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Global Market Report - 23 January

Lex Hall  |  23 Jan 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is tipped for an early slump as a gloomy global growth outlook and weak company forecasts end Wall Street's four-day rally.

The SPI200 futures contract was down 28 points, or 0.48 per cent, to 5775.0 at 8am Sydney time on Wednesday, indicating the benchmark ASX/200 will continue its slide from the previous session.

Yesterday, the ASX closed lower for the first time in six days dragged heavily by financials, but remains on a six-year high comparatively for January. The benchmark S&P/ASX200 index was down 31.6 points, or 0.54 per cent, to 5858.8 at 4.30pm on Tuesday, while the broader All Ordinaries was down 29.2 points, or 0.49 per cent, lower at 5924.3.

The Aussie dollar has also dropped as global economic sentiment sours, buying 71.19 US cents from 71.36 US cents on Tuesday.

The major US stock indexes have fallen following reports the Trump administration rejected an offer from China for preparatory talks ahead of next week's high-level trade negotiations. The US later denied this was the case.

Global markets are down after the International Monetary Fund trimmed its 2019 global economic growth estimates on Monday, while data from China on the same day confirmed the country's slowest economic growth rate in 28 years.

The Dow Jones Industrial Average fell 301.87 points, or 1.22 per cent, to 24,404.48, the S&P 500 lost 37.81 points, or 1.42 per cent, to 2,632.90 and the Nasdaq Composite fell 136.87 points, or 1.91 per cent, to 7,020.36.

Oil and metals prices have also taken a hit, but safe-haven gold is up as investor risk sentiment retreats.

ASIA

Asian markets finished broadly lower today with shares in China leading the region. Chinese President Xi Jinping stressed the need to maintain political stability, comments which hinted at growing concern over the country’s slowing economy.

The Shanghai Composite is down 1.18 per cent while Hong Kong's Hang Seng is off 0.70 per cent and Japan's Nikkei 225 is lower by 0.47 per cent.

Tencent, the most actively-traded name in Hong Kong's stock market, fell 1.2 per cent after missing out on a third round of video games approvals in China.

In Korea, Hyundai Motor Co is up 28.5 per cent after bagging several awards at the Detroit Motor Show.

EUROPE

European markets finished lower today with shares in London leading the region. The FTSE 100 is down 0.99 per cent while France's CAC 40 is off 0.42 per cent and Germany's DAX is lower by 0.41 per cent.

The pan-European STOXX 600 index lost 0.36 per cent and MSCI’s gauge of global stocks fell 1.08 per cent.

Shares in banking stocks were among the losers amid poor earnings results.

Europe's banking index fell 1 per cent, with HSBC, BNP Paribas and Santander down between 1.2 per cent and 2.7 per cent. UBS fell 3.2 per cent.

NORTH AMERICA

US stocks ended lower, snapping a four-session rally, as a gloomy global economic growth outlook, trade concerns and disappointing company forecasts dampened sentiment.

All three major US stock indexes pared losses after White House economic adviser Larry Kudlow denied a report by the Financial Times that the Trump administration cancelled preparatory trade talks with China.

Still, the S&P 500, the Nasdaq and the Dow all posted their biggest one-day percentage drops since 3 January.

On Monday, the IMF trimmed its 2019 global economic growth estimates, and China confirmed its slowest economic growth rate in 28 years.

The downbeat China news pulled chipmakers lower. The Philadelphia SE Semiconductor index fell 2.9 per cent.

Each of the FAANG momentum stocks, Facebook, Apple, Amazon.com, Netflix and Google parent Alphabet, ended down between 1.6 per cent and 4.1 per cent.

Fears of a slowdown in corporate profits mounted as companies posting fourth-quarter results provided disappointing forward-looking projections.

Johnson & Johnson dropped 1.4 per cent after its 2019 sales forecast fell short of analyst expectations.

Shares of Stanley Black & Decker tumbled 15.5 per cent after its disappointing 2019 forecast.

The Dow Jones Industrial Average fell 301.87 points, or 1.22 per cent, to 24,404.48. The S&P 500 lost 37.81 points, or 1.42 per cent, to 2,632.9 and the Nasdaq Composite dropped 136.87 points, or 1.91 per cent, to 7,020.36.

Of the 11 major sectors of the S&P 500, all but utilities closed lower. Industrials, energy, communications services and consumer discretionary had the largest percentage losses.

With just over 12 per cent of S&P 500 companies having reported thus far, 78.7 per cent have beat expectations. Analysts expect S&P 500 fourth-quarter earnings growth of 14.1 per cent, down from 20.1 per cent on 1 October, according to Refinitiv data.

Oilfield services company Halliburton fell 3.1 per cent as falling oil prices and slowing US demand weighed on fourth-quarter results.

IBM rose in post-market trading after reporting a smaller-than-expected drop in fourth-quarter revenue.

During the dearth of US economic data stemming from the government shutdown, a report from the National Association of Realtors showed US sales of existing homes fell in December to the lowest level in three years.

The PHLX Housing index fell 1.8 per cent.

is content editor for Morningstar Australia

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