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Global Market Report - 18 October

Lex Hall  |  18 Oct 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open lower despite strong earnings among US companies and upbeat global news.

The SPI200 futures contract was down 13 points, or 0.20 per cent, at 6,651.0 at 8am Sydney, suggesting a fall for the benchmark S&P/ASX200 on Friday.

The Australian share market slipped yesterday and the local currency gained as investors digested a surprise dip in the country's unemployment rate.

The benchmark S&P/ASX200 index finished Thursday down 51.8 points, or 0.77 per cent, to 6,684.7 points, while the broader All Ordinaries was down 51.7 points, or 0.76 per cent, to 6,791.5 points.

On Wall Street overnight, the Dow Jones Industrial Average was up 0.09 per cent, the S&P 500 was up 0.28 per cent and the tech-heavy Nasdaq Composite was up 0.40 per cent.

The Aussie dollar is buying 68.24 US cents from 67.83 US cents on Thursday.

Asia

China’s major stock indexes ended roughly flat on Thursday in thin trading, as caution prevailed as investors awaited more details on a proposed Sino-US trade deal.

The blue-chip CSI300 index rose 0.1 per cent, to 3,925.22, while the Shanghai Composite Index slipped 0.1 per cent to 2,977.33.

Hong Kong stocks climbed to end at a one-month high on Thursday, on hopes that more stimulative measures would be rolled out to bolster the island city’s growth amid months-long protests.

The Hang Seng index rose 0.7 per cent, to 26,848.49, while the China Enterprises Index gained 0.5 per cent, to 10,588.17.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.11 per cent, while Japan’s Nikkei index closed down 0.09 per cent.

Europe

European shares edged lower on Thursday, as strong earnings from Sweden’s Ericsson were offset by fading optimism over the Brexit deal amid investor worries about its support in the British parliament.

The pan-European STOXX 600 index closed down 0.1 per cent after gaining as much as 0.9 per cent, as investors initially cheered news that the European Union and Britain had clinched a deal on the terms of Britain’s exit from the bloc.

Shares in domestically focused British companies and Irish firms, which have come to be seen as a barometer on Brexit sentiment, gave up gains as the Northern Irish Democratic Unionist Party (DUP) said it would vote against the accord at an extraordinary session on Saturday.

The FTSE midcap index closed up just 0.16 per cent, while Irish stocks dropped 0.9 per cent amid doubts over whether Prime Minister Boris Johnson will be able to win the British parliament's approval for any deal.

The pound saw wild swings, sending London's internationally focused FTSE 100 lower initially but the index closed up 0.2 per cent with help from blue-chip firms.

France's CAC 40 eased 0.4 per cent after hitting a fresh 12-year high earlier, while Germany's DAX closed down 0.1 per cent, although near its strongest level in over a year. An index of eurozone stocks fell 0.2 per cent.

Fears of a slide into recession continue to dog Europe and not all earnings were upbeat, with Swiss banking software maker Temenos tumbling more than 15 per cent, its worst day in more than five years, after traders said third-quarter core profits missed expectations.

Swedish telecoms gear maker Ericsson was a bright spot, jumping 6 per cent to hit a three-month high after posting quarterly core earnings that were well ahead of expectations. Shares of Finnish peer Nokia also gained 2 per cent.

Nestle was the biggest drag on the benchmark index as organic sales growth dipped in the third quarter, outweighing the announcement of a plan to buy back up to 20 billion Swiss francs ($20.13 billion) in shares.

Shares of Pernod Ricard fell 4.2 per cent after the spirits maker missed expectations for quarterly organic sales, reflecting slower growth rates in China and India. French car parts group Faurecia dropped 6.5 per cent after posting lower-than-expected third quarter sales.

Wirecard’s shares, down over 2.5 per cent, extended their slide in the wake of an FT report alleging its effort to inflate sales and profits. Shares in SAP SE and Capgemini came under pressure after weaker results from US tech company IBM.

N America

Wall Street advanced on Thursday as investor sentiment was buoyed by a string of corporate earnings results and encouraging geopolitical developments.

A broad-based rally led all three major US stock averages to moderate gains.

Britain and the European Union agreed to a severance deal, moving closer toward wrapping up three years of uncertainties after Britons voted to leave the bloc.

Upbeat statements from Beijing and Washington fuelled hopes that a phased agreement could ease the long-running US-China trade war that has rattled markets for months.

And Turkey agreed to pause its Syria assault to allow for the withdrawal of Kurdish forces.

Analysts now see third-quarter S&P 500 earnings falling by 2.9 per cent, according to Refinitiv I/B/E/S, marking the first contraction since the earnings recession that ended mid-2016.

But of the 63 companies in the S&P 500 that have reported so far, 82.5 per cent have come in above estimates.

Morgan Stanley rounded out big bank earnings with better-than-expected third-quarter profits, driven by bond trading and M&A advisory strength, sending its shares up 1.5 per cent.

Streaming pioneer Netflix Inc advanced 2.5 per cent after the company reported a rebound in subscribers in the third quarter.

The Dow Jones Industrial Average rose 24.18 points, or 0.09 per cent, to 27,026.16, the S&P 500 gained 8.28 points, or 0.28 per cent, to 2,997.97 and the Nasdaq Composite added 32.67 points, or 0.4 per cent, to 8,156.85.

Of the 11 major sectors in the S&P 500, all but technology closed in the black, with healthcare, real estate and communications services enjoying the largest percentage gains.

In other earnings news, shares of International Business Machines Corp were the biggest drag on the blue-chip Dow, sinking 5.5 per cent after missing quarterly revenue estimates.

Honeywell International's quarterly results fell short of analyst expectations, but positive geopolitical developments helped the international conglomerate gain 2.4 per cent.

is content editor for Morningstar Australia

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