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Global Market Report - 2 September

Lex Hall  |  02 Sep 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open flat after a mixed result on Wall Street at the end of last week as fresh tariffs loom.

The SPI200 futures contract was down 5 points, or 0.08 per cent, at 6,566.0 at 8am Sydney time, suggesting little change for the benchmark S&P/ASX200 on Monday.

The Australian share market enjoyed its best day since mid-June, with every sector posting gains as earnings season came to a close.

The benchmark S&P/ASX200 index closed Friday up 96.8 points, or 1.49 per cent, to 6,587.0 points, while the broader All Ordinaries was up 92.9 points, or 1.41 per cent, to 6,698.6 points.

On Wall Street on Friday, the Dow Jones Industrial Average finished up 0.16 per cent, the S&P 500 was up 0.06 per cent and the tech-heavy Nasdaq Composite was down 0.13 per cent.

The Aussie dollar is buying 67.27 US cents from 67.13 US cents on Friday.

Asia

China stocks traded mixed on Friday, as investor optimism over signs of fresh Sino-US trade negotiations was shadowed by Washington’s firm decision to go ahead with additional tariffs on Chinese imports starting 1 September.

At the close, the Shanghai Composite index was down 0.2 per cent at 2,886.24 points. The index closed 0.4 per cent lower this week and dropped 1.6 per cent in August, as a tit-for-tat escalation in the Sino-US trade spat and a slump in the Chinese yuan dented sentiment.

Hong Kong shares closed slightly higher on Friday but posted their biggest monthly drop since May as a bruising Sino-US trade war and the city’s deepening political crisis knocked down the market. At the close of trade, the Hang Seng index was up 0.1 per cent at 25,724.73, shedding 1.7 per cent for the week.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by almost 1 per cent, while Japan’s Nikkei index closed up 1.2 per cent.

Europe

European stocks scaled fresh one-month highs on Friday, wrapping up a brutal month on a positive note as investors took comfort from Chinese and US willingness to return to trade talks.

The pan-European STOXX 600 index rose 0.7 per cent to hit its highest level since 2 August, building on the previous day’s rally after both China and the US indicated they were discussing the next round of negotiations in September.

Tariff-sensitive commodity-linked stocks rose 2.5 per cent, carmakers 1 per cent and technology stocks gained 0.9 per cent.

The real estate sector jumped 2 per cent and was set to post its best day since October 2018, as German real estate companies gained after a report said a rent freeze in Berlin could be watered down.

German real-estate firms Deutsche Wohnen, Vonovia and LEG Immobilien rose between 4 per cent and 9 per cent.

Britain's FTSE 100 ended the day 0.3 per cent higher but just shy of having its worst month in four years as sterling's recovery, the US-China trade spat and a sharp drop in mining stocks took its toll on the export-heavy index.

Most European indices have racked up losses this month barring Denmark, Romania and Switzerland, as an inversion in the US Treasury yield curve exacerbated concerns about economic growth in the face of the US-China trade war.

North America

Wall Street has ended the week with a lacklustre session as investors remained cautious ahead of a holiday weekend in which a fresh round of US tariffs on Chinese imports are due to be levied.

While the S&P 500 registered its biggest weekly gain since June, August had its biggest monthly decline since May.

Investors had fled risky assets in August due to escalations in the US-China trade war and the inversion of a key part of the US yield curve which is often a recessionary signal.

US financial markets were due to stay closed on Monday for the Labor Day holiday and a new round of US tariffs on some Chinese goods were expected to come into effect on Sunday.

Trading volume was light as the S&P swapped between negative and positive territory in the afternoon to end the day with little progress.

The US and China had given hopeful signs on trade on Thursday as they discussed the next round of in-person negotiations in September.

The Dow Jones Industrial Average rose 41.03 points, or 0.16 per cent, to 26,403.28 on Friday, the S&P 500 gained 1.88 points, or 0.06 per cent, to 2926.46 and the Nasdaq Composite dropped 10.51 points, or 0.13 per cent, to 7962.88.

Since bonds have recently outperformed stocks, investors may have taken early action to rebalance their portfolios for the end of the month due to the long weekend, according to Vinay Pande, head of trading strategies at UBS Global Wealth Management in New York.

US consumer spending increased solidly in July as households bought a range of goods and services.

While this could allay financial market fears of a recession, a survey from the University of Michigan, also out Friday, showed its consumer sentiment index in August dropping by the most since December 2012, amid nerves over the US-China trade war.

The Consumer Discretionary sector was the S&P's biggest drag as Ulta Beauty, which had been the S&P's top performing stock in Wall Street's decade-old bull market, tumbled 29.6 per cent after the cosmetics company cut its full-year profit forecast.

One of the biggest percentage gainers on the benchmark index was Campbell Soup, which jumped 3.9 per cent after its quarterly profit beat estimates.

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