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Global Market Report - 5 April

Lex Hall  |  05 Apr 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open marginally lower as investors wait for clarity on US-China trade talks.

The SPI200 futures contract was down 9 points, or 0.14 per cent, at 6,209.0 at 8am Sydney time, suggesting a dip for the benchmark S&P/ASX200 on Friday.

The Australian share market suffered its first losing session in eight days yesterday, with nearly every sector down.

The benchmark S&P/ASX200 index closed down 52.2 points, or 0.83 per cent, to 6,232.8 points, while the broader All Ordinaries was down 48.3 points, or 0.76 per cent, to 6,320.4.

Media reports that US President Donald Trump could soon announce a date for a summit with China's President Xi Jinping suggested the two countries were closer to a deal to end their trade conflict.

On Wall Street overnight, the Dow Jones Industrial Average was up 0.64 per cent, the S&P 500 was up 0.21 per cent and the tech-heavy Nasdaq Composite was down 0.05 per cent.

The Aussie dollar is buying 71.12 US cents from 71.16 US cents on Thursday.
Out today: AiG construction performance data for March.

ASIA

China stocks ended at an over one-year high on Thursday, with the blue-chip index rising for a fourth straight week as investors cheered progress in trade talks and Beijing’s policy stimulus to bolster growth.

Chinese markets will be closed on Friday for a holiday. The blue-chip CSI300 index rose 1.0 per cent, to 4,062.23 points, while the Shanghai Composite Index climbed 0.9 per cent to 3,246.57 points.

Hopes for a trade deal between the world’s top two economies continued to bolster sentiment.

Trade talks between the US and China made “good headway” last week in Beijing and the two sides aim to bridge differences during talks that could extend beyond three days this week, White House economic adviser Larry Kudlow said.

Most sectors rallied, led by transport firms , as major airlines surged on Beijing’s pledge to cut burdens for the civil aviation industry.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.37 per cent, while Japan’s Nikkei index closed up 0.05 per cent.

The Hong Kong will be closed on Friday for a holiday. At close, the Hang Seng index was down 0.2 per cent at 29,936.32 points, tracking losses in regional markets, after earlier topping 30,000 for the first time since June 2018.

The Hang Seng China Enterprises index fell 0.1 per cent on Thursday. The Hang Seng rose 3 per cent this week, while H-shares gained 2.7 per cent week-on-week.

EUROPE

European shares snapped a four session winning run on Thursday, as bank stocks drew close attention after sources said Italy’s UniCredit was interested in buying Germany’s Commerzbank.

The pan-European STOXX 600 index fell 0.3 per cent, as most sectors ended in negative territory, giving back a sliver of the 3.2 per cent gained largely on strong Chinese economic data and hopes of a US-China trade deal during the past four sessions.

Banking stocks were among the rare gainers on the day with a 0.2 per cent rise.
Commerzbank gained 2.8 per cent to lead the sector index after sources said there was buyout interest from Italian lender UniCredit if Commerzbank’s talks with Deutsche Bank break down.

Milan-traded UniCredit shares dipped 0.7 per cent, while Deutsche Bank fell 0.8 per cent. Some analysts said UniCredit’s interest ramped up pressure on the German banking giant to move forward on a tie-up with Commerzbank.

Lloyds Banking Group slid 3.5 per cent as it traded ex-dividend, hindering further gains on banking index.

Italian stocks fell 0.2 per cent on the day, with sentiment clouded by a report the country’s government will cut its 2019 economic growth forecast.

Basic resources stocks slid 1.3 per cent to snap a seven session winning streak as they gave up much of Wednesday’s 1.8 per cent rise.

Sentiment was crimped by German data showing an unexpected drop in industrial orders in February on a slump in foreign demand. The country’s leading economic institutes also cut their forecasts for 2019 growth in the euro zone’s top economy by more than half.

Industrial goods and services stocks slid 0.4 percent with Thyssenkrupp dropping 1.3 per cent.

NORTH AMERICA

The benchmark S&P 500 stock index edged higher, nearing a six-month high on Thursday, with losses in technology stocks countered by gains in Boeing Co and Facebook as investors waited for more clarity on the US-China trade talks.

Negotiations continued in Washington after meetings last week in Beijing, as the two countries worked toward resolving their long-standing trade dispute, which has cast a shadow over global economic growth.

US President Donald Trump is set to meet Vice Premier Liu He, who is leading the Chinese side in the talks, on Thursday.

Hopes of a trade deal have helped fuel the S&P 500’s strong start to the second quarter. It has reached its highest level since 9 October and is only 1.75 per cent below its all-time closing high.

Also helping investor sentiment, data from the US Labor Department showed that jobless claims fell to a 49-year low last week, pointing to sustained labor market strength.

Investors will get a clearer picture of the US labour market on Friday, when the non-farm payrolls report is expected.

The Dow Jones Industrial Average rose 166.5 points, or 0.64 per cent, to 26,384.63, the S&P 500 gained 5.99 points, or 0.21 per cent, to 2,879.39 and the Nasdaq Composite dropped 3.77 points, or 0.05 per cent, to 7,891.78.

Seven of the 11 major S&P sectors were higher. Conversely, the technology sector fell 0.4 per cent.

Gains in Facebook and Boeing shares helped push the S&P 500 forward.

Facebook rose 1.4 per cent, contributing to a 0.7 per cent gain in the communication services sector, after brokerage Guggenheim upgraded the social media company’s stock to “buy” from “neutral.”

Boeing climbed 2.9 per cent, adding the most to gains on the Dow and the S&P industrial index, which rose 0.6 per cent.

Ethiopian investigators urged Boeing to review its flight control technology in the first public findings on the March crash of a 737 MAX jet. A Morgan Stanley analyst said the report potentially took the worst case scenario of an entirely new cause off the table.

But the Nasdaq snapped a five-day run of gains, as it was pressured by a fall in the shares of Microsoft Corp and Tesla.

Tesla shares tumbled 8.2 per cent after the electric carmaker’s deliveries fell 31 per cent in the first quarter.

They pared some losses in afternoon trading as chief executive Elon Musk’s role at the company appeared safe, with a federal judge in Manhattan urging the billionaire to settle contempt allegations by the Securities and Exchange Commission.

is content editor for Morningstar Australia

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