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Global Market Report - 4 April

Lex Hall  |  04 Apr 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open flat despite a rise on Wall Street overnight prompted by growing hopes of progress in trade and a rally for chipmakers.

The SPI200 futures contract was up just one point, or 0.02 per cent, at 6,270.0 at 8am Sydney time, suggesting a steady start for the benchmark S&P/ASX200 on Thursday. The ASX hit a six-month high yesterday, amid positive signs for the local economy and optimism on US-China trade talks.

The benchmark S&P/ASX200 index was up 42.6 points, or 0.68 per cent, to 6,285 points on Wednesday, while the broader All Ordinaries was up 40.9 points, or 0.65 per cent, to 6,368.7.

Wall Street finished higher after a late rally sparked by hopes of a US-China trade deal, with the Dow Jones Industrial Average up 0.15 per cent, the S&P 500 up 0.21 per cent and the tech-heavy Nasdaq Composite up 0.60 per cent.

The Aussie dollar is buying 71.13 US cents from 71.07 US cents on Wednesday.

Labor will deliver its budget reply today in which it is expected to offer bigger tax cuts to the lowest income earners, promise bigger surpluses and then change the subject to Medicare.

ASIA

China stocks on Wednesday closed at their highest levels since March 2018, aided by more evidence of economic recovery and signs of progress in US-China trade talks.

The blue-chip CSI300 index rose 1.3 per cent, to 4,022.16 points, while the Shanghai Composite Index closed up 1.2 per cent at 3,216.30 points.

Both indexes ended at their highest levels since late March 2018.

Activity in China’s services sector picked up to a 14-month high in March as demand improved at home and abroad, a private business survey showed on Wednesday, adding to signs that government stimulus policies are gradually kicking in

Hong Kong stocks closed at near 10-month highs on Wednesday, aided by more evidence of economic recovery on the mainland and signs of progress in US-China trade talks.

The Hang Seng index rose 1.2 per cent to 29,986.39, while the China Enterprises Index gained 1.4 percent to 11,705.16, its highest close since 15 June, 2018.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.93 per cent, while Japan’s Nikkei index closed up 0.97 per cent.

EUROPE

Stocks in Europe climbed for a fourth straight session on Wednesday, propped up by positive sentiment about a potential US-China trade deal, hopes of a smoother Brexit and strong economic data in China and the eurozone.

The pan-European STOXX 600 index rose 1 per cent to its highest level in nearly eight months, aided by gains on bourses across the continent.

Positive sentiment was supplemented by data showing retail sales in the eurozone were stronger than expected in February, while activity in China’s services sector hit a 14-month high in March.

Germany’s DAX rose for a fifth straight session. The trade-sensitive index added 1.7 per cent on Wednesday in its best performance in more than half a month.

London's FTSE 100 rose 0.4 per cent, but did not match advances seen on most European bourses as a firmer pound GBP capped gains. The profits of a significant number of the benchmark's firms are dented by a stronger pound due to the companies' reliance on overseas earnings.

The positive sentiment crossed the Irish Sea, with Dublin-traded stocks rising 1.8 per cent to their highest closing level in nearly half a year. Ireland is especially exposed to the fallout from a hard Brexit.

Shares of European chemical firms gained about 2.1 per cent, while financials services stocks added 1.9 per cent largely on gains made by London-traded stocks.

Construction and materials stocks also basked in the glow of a potentially softer Brexit, tacking on 1.8 per cent.

European chipmakers Ams, Siltronic and Infineon Technologies each rose at least 4.1 per cent, gaining along with their US peers, bolstered by optimism over US-China trade talks.

NORTH AMERICA

US stocks edged higher on Wednesday, extending a strong start to the quarter as a rally among chipmaker shares provided a boost to the broader market on growing hopes of a trade deal between Washington and Beijing.

White House economic adviser Larry Kudlow said talks between the US and China have progressed and both sides hope to get closer to a deal this week.

Shares of chipmakers, which rely heavily on China for revenue, especially benefited. The Philadelphia Semiconductor index jumped as much as 3 per cent to a record high. The index ended 2.3 per cent higher.

Advanced Micro Devices Inc shares gained 8.5 per cent, the most on the S&P 500, and Intel Corp shares rose 2 per cent after Nomura Instinet started coverage of both the stocks with “buy” ratings.

Positive sentiment on trade outweighed weak economic data. The Institute for Supply Management’s US services sector PMI for March was below estimates and at its lowest since August 2017.

Earlier, the ADP National Employment Report showed US private employers added 129,000 jobs in March, below economists’ estimates.

The Dow Jones Industrial Average rose 39 points, or 0.15 per cent, to 26,218.13, the S&P 500 gained 6.16 points, or 0.21 per cent, to 2,873.4 and the Nasdaq Composite added 46.86 points, or 0.6 per cent, to 7,895.55.

The S&P 500 came off its highs in afternoon trading after a report from cybersecurity firm UpGuard that millions of Facebook’s user records were inadvertently posted on

Amazon.com’s cloud computing servers in plain sight.

Facebook shares turned negative on the report and ended 0.4 per cent lower.

Still, dovish Federal Reserve and trade hopes set the stage for a strong start to the quarter. The S&P 500’s gains put the benchmark stock index just 2 per cent below a record high set in September.

Boeing Co capped gains on the Dow, with its shares dropping 1.5 per cent after Baird said it expects Wall Street to cut earnings estimates “considerably” after the company reports delivery numbers next week. The numbers could reflect the 737-MAX groundings following the Ethiopian crash, Baird said.

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