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Global Market Report - 26 September

Lex Hall  |  26 Sep 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open higher after a positive lead from Wall Street, which shrugged off talk of presidential impeachment.

The SPI200 futures contract was up 14 points, or 0.21 per cent, at 6,702.0 at 8am Sydney time, suggesting an early rise for the benchmark S&P/ASX200 on Thursday.

Democratic lawmakers on Tuesday moved to launch a formal inquiry into whether to impeach Donald Trump, and indexes weakened briefly early on Wednesday after the White House released a summary of a telephone call between Trump and Ukraine's president that is at the centre of the inquiry.

On Wall Street overnight, the Dow Jones Industrial Average finished up 0.61 per cent, the S&P 500 was up 0.62 and the tech-heavy Nasdaq Composite was up 1.05 per cent.

The benchmark S&P/ASX200 index closed on Wednesday down 38.7 points, or 0.57 per cent, to 6,710.2 points, while the broader All Ordinaries was down 41.9 points, or 0.61 per cent, to 6,814.7 points.

The Aussie dollar is buying 67.52 US cents from 67.80 US cents on Wednesday.

Asia

China stocks closed lower on Wednesday, after Washington and Beijing exchanged tough words and doused hopes of a trade deal.

The blue-chip CSI300 index fell 0.8 per cent to 3,870.98, while the Shanghai Composite Index shed 1.0 per cent to 2,955.43.

In Hong Kong, the Hang Seng index dropped 1 per cent to 26,031.92 points, while the Hong Kong China Enterprises Index lost 0.8 per cent to 10,193.29 points.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.9 per cent, while Japan’s Nikkei index closed down 0.36 per cent.

Europe

European shares were on course for their worst day in more than a month on Wednesday, as an impeachment inquiry into US President Donald Trump and worsening rhetoric on US-China trade relations fanned fears about global economic growth.

Trade-sensitive tech stocks fell 2 per cent, driving a more than 1 per cent fall in the pan-European STOXX 600 index , after Trump issued a stinging rebuke to China’s trade practices in a speech to the UN.

The fallout of the speech, given late in the European session on Tuesday, rippled through Wall Street and other global markets overnight and sent all of Europe’s industrial sectors into the red in the first hour of trading.

Semiconductor shares including AMS and ASM International were among the top losers while export-reliant Germany slipped 1 per cent, putting the STOXX overall firmly on course for its first weekly fall since mid August.

Equity markets have been rankled by a slew of poor euro zone economic and political news in the past week.

Data on Monday showed business growth had stalled across the currency bloc, and while a UK Supreme Court ruling on Tuesday may help head off a no-deal Brexit it was also likely further to delay the country’s tortured European Union exit process.

Weak PMI surveys, recent profit warnings from European companies and the political uncertainty on the back of the Trump impeachment probe were leading markets to take a pause, said Will James, senior investment director for European equities at Aberdeen Standard Investments.

Germany’s Pfeiffer Vacuum plunged 14 per cent, as it became the latest European industrial machinery company to cut guidance, citing order delays.

German truck supplier SAF Holland also cut its 2019 outlook for the second time this year on Tuesday, blaming a deterioration of economic conditions, particularly in Europe, China and India.

Shares in France’s EDF dropped 6.1 per cent, to the bottom of the STOXX 600, after the state-controlled power group raised its cost estimate for the Hinkley Point C nuclear plant in Britain.

In a bright spot, British supermarket group Sainsbury’s gained 2.6 per cent after it announced a new plan to cut costs, speed up debt reduction and shake up its store estate and financial services division.

North America

The S&P 500 has notched its biggest daily gain in two weeks as investors shrugged off the news of an impeachment inquiry into US President Donald Trump, while Nike shares jumped on upbeat quarterly results.

Stocks rose on Wednesday as investors digested the news, recovering from losses on Tuesday as the impeachment push gained momentum.

Helping sentiment, data showed that sales of new US single-family homes rebounded more than expected in August, a sign that the struggling housing market was starting to get a lift from lower borrowing rates.

Nike shares jumped 4.2 per cent after the company's first-quarter results beat market expectations.

The Dow Jones Industrial Average rose 162.94 points, or 0.61 per cent, to 26,970.71, the S&P 500 gained 18.27 points, or 0.62 per cent, to 2984.87 and the Nasdaq Composite added 83.76 points, or 1.05 per cent, to 8077.38.

Among the day's top sector performers were technology and communication services. The S&P 500 technology index was up 1.2 per cent, while the Philadelphia chip index gained 1.8 per cent.

Michael Antonelli, market strategist at Robert W Baird in Milwaukee, said investors were paying attention to the data.

Adding to the stronger tone, Trump said a trade deal with China could happen sooner than expected, comments that were in contrast to his harsh rhetoric the day before.

Also on the trade front, Trump and Japanese Prime Minister Shinzo Abe announced initial details of an emerging trade deal between the two countries, with Trump saying it would open up Japanese markets to $US7 billion worth of American products.

Shares in Philip Morris surged 5.2 per cent after the tobacco company called off merger talks with Altria Group and said it would instead focus on the US launch of its tobacco-heating product, iQOS.

is content editor for Morningstar Australia

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