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Global Market Report - 28 October

Lex Hall  |  28 Oct 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 at the end of last week.

The SPI200 futures contract was up 24.0 points, or 0.36 per cent, at 6,739.0 at 7am Sydney time, suggesting a rise for the benchmark S&P/ASX200 on Monday.

The Australian share market closed higher for a fifth straight day on Friday - and added more gains than the rest of the week combined.

The benchmark S&P/ASX200 index finished Friday up 45.6 points, or 0.68 per cent, to 6,739.2 points, while the broader All Ordinaries was up 44.3 points, or 0.65 per cent, to 6,841 points.

On Wall Street on Friday, the Dow Jones Industrial Average finished up 0.57 per cent, the S&P 500 was up 0.41 per cent and the tech-heavy Nasdaq Composite was up 0.70 per cent.

The Aussie dollar is buying 68.25 US cents from 68.21 US cents on Friday.

Asia

Chinese stocks rose on Friday as Beijing reportedly sought the scrapping of Washington’s tariffs on its goods in exchange for buying more US agricultural products, ahead of high-level trade talks later in the day.

At the close, the Shanghai Composite index was up 0.5 per cent at 2,954.93 points. The CSI300 was up 0.7 per cent.

The Hong Kong stock market fell on Friday, as investors braced for uncertainty ahead of fresh U.S.-China trade talks, local protests and the U.S. Federal Reserve’s rate decision next week.

At the close of trade, the Hang Seng index was down 0.5 per cent at 26,667.39, down 0.2 per cent from the previous week.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by almost 0.1 per cent, while Japan’s Nikkei index closed up 0.2 per cent.

Europe

A late turnaround helped European stocks notch gains for a fifth straight session on Friday, as signs of progress in US-China trade talks and upbeat reports from luxury goods makers dispelled some fears about an earnings and growth slowdown.

After starting the day nearly flat and eventually falling as much as 0.4 per cent, the main European equities benchmark recovered to finish 0.2 per cent higher.

New York's S&P 500 surpassed its record closing high after CNBC reported that the US and China were close to finalizing parts of a trade pact, while the trade-sensitive German DAX rose 0.2 per cent.

France's CAC 40 outperformed major regional indexes as Gucci owner Kering jumped 8.7 per cent, while Italian jacket maker Moncler rose 11.3 per cent. The companies joined other luxury labels in easing fears of a major third quarter sales hit from protests in Hong Kong.

Europe’s retail index gained 1.2 per cent, leading gains among major subsectors.

The food and beverage sector led losses on Friday, however, after brewer AB InBev provided a cautious outlook and reported weaker-than-expected quarterly earnings growth, sparked by reduced demand for its beer in Brazil and South Korea.

Shares in Carlsberg and Heineken dropped about 2 per cent each.

The prospect of months more wrangling over Brexit remained as the EU failed to set a date for Britain’s departure from the bloc, while the UK parliament squabbled over Prime Minister Boris Johnson’s call for an election to break the deadlock.

EU ambassadors agreed in principle to a delay beyond the 31 October deadline, but will not decide the length of the extension until Monday or Tuesday, an official said.

London's FTSE 100 fell for the first time in five sessions, while mid-caps and the pound weakened as Johnson conceded for the first time on Thursday that he could not meet his 31 October Brexit deadline.

Despite uncertainties around trade and Brexit, the STOXX 600 closed the week with a gain of more than 1 per cent after a handful of industry heavyweights topped low market expectations.

The Swiss index, packed with defensive shares that have been favored this year, hit a record high.

Shares in French tyre maker Michelin gained 6 per cent after it maintained its full-year profit guidance even as it cut its forecast again for the global tyre market.

German telecoms operator 1&1 Drillisch and its parent United Internet tanked after the former’s request to review prices under an agreement with rival Telefonica Deutschland was rejected.

Offsetting those gains was a 16.2 per cent fall in shares of entertainment company Ubisoft, which lost roughly a quarter of its value after cutting its 2020 earnings guidance.

Among banks, Britain’s Barclays rose 2.4 per cent after reporting higher than expected third-quarter earnings.

North America

US stocks rose on Friday after Washington said it was close to finalising parts of a trade pact with Beijing, while strong quarterly results from Intel boosted investor sentiment, sending the S&P 500 briefly over a record high.

During the session, the benchmark index peaked at 3,027.39 points, which surpassed its closing record of 3,025.86 on 26 July. It ended at 3,022.55.

US stocks rose early after the US Trade Representative's office said deputy-level talks would continue. President Donald Trump said China wanted "to make a deal very badly."

Wall Street enjoyed a strong week, boosted by a clutch of better-than-expected third-quarter earnings reports. The S&P 500 posted its biggest weekly percentage gain in seven weeks, the Nasdaq its biggest in eight weeks.

Intel's quarterly report added to Friday's upbeat sentiment. The chipmaker's shares jumped 8.1 per cent, their biggest gain since January 2018, after the company beat Wall Street revenue and profit estimates and raised its full-year revenue forecast.

The gain in Intel helped propel the Philadelphia SE Semiconductor index to a record high.

Amazon.com fell after the e-commerce giant forecast revenue and profit for the crucial holiday quarter below estimates. Amazon shares ended 1.1 per cent lower, well off their session low.

The Dow Jones Industrial Average rose 152.53 points, or 0.57 per cent, to 26,958.06, the S&P 500 gained 12.26 points, or 0.41 per cent, to 3,022.55 and the Nasdaq Composite added 57.32 points, or 0.7 per cent, to 8,243.12.

For the week, the S&P 500 rose 1.2 per cent, the Dow gained 0.7 per cent and the Nasdaq climbed 1.9 per cent.

Boeing shares dropped 1.4 per cent after Indonesian authorities looking into October 2018's Lion Air crash said the world's largest planemaker failed to grasp risks in the design of cockpit software on its 737 MAX jet.

Shares of VF Corp fell 7.3 per cent after the apparel maker reported lower-than-expected quarterly revenue as competition intensified for its Vans and Timberland brands.

The next round of earnings due this week includes Apple, Alphabet, Pfizer and Merck & Co.

 

is content editor for Morningstar Australia

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