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Global Market Report - 30 October

Lex Hall  |  30 Oct 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open lower after stocks on Wall Street dipped overnight.

The SPI200 futures contract was down 23.0 points, or 0.34 per cent, at 6,700.0 at 7am Sydney time, suggesting an early fall for the benchmark S&P/ASX200 on Wednesday.

The benchmark S&P/ASX200 index finished Tuesday up 4.7 points, or 0.07 per cent, to 6,745.4 points, while the broader All Ordinaries closed up six points, or 0.09 per cent, to 6,848.5 points.

On Wall Street, the Dow Jones Industrial Average was down 0.06 per cent, the S&P 500 was down 0.10 per cent and the tech-heavy Nasdaq Composite was down 0.58 per cent.

The Australia Bureau of Statistics will release its consumer price index data for the three months to September at 11.30am on Wednesday.

The Aussie dollar is buying 68.65 US cents from 68.57 US cents on Tuesday.

Asia

China shares closed lower on Tuesday, as a correction in high-tech firms weighed, while investors also sought clarity on Sino-US trade talks and the outlook for the domestic economy.

The Shanghai Composite index ended 0.87 per cent down at 2,954.18, erasing a gain of 0.85 per cent made a day earlier.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.24 per cent, while Japan’s Nikkei index closed up 0.47 per cent.

Hong Kong shares closed lower on Tuesday, pulling back from six-month highs recorded a day earlier, as investors took profits, and as the city’s leader warned that Hong Kong could record negative growth for the full 2019 year.

The Hang Seng index closed 104.50 points down or 0.39 per cent at 26,786.76.

Europe

European shares closed lower for the first time in seven sessions on Tuesday, as weak earnings dampened optimism surrounding the US-China trade progress and ahead of an expected interest-rate cut by the US Federal Reserve later this week.

The pan-European STOXX 600 fell 0.2 per cent after scaling a 21-month high in the previous session, tracking record gains for Wall Street's S&P 500 index.

Finnish paper firm Stora Enso’s slumped 5.1 per cent as its quarterly profit dropped and it warned of global political uncertainties.

Peers Mondi and Smurfit Kappa also fell following the results.

Telecom stocks lost 1.7 per cent, the most among the major European sub-sectors, hurt by a 2.6 per cent slide in shares of Orange.

A top executive at France’s number one telecoms operator said sales in Spain, the telecoms group’s second-biggest market, would remain under pressure from competitors cutting prices in coming months.

The oil and gas sector fell 0.9 per cent, dragged down by British energy firm BP, which reported a sharp drop in third-quarter profits, hurt by weaker oil prices and lower production.

Also weighing on the sector was British oilfield services firm Hunting, down 1 per cent, after the company said it sees annual core profit at the lower end of market expectations as it grapples with a slowdown in the US onshore drilling market.

Financials were pulled lower by a 2.4 per cent drop in Deutsche Boerse after the German exchange operator missed its third-quarter profit forecasts.

Expectations were low going into the European corporate earnings season, but after its three busiest weeks the overall picture has been slightly better than expected with companies pulling off modest beats.

Banks were dragged lower by shares of Swedbank, which fell 3 per cent, after Estonia’s financial regulator said it decided to open a misdemeanour case with regard to the Estonian subsidiary of the Swedish lender.

Among positive movers, shares of German healthcare group Fresenius gained nearly 5 per cent to top the STOXX index after beating revenue expectations on strong sales in emerging markets and growth in its dialysis unit.

Airbus edged 1 per cent higher after Indian budget carrier IndiGo placed an order for 300 A320neo-family jets worth at least $33 billion at recent catalogue prices.

The catalyst for markets this week is expected to be the Fed meeting where officials are expected to cut interest rates for the third time this year, but focus will be squarely on further clues from the central bank on the policy path ahead.

North America

The S&P 500 edged lower to snap a four-session win streak on Tuesday and it retreated from a record high as investors grappled with a flood of earnings and the latest update on a potential trade deal between the US and China.

Hopes of a US-China trade deal and expectations of another interest rate cut by the Federal Reserve when it concludes its two-day meeting on Wednesday have pushed stocks higher the past several sessions, sending the S&P to its second straight record intraday high.

But indexes pulled back after a US administration official told Reuters that Washington and Beijing are continuing to work on an interim trade agreement, but it may not be completed in time for the leaders of the two countries to sign in Chile next month.

Tech shares, which have been closely tied to trade progress, lost ground after the report and were last down 0.92 per cent.

Drugmakers Merck & Co Inc and Pfizer Inc both gained after reporting upbeat third-quarter results to help keep the Dow and S&P near the flat line. The healthcare sector, which has been the second-worst performer among the 11 major S&P 500 sectors this year, rose 1.16 per cent as the best performer on the session as Merck gained 3.5 per cent and Pfizer advanced 2.5 per cent.

But shares of Google parent Alphabet Inc, however, lost 2.20 per cent and weighed on the Nasdaq as its quarterly profit missed estimates due to higher costs.

Third-quarter earnings of S&P 500 companies have largely been better than expected, with over 77 per cent of the 236 firms to report so far surpassing profit expectations, according to Refinitiv data. Still, earnings are expected to decline by 1.9 per cent for the quarter.

Other big names reporting this week include tech and internet heavyweights Apple Inc and Facebook Inc, as well as oil majors Exxon Mobil Corp and Chevron Corp.

The focus now shifts to the Fed meeting, where the central bank is widely expected to deliver a quarter-percentage-point interest rate cut for the third time this year.

The Dow Jones Industrial Average fell 20.04 points, or 0.07 per cent, to 27,070.68, the S&P 500 lost 2.54 points, or 0.08 per cent, to 3,036.88 and the Nasdaq Composite dropped 49.14 points, or 0.59 per cent, to 8,276.85.

The S&P earlier in the session reached a high of 3,047.87, its second straight intraday record.

General Motors Co gained 4.28 per cent after its quarterly net profit topped estimates, but the carmaker slashed its earnings forecast for 2019 as the 40-day US labour strike by the United Auto Workers union brought virtually all of its North American operations to a standstill.

Beyond Meat Inc  tumbled 22.22 per cent as the vegan burger maker said it would need to offer more store discounts amid rising competition.

Shares of GrubHub Inc plunged 43.30 per cent after the online food delivery company warned of slowing growth as customers opted to choose from a growing pool of rival providers.

 

is content editor for Morningstar Australia

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