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Global Market Report - 22 November

Lex Hall  |  22 Nov 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open higher despite a negative lead from Wall Street.

The SPI200 futures contract was up 38.0 points, or 0.57 per cent, at 6,710.0 at 8am Sydney, suggesting a positive start for the benchmark S&P/ASX200 on Friday.

The Australian share market slumped for a second day yesterday, with losses across the board as passage of a US-China trade deal appears less and less likely anytime soon.

The benchmark S&P/ASX200 index on Thursday closed down 49.5 points, or 0.74 per cent, to 6,672.9 points, while the broader All Ordinaries was down 50.6 points, or 0.74 per cent, to 6,777.7 points.

On Wall Street overnight, the Dow Jones Industrial Average was down 0.20 per cent, the S&P 500 was down 0.16 per cent and the tech-heavy Nasdaq Composite was down 0.24 per cent.

The Aussie dollar is buying 67.84 US cents from 67.99 US cents on Thursday.

Asia

China and Hong Kong stocks extended losses for a second straight session on Thursday, as a fresh dispute between Washington and Beijing over Hong Kong stoked concerns that an interim trade deal could be delayed.

China’s blue-chip CSI300 index fell 0.5 per cent, to 3,889.60, while the Shanghai Composite index shed 0.3 per cent to 2,903.64.

In Hong Kong, the Hang Seng index fell 1.6 per cent to 26,466.88, while the China Enterprises Index lost 1.6 per cent to 10,450.22.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 1.12 per cent, while Japan’s Nikkei index closed down 0.48 per cent.

Europe

European stocks dropped for a fourth straight day on Thursday as mixed headlines about US-China trade talks muted risk appetite, while German conglomerate Thyssenkrupp suffered its worst day in nineteen years after scrapping its dividend.

Thyssenkrupp tumbled more than 13 per cent as it warned of deeper losses and asked investors for yet more patience over its turnaround.

The major indexes were broadly lower with the pan-European STOXX 600 set for its first weekly drop in seven.

European miners, among the most vulnerable to trade headlines, led sector losses, dropping more than 1 per cent, while technology and industrials lost about 0.4 per cent.

Fears that agreement of an initial trade deal between US and China could slide into next year, as well as political tensions between the two sides due to the US passing legislation backing protesters in Hong Kong, weighed on investor sentiment.

However, markets closed off their session lows, with another report claiming the US could delay tariffs on Chinese imports even if a trade deal was not reached by 15 December.

The volatility gauge on euro zone blue-chips, hit a three-week high before closing at session lows.

The STOXX 600 is now about 2 per cent below a four-year peak hit two weeks ago, which was largely driven by better-than-expected earnings and hopes that a trade truce between US and China was imminent.

Royal Mail slumped 14 per cent as Britain’s former postal monopoly said it was running behind schedule with planned reforms as it grapples with threatened labour unrest and a slowing UK economy.

Centrica Plc logged its biggest one-day percentage rise in over a decade after the utility said it was on course to meet its full year earnings targets and raised its expected efficiency savings.

British American Tobacco rose nearly 4 per cent as the US dropped a proposal to sharply cut nicotine levels in cigarettes.

North America

US stock indexes moved slightly lower on Thursday as investors moved to the sidelines with mixed messages and no concrete signs of progress on US-China relations.

The US House of Representatives passed two bills to back protesters in Hong Kong and send a warning to China about human rights, a measure that angered Beijing.

But China still invited top US trade negotiators for a new round of face-to-face talks in Beijing, the Wall Street Journal reported, citing unidentified sources.

This was a day after stocks sold off on a report that a phase 1 US-China deal was not likely to happen this year. As a result, investors were wary of putting further bets on a trade deal and keeping in mind that stocks are still near record highs.

The Dow Jones Industrial Average fell 54.80 points, or 0.2 per cent, to 27,766.29, the S&P 500 lost 4.92 points, or 0.16 per cent, to 3,103.54, and the Nasdaq Composite dropped 20.52 points, or 0.24 per cent, to 8,506.21.

While the number of Americans seeking unemployment benefits was unexpectedly unchanged at a five-month high last week, suggesting some labour market softening, US home sales increased more than expected in October and house prices rose at the fastest pace in more than two years amid lower mortgage rates and a supply shortage.

Three of the S&P 500’s 11 major industry sectors rose, with energy showing the biggest gain at 1.6 per cent as oil prices gained on hopes that OPEC and its allies were likely to extend output cuts until mid-2020.

Real estate showed the biggest decline at 1.4 per cent, while technology was the biggest drag on the benchmark index with a 0.5 per cent drop.

Shares in TD Ameritrade Holding Corp surged 16.9 per cent after CNBC reported bigger rival Charles Schwab Corp was in talks to buy the discount brokerage. Schwab’s shares gained 7.3 per cent. Rival E*Trade Financial lost 9.3 per cent.

Tiffany & Co gained about 2.6 per cent after a Reuters report that LVMH persuaded the jewellery chain to allow it to access its books following a raised bid.

is content editor for Morningstar Australia

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