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Global Market Report - 3 September

Lex Hall  |  03 Sep 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open lower ahead of the central bank’s decision on monetary policy.

At 7am Sydney time the SPI200 futures contract was down 15 points, or 0.23 per cent, at 6,537.0, suggesting a dip for the benchmark S&P/ASX200.

The Australian share market has closed lower for the first time in five days, with telecom and energy shares leading losses.

The benchmark S&P/ASX200 index yesterday finished Monday down 24.8 points, or 0.38 per cent, to 6,579.4 points, while the broader All Ordinaries was down 20.7 points, or 0.31 per cent, to 6,677.5 points.

China has lodged a complaint against the US at the World Trade Organization over  US import duties, the Chinese Commerce Ministry said on Monday.

Wall Street was closed overnight for a US holiday.

The Reserve Bank of Australia will announce its decision on the cash rate at 2.30pm Sydney time.

The Aussie dollar is buying US67.16 cents from US67.31 cents on Monday.

Asia

China markets ended ahead, but the Hang Seng slipped amid a new round of tariffs and protests that disrupted airport and MTR service in Hong Kong.

The Shanghai Composite Index added 1.3 per cent to close at 2,924.1, bolstered by shares in the aviation, technology development, media and communications sectors.

The Hang Seng Index closed down 0.4 per cent lower at 25,626.6.

Japanese shares also fell following the round of new mutual tariffs between the US and China.

The Nikkei stock average ended down 0.41 per cent at 20,620.19 points.

Europe

European stocks closed higher in thin trading on Monday, with investors favouring defensive sectors as the United States and China imposed more tariffs, while a slide in the pound helped Britain’s FTSE 100 outperform.

The pan-European STOXX 600 closed up 0.3 per cent, starting September on a positive note after global trade disputes and recession worries drove the benchmark down 1.6 per cent in August.

After a tumultuous month, equity investors largely shrugged off the latest escalation in the trade spat as Washington began imposing 15 per cent tariffs on a variety of Chinese goods on Sunday and Beijing reciprocated with new duties on  US crude oil.

London shares jumped 1 per cent, outpacing their European peers, as the internationally focused stocks got a boost from a slump in sterling on fresh Brexit worries. Sterling fell sharply as Boris Johnson gathered an emergency meeting, fuelling expectations the prime minister was preparing to call a snap election should politicians this week vote to delay Britain's exit from the European Union. The pound's decline helped the exporter-heavy FTSE 100 1 per cent higher.

On the main STOXX index, defensive sectors such as food and beverage, healthcare and utilities - which tend to be favoured during times of economic uncertainty - led the gainers.

In the latest evidence of trade war taking a toll on global growth, a series of business surveys from China to Europe showed factory activity was largely in decline in August.

An ongoing decline in export-reliant Germany meant factory activity in the euro zone contracted for a seventh month in August, bolstering expectations the European Central Bank will ease monetary policy next week.

US President Donald Trump said both sides will still meet for talks later this month.

Trade reliant sectors like technology stocks and autos lagged, and commodity-linked stocks turned to losses after initially leading gains in the region on a surge in iron ore prices.

Trade-sensitive German shares ended slightly higher, led by gains in exchange operator Deutsche Boerse, while a price target hike by Goldman Sachs on renewable energy company RWE drove its shares up 3.7 per cent.

Easing political worries helped Italy’s FTSE MIB gain 0.6 per cent after Prime Minister Giuseppe Conte said on Sunday he expected to settle talks over a new government by Wednesday, as the 5-Star Movement and Democratic Party (PD) worked out cabinet posts and a common agenda.

British pharma company AstraZeneca Plc jumped 2.9 per cent to an all-time high on positive late-stage study results and a target price hike by Deutsche Bank.

North America

US stock futures dived on Monday after Washington and Beijing placed new taxes on each other’s goods, while Argentina imposed capital controls and cast a new spotlight on emerging-market risks.

The US imposed 15 per cent tariffs on a variety of Chinese goods and China began to impose new duties on a $75 billion target list.  US President Donald Trump said both sides would still meet for talks later this month.

Wall Street was shut for the Labor Day holiday on Monday, but futures contracts tied to the major indexes were trading and spiked lower.

The E-mini futures for  US S&P 500 ESc1 fell as much as 1.2 per cent in early trade and last stood down 0.9 per cent. MSCI’s All-Country World Index, which tracks shares across 47 countries, was down 0.1 per cent on the day.

is content editor for Morningstar Australia

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