled by upbeat earnings and strong economic data.

The SPI200 futures contract was up 47 points, or 0.74 per cent, at 6,392.0 at 7am Sydney time, suggesting a positive start for the benchmark S&P/ASX200 on Friday.

The Australian share market has recovered from early weakness to finish higher, with every sector rising except banking as Westpac traded ex-dividend.

The benchmark S&P/ASX200 index hit its highest level in the final minutes of trade to close up 43.6 points, or 0.69 per cent, to 6,327.8 points on Thursday. The broader All Ordinaries was up 46.6 points, or 0.73 per cent, to 6,417.5.

On Wall Street, the Dow Jones Industrial Average was up 0.84 per cent, the S&P 500 was up 0.89 per cent and the tech-heavy Nasdaq Composite was up 0.97 per cent.

The Aussie dollar is buying 68.93 US cents from 69.13 US cents on Thursday.

Asia

China stocks ended higher on Thursday, extending a strong rally in the previous session, as Beijing is expected to roll out more stimulus to shore up the world’s second largest economy amid external uncertainties.

The blue-chip CSI300 index rose 0.5 per cent, to 3,743.96, while the Shanghai Composite Index closed up 0.6 per cent at 2,955.71.

Hong Kong stocks ended flat on Thursday, as confidence was shaken after the US government hit Chinese telecoms giant Huawei with severe sanctions.

The Hang Seng index was nearly unchanged at 28,275.07, while the China Enterprises Index gained 0.1 per cent to 10,811.62.

In Japan, trade frictions soured sentiment, and banks tumbled on weak earnings reports. The Nikkei share average ended down 0.6 per cent at 21,062.98 points.

Europe

European shares reversed course to end in positive territory on Thursday, with deal-making news in Germany helping to prop up the pan-European benchmark as it overcame fears of an escalation in the US-China trade war.

The STOXX 600 index rose 1.3 per cent to a 10-day closing peak after shrugging off early weakness triggered by the White House imposing severe sanctions on Chinese telecoms giant Huawei late on Wednesday.

Rabobank market economist Stefan Koopman said that US-China tensions have already been priced in and markets are more focused on the trade situation between Europe and the US.

The latest Huawei sanctions helped rivals Ericsson and Nokia to advance by 2.1 per cent and 4.1 per cent respectively.

Paris-traded stocks rose 1.4 per cent, matched by the Milan benchmark while London-listed equities firmed by 0.8 per cent.

Germany’s DAX jumped by 1.7 per cent for a third consecutive daily gain, though tariff-sensitive automotive shares did not contribute. The gains in Frankfurt were mainly driven by news of corporate deals.

Thyssenkrupp soared with a 9.4 per cent advance after Reuters reported that Finland’s Kone might bid for the German group’s elevator division. Kone shares added 5 per cent.

Lighting group Osram Licht gained 5.3 per cent to 28.80 euros after it said that talks with Bain and Carlyle were continuing. German magazine Boerse Online said the private equity groups could bid with an offer price of 35 euros per share.

Basic materials stocks rose by 1.6 per cent, with Norsk Hydro up 4.9 per cent after a Brazilian federal court lifted one of two production embargoes on a plant owned by the Norwegian metals producer.

Nestle was up 1.8 per cent at a record closing high. The Swiss group said it entered exclusive talks to sell its skin health business to a consortium led by private equity firm EQT Partners in a deal worth 10.2 billion Swiss francs ($10.1 billion).

If it goes through, the deal will be the second-largest private equity-backed deal in Europe since the financial crisis, Refinitiv data shows, and comes as the food group shifts its portfolio in response to changing consumer demands.

Carmakers and their suppliers fared less well, shedding 0.5 per cent after the previous session’s 2 per cent gain.

French video games group Ubisoft Entertainment, meanwhile, slumped by 12.7 per cent after fourth-quarter results missed market forecasts.

North America

Wall Street has closed higher as upbeat earnings and strong economic data put investors in a buying mood, with technology companies leading the charge.

All three major US stock indexes pared gains late in the session on Thursday, adding less than 1 per cent and bringing the bellwether S&P 500 close to 2 per cent below an all-time high reached on April 30.

The escalating US-China tariff war continued to be a concern for market participants, but upbeat quarterly results and data pointing to a strong US economy helped ease trade-related jitters.

Walmart rose 1.4 per cent after its first-quarter results beat analyst expectations.

Cisco Systems stock saw its biggest percentage jump since February 2016, gaining 6.7 per cent after better-than-expected quarterly results.

On the economic front, groundbreaking on new US homes increased more than expected in April, according to the Commerce Department, as declining interest rates provided support to the struggling housing sector.

The S&P 1500 Homebuilding index advanced 1.2 per cent.

In a separate report from the Labor Department, 16,000 fewer Americans applied for unemployment last week, beating economist estimates.

Washington placed Huawei Technologies on a blacklist which bans it from acquiring components and technology from US firms without prior approval.

Shares of Huawei suppliers Qorvo, Skyworks Solutions, Qualcomm, Xilinx and Micron Technology lost ground.

The Philadelphia SE Semiconductor index ended the session down 1.7 per cent.

Electric car-maker Tesla dropped 1.6 per cent following safety agency reports the autopilot feature was engaged during a fatal crash in Florida in March.

Ride-hailing rivals Uber Technologies and Lyft posted their third straight day of gains after spending much of their post-debut trading days in negative territory. Their shares were up 4.1 per cent and 2.9 per cent, respectively.

The Dow Jones Industrial Average rose 214.66 points, or 0.84 per cent, to 25,862.68; the S&P 500 gained 25.36 points, or 0.89 per cent, to 2,876.32; and the Nasdaq Composite added 75.90 points, or 0.97 per cent, to 7,898.05.

All 11 major sectors in the S&P 500 were trading in positive territory, with materials, financials and consumer discretionary seeing the largest percentage gains.

A mostly upbeat first quarter earnings season is beginning to wind down, with 457 S&P 500 companies having reported. Of those, about 75 per cent have beaten profit expectations, according to Refinitiv data.

Analysts now expect first quarter earnings growth of 1.4 per cent, a significant improvement over the 2 per cent loss expected on 1 April.

Nvidia was up over 4 per cent in after-market trading after the Huawei Technologies supplier posted quarterly earnings.

Pinterest dropped more than 12 per cent in extended trading after posting results.

 

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