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Global Market Report - 25 September

Lex Hall  |  25 Sep 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open sharply lower after falls on Wall Street overnight as a push to impeach Donald Trump gains momentum.

The SPI200 futures contract was down 72 points, or 1.07 per cent, at 6,663.0 at 8am Sydney time, suggesting a firmly negative start for the benchmark S&P/ASX200 on Wednesday.

The Australian share market has finished flat, with losses for tech stocks and miners and gains for consumer discretionary and bank stocks.

The benchmark S&P/ASX200 index finished Tuesday down 0.8 points, or 0.01 per cent, to 6,748.9 points, while the broader All Ordinaries was down 4.5 points, or 0.07 per cent, to 6,856.6 points.

US stocks have fallen in volatile trade, giving the S&P 500 its biggest daily drop in a month, as a push for the impeachment of US President Donald Trump gained momentum among Democrats in the US congress.

On Wall Street, the Dow Jones Industrial Average finished down 0.53 per cent, the S&P 500 was down 0.84 and the tech-heavy Nasdaq Composite was down 1.46 per cent.

The Aussie dollar is buying 67.99 US cents from 67.72 US cents on Tuesday.

Asia

China stocks rose on Tuesday as policymakers promised additional measures to bolster a slowing economy, but lingering uncertainties around the US-China trade talks capped gains.

The blue-chip CSI300 Index and the Shanghai Composite Index both rose 0.3 per cent to 3,901.08 and 2,985.34, respectively.

Hong Kong’s benchmark stock index ended higher on Tuesday as fresh stimulus hopes in China offset trade war uncertainty and slowdown concerns due to ongoing protests in the island city.

The Hang Seng index gained 0.2 per cent to 26,281, but the China Enterprises Index dipped 0.2 per cent to 10,271.03.

Japanese shares rose on Tuesday, buoyed by optimism that high-level US-China trade talks will take place early next month and investors bought ahead of companies going ex-dividend later in the week.

The benchmark Nikkei average edged 0.1 per cent higher to close at 22,098.84 points, while the broader Topix advanced 0.4 per cent to 1,622.94, its highest closing since 23 April.

Europe

European shares closed little changed on Tuesday on persistent growth worries and as London stocks succumbed to heightened Brexit uncertainty after the Supreme Court ruled that the British prime minister’s suspension of parliament was unlawful.

The pound rallied as the Court's decision was seen as reducing the probability of Britain leaving the European Union without a divorce deal or possibly delaying Brexit.

The currency's rally saw the FTSE 100 give up 0.5 per cent as firms that earn much of their revenue in dollars fell. More domestically focused stocks also declined 0.6 per cent, showing deeper Brexit malaise among investors.

Opposition leaders called on Prime Minister Boris Johnson to resign, but a source in his office said he would not do so and remained committed to delivering Brexit on 31 October.

Euro zone stocks and the broader STOXX 600 index both closed steady, giving up meagre gains as disappointing US consumer confidence was the latest in a raft of poor economic data.

After dismal data from Germany and across the euro zone had dented sentiment on Monday, a slight rise in German business morale did little to calm investor nerves as the Ifo economic institute said Europe’s largest economy is still likely slipping into recession.

Investors bought into sectors perceived as defensive plays such as healthcare, food and beverages and utilities - commonly considered as industries where demand and results hold up relatively better when economic growth slows.

Travel and leisure saw a 1.2 per cent jump, the largest of any sector, as airlines and travel operators rose on expectations that they will pick up lost business from British travel giant Thomas Cook following its collapse on Monday.

TUI jumped 6.5 per cent to top the main index, while Deutsche Lufthansa, Ryanair Holdings and EasyJet gained between 1 and 2 per cent.

Belgian materials and technology group Umicore rallied 5.8 per cent after it partnered with LG Chem for a cathode material supply deal.

Falling iron ore prices hurt miners such as BHP and Rio Tinto, while lower oil prices hit oil stocks.

The eurozone banking index and auto stocks continued their slide after Monday’s business activity readings.

North America

Further pressuring Wall Street, disappointing consumer confidence data underscored concerns over the economic impact of a prolonged US-China trade war.

Democratic House Speaker Nancy Pelosi will announce a formal impeachment inquiry of Trump, a Republican, later on Tuesday, according to several media reports.

Support among Democrats for the start of impeachment proceedings increased after news that Trump may have sought foreign help in smearing a political rival.

Stocks briefly pared losses after Trump, in a tweet, said his administration would release a complete transcript of a call with Ukrainian President Volodymyr Zelensky that is at the centre of the controversy.

He said the released transcript would show the call was "totally appropriate" and that he had not pressured Zelensky to investigate Democratic presidential hopeful Joe Biden and that there had been no quid pro quo for US aid in exchange for a probe.

The Cboe volatility index jumped on Tuesday. The S&P 500 retail index fell 1.4 per cent while Amazon.com declined 2.4 per cent and was the biggest drag on the S&P 500 and Nasdaq.

The Dow Jones Industrial Average fell 142.22 points, or 0.53 per cent, to 26,807.77; the S&P 500 lost 25.18 points, or 0.84 per cent, to 2,966.6; and the Nasdaq Composite dropped 118.84 points, or 1.46 per cent, to 7,993.63.

Wall Street's major indexes lost their footing early when Trump took a harsh tone about China's trade practices.

Nike slipped 0.6 per cent, ahead of the world's largest sportswear-maker's first-quarter results after the bell.

is content editor for Morningstar Australia

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