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Global Market Report - 31 December

Lex Hall  |  31 Dec 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is tipped to close out the decade with another session in the red as Wall Street continues to pull back from record highs.

The SPI200 futures contract was down 57 points, or 0.85 per cent, at 6684.0 by 7am Sydney time on Tuesday, suggesting an early slide for the benchmark S&P/ASX200 during a shortened New Year's Eve session.

The Australian share market closed slightly lower yesterday, weighed down by falls in the share prices of the big miners, energy companies and a number of ex-dividend property, industrial, and utility stocks.

The benchmark S&P/ASX200 index closed 16.8 points, or 0.25 per cent, lower at 6,804.9 points on Monday, while the broader All Ordinaries was down 14.7 points, or 0.21 per cent, at 6,921.6 points.

US stocks slipped overnight as Wall Street's record run lost more steam amid thin trade and the data vacuum of a holiday-disrupted week.

The Dow Jones Industrial Average fell 0.64 per cent; the S&P 500 lost 0.61 per cent, and the Nasdaq Composite dropped 0.67 per cent.

The ASX will close early at 2pm on Tuesday, and will resume trade on Thursday after breaking for New Year's Day.

The Aussie dollar is buying 69.98 US cents from 69.76 US cents on Friday, having moved within touching distance of a new five-month high overnight.

Asia

China’s blue-chip index closed at an eight-month high on Monday, as the country’s central bank planned to switch benchmark for floating-rate loans to lower funding costs, while investors cheered signs of economic resilience following a Sino-US trade truce.

The blue-chip CSI300 index rose 1.5 per cent to 4,081.63, its highest closing level since April 19, while the Shanghai Composite Index ended up 1.2 per cent at 3040.02.Asia

Hong Kong shares tracked strength on the mainland to close at an over five-month high on Monday, after China’s central bank said it will switch the benchmark for floating-rate loans, a move that could help lower funding costs.

The Hang Seng index closed up 0.3 per cent at 28,319.39, its highest since July 26, while the China Enterprises Index gained 0.3 per cent to 11,225.31.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.08 per cent while Japan’s Nikkei index was down 0.76 per cent.

Europe

European shares posted their steepest one-day loss in four weeks on Monday as investors cashed in gains from a record run higher that has put the benchmark index on course for its best year since the global financial crisis.

In a holiday-shortened week, the pan-European STOXX 600 index closed 0.9 per cent lower in volumes that were less than a third of the average so far this month. The index is up 24 per cent so far this year, on track for its biggest annual rise since 2009.

A fall on Wall Street saw regional bourses steepen losses as the decline spread to all sectors.

Industrials and other defensive sectors such as healthcare led losses, while banks, one of the major underperformers for the year, lost the least.

Frankfurt shares fell more than half a percent, while those in France, Italy and Spain dropped around 1 per cent each. London-listed shares dipped 0.8 per cent.

White House trade adviser Peter Navarro’s comments on Monday that the US-China phase 1 trade deal would likely be signed next week failed to cheer investors as they await confirmation from US Trade Representative Robert Lighthizer or President Donald Trump.

After somewhat choppy trading earlier in the year, European equities have enjoyed a strong December as investors received clarity on two of the major risks to global economic growth - the US-China trade war and Brexit.

Fairly upbeat economic data from around the world has also eased recession fears, with latest figures showing Spain’s economy growing 0.4 per cent in the third quarter, in line with a flash estimate.

In corporate news, spectacles group EssilorLuxottica shed 3.1 per cent, its largest daily drop in four weeks, after saying it had discovered fraudulent activity at a plant in Thailand that was expected to cost it 190 million euros ($213 million).

Among other individual stocks, Swiss lender Cembra fell 3.8 per cent, the most on the STOXX 600 and its biggest one-day fall in more than two months, after gaining nearly 3 per cent over the last three sessions.

Looking ahead to 2020, David Madden, a market analyst at CMC Markets, sees the travel sector being held back, with rising fuel costs being one of the factors.

North America

Wall Street’s major stock indexes slipped from record highs on Monday as investors booked profits from gains made this month after the US and China reached a trade deal.

The S&P 500, the Dow Jones Industrial Average and the Nasdaq were on track for their biggest one-day percentage declines in more than three weeks.

Monday brought minor updates on the US-China trade agreement. White House trade adviser Peter Navarro said the pact was likely to be signed in the next week but confirmation would come from Trump or Lighthizer.

A South China Morning Post report earlier said Chinese Vice Premier Liu He would travel to Washington later this week to sign the deal.

The news provided little impetus for US. stocks to extend their steep climb, analysts said. Going into Monday, the benchmark S&P 500 had notched record high closes in nine of the past 11 sessions.

The Dow Jones Industrial Average fell 183.12 points, or 0.64 per cent, to 28,462.14, the S&P 500 lost 19.67 points, or 0.61 per cent, to 3220.35 and the Nasdaq Composite dropped 60.62 points, or 0.67 per cent, to 8946.

S&P 500 technology stocks dropped 0.5 per cent and weighed most heavily on the benchmark index. The sector has soared this year, with a 47.5 per cent annual gain.

 

is content editor for Morningstar Australia

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