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Global Market Report - 27 November

Lex Hall  |  27 Nov 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open lower despite slight gains on Wall Street overnight.

The SPI200 futures contract was down 8.0 points, or 0.12 per cent, at 6,787.0 at 8am Sydney time, suggesting a dip for the benchmark S&P/ASX200 on Wednesday.

The Australian share market closed higher for a third day yesterday, with gains across every sector except consumer discretionary shares.

The benchmark S&P/ASX200 index finished on Tuesday up 56.1 points, or 0.83 per cent, to 6,787.5 points, while the broader All Ordinaries was up 54.2 points, or 0.79 per cent, to 6,889.8 points.

On Wall Street, the Dow Jones Industrial Average was up 0.20 per cent, the S&P 500 was up 0.22 per cent and the tech-heavy Nasdaq Composite was up 0.18 per cent.

The Aussie dollar is buying 67.88 US cents from 67.84 US cents on Tuesday.

Asia

Chinese blue-chip shares rose on Tuesday and the Shanghai Composite Index inched higher on a rebound in high-tech firms and as renewed optimism over US-China trade deal offered a mild boost.

At the close, the blue-chip CSI300 index was up 0.35 per cent, with its financial sector sub-index lower by 0.27 per cent, the consumer staples sector up 0.94 per cent, the real estate index down 0.16 per cent and the healthcare sub-index up 1.06 per cent.

Hong Kong stocks ended lower on Tuesday as investors locked in profit after a recent rally, while Alibaba’s shares rose to a small premium over New York in their debut at the financial hub.

At the close of trade, the Hang Seng index was down 79.12 points or 0.29 per cent at 26,913.92 after gaining nearly 2 per cent over the previous two sessions.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.08 per cent, while Japan’s Nikkei index closed up 0.35 per cent.

Europe

European stocks rose for the third straight session on Tuesday, lifted by hopes that the ongoing negotiations between US and China would yield a trade truce.

Swiss drugmaker Vifor Pharma was the top performer on the pan-European STOXX 600 after the company announced the success of avacopan as a treatment for an auto-immune disease in a trial.

Irish shares of CRH rose nearly 3 per cent after the building materials supplier posted a rise in quarterly profit on a like-for-like basis helped by strong demand and pricing which it expects to continue in 2020.

Its shares helped the construction & materials subsector gain nearly 1 per cent.

After a sluggish start, the STOXX 600 index gradually crept up 0.1 per cent as major US stock indexes notched record highs.

Trade negotiators from China and the US discussed issues related to phase one of a trade agreement on Tuesday and agreed to maintain communication on remaining issues, China’s Commerce Ministry said.

White House adviser Kellyanne Conway said both countries are close to agreement on the initial deal but three big sticking points remain.

Hopes that the world’s top two economies would hammer out a deal to end their trade war, along with a better-than-feared third-quarter earnings, has helped the benchmark STOXX 600 rise about 3 per cent so far in November, its third straight monthly climb.

Among major country indexes, Italy was leading gains with its 0.4 per cent rise while those in Britain and Spain posted modest gains.

UK's midcaps index outperformed with its 0.8 per cent jump, boosted by a surge in shares of Pets at Home Group Plc after the company forecast full-year underlying pretax profit toward the top end of current market view.

Shares of French car parts maker Faurecia rose 2 per cent as it said it was targeting record sales, profits and cash generation in 2022, partly helped by a boost from its acquisition of Japanese company Clarion.

Among decliners, Compass Group tumbled more than 7 per cent as the world’s biggest catering firm warned that hundreds of jobs could be in jeopardy as a part of a program to stem costs, as the weakening economic outlook in Europe dented its volumes and margins.

North America

US stocks crawled higher on Tuesday, and all three major Wall Street indexes notched record levels, as upbeat comments by President Donald Trump on trade talks eclipsed some softer-than-anticipated economic data.

Trump said the US and China were close to an agreement on the first phase of a deal, while stressing Washington’s support for protesters in Hong Kong, a point of contention between the world’s two largest economies.

The Dow Jones Industrial Average rose 55.21 points, or 0.2 per cent, to 28,121.68, the S&P 500 gained 6.88 points, or 0.22 per cent, to 3,140.52 and the Nasdaq Composite added 15.45 points, or 0.18 per cent, to 8,647.93.

Walt Disney Co gained 1.30 per cent after a report that its streaming service was averaging nearly 1 million new subscribers a day. The stock helped keep the Dow Jones Industrial Average on the plus side, providing about 20 points to the upside.

Rising hopes for a trade deal between the world’s two largest economies, solid US economic indicators and a third-quarter corporate earnings season that has largely topped lowered expectations have pushed stocks higher. The three major indexes have now notched a record close in five of the past eight sessions.

Also supporting stocks has been the dovish turn by the Federal Reserve, which has cut interest rates three times this year. Fed Chair Jerome Powell said on Monday that monetary policy was “well positioned” to support the strong labour market.

Investors are watching for signs on the health of the consumer for the holiday shopping season. Consumer confidence fell for a fourth straight month in November but remained at levels sufficient to support a steady pace of consumer spending, according to data on Tuesday. A separate report showed that new home sales unexpectedly dropped in October, although data for the prior month was revised up, with purchases hitting their highest level in over 12 years.

Eight of the 11 major S&P 500 sectors were higher. The consumer discretionary sector rose 0.81 per cent and provided the biggest boost, led by a 9.86 per cent jump in shares of Best Buy Co Inc following a strong holiday-quarter profit forecast.

In contrast, Dollar Tree Inc tumbled 15.24 per cent after it projected holiday-quarter profit below estimates, signalling the fallout from the trade dispute.

Best Buy was the best performer on the S&P 500, while Dollar Tree was the biggest drag on both the S&P and the Nasdaq.

Among other stocks, Hewlett Packard Enterprise Co fell 8.48 per cent as the enterprise software maker missed fourth-quarter revenue estimates.

 

is content editor for Morningstar Australia

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