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Global Market Report - 5 November

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

The Australian share market is expected to open higher after stocks on Wall Street gained overnight amid optimism over trade and the domestic economy.

The SPI200 futures contract was up 35.0 points, or 0.53 per cent, at 6,692.0 at 7am Sydney time, suggesting an early bounce for the benchmark S&P/ASX200 on Tuesday.

The Australian share market yesterday closed higher for the ninth time in eleven days, with a big day for the mining sector outweighing a slide in major bank stocks.

The benchmark S&P/ASX200 index closed on Monday up 17.8 points, or 0.27 per cent, to 6,686.9 points, while the broader All Ordinaries finished up 20.7 points, or 0.31 per cent, to 6,799.8 points.

On Wall Street, the Dow Jones Industrial Average was up 0.39 per cent, the S&P 500 was up 0.41 per cent and the tech-heavy Nasdaq Composite was up 0.69 per cent.

The Reserve Bank of Australia will announce its decision on the cash rate at 2.30pm on Tuesday, with most analysts expecting it to make no change.

The Aussie dollar is buying 68.80 US cents from 69.05 US cents on Monday.

Asia

China stocks ended higher on Monday, helped by increasing optimism about the prospects for a Sino-US trade deal.

The blue-chip CSI300 index rose 0.7 per cent to 3,978.12, while the Shanghai Composite Index added 0.6 per cent to 2,975.49.

Hong Kong stocks ended at their highest in more than three months on Monday, aided by increasing hopes for a Sino-US trade deal.

The Hang Seng index rose 1.7 per cent to 27,547.30, its highest since Aug. 1, while the China Enterprises Index gained 1.8 per cent to 10,813.47, its highest since July 30.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.05 per cent, while Japan’s Nikkei index closed down 0.33 per cent.

Europe

Optimism over trade talks helped European shares close at their highest level in nearly two years on Monday, while a strong earnings report by Ryanair lifted Irish stocks to a more than one-year high.

Tariff-exposed European miners and auto and parts makers shot up almost 3 per cent, taking the pan-European STOXX 600 index up 1 per cent to its highest since January 2018.

French stocks scaled 12-year highs, while German shares ended at levels not seen since June last year. Among other sectors, a jump in oil prices saw energy shares post their best day in seven weeks, while euro zone bank stocks jumped 2.5 per cent.

US Commerce Secretary Wilbur Ross said on Sunday licences for US companies to sell components to China’s Huawei Technologies Co would come “very shortly”, adding there was no reason a trade deal could not be on track to be signed this month.

Analysts also pointed to a looming decision on US tariffs on European goods due next week.

Auto stocks rallied 2.9 per cent, powered also by reports that Fiat Chrysler and Peugeot owner PSA aimed to sign a final merger agreement as early as next month.

Lagarde is due to deliver her first speech as president of the European Central Bank at an event later in the day. A survey showing rebounding euro zone investor morale in November also added to the positivity.

Europe’s main index had touched its highest since an all-time peak hit in April 2015 during the session to mark a strong start to the week after four weeks of gains.

Ryanair rose 8.5 per cent to a one-year high after the budget carrier beat first-half profit expectations. Its shares helped Irish stocks jump 1.8 per cent, the most among regional indexes.

Siemens Healthineers jumped 9.5 per cent to a record high after it said it expected strong growth to continue next year following a better-than-expected fourth quarter.

Expectations had been low for third-quarter earnings from European companies, and most firms have surpassed estimates four weeks into the reporting season.

London-listed GVC was the worst performer on STOXX 600, tumbling 10.5 per cent, as British gambling companies were hit after a cross-party group of lawmakers called for a raft of measures to overhaul online casinos and protect vulnerable people.

Meanwhile, investors shrugged off weak manufacturing data from major European regions, even as the factory activity in the bloc’s powerhouse, Germany, remained in recession in October.

North America

US stocks rose on Monday, hitting record highs again on hopes of a US-China trade deal and an improving domestic economy.

US officials on Friday indicated that a trade deal with China could be signed this month, with risk sentiment also boosted by Commerce Secretary Wilbur Ross saying on Sunday that licenses for US companies to sell components to Huawei Technologies Co would come “very shortly.”

In May, Huawei, the world’s largest telecoms equipment provider, was put under a US blacklist citing national security concerns.

The technology sector gained, as trade-sensitive chip stocks rallied and also helped the Philadelphia Semiconductor index to a record high.

Energy shares jumped along with gains in oil prices.

The third-quarter earnings season has been fairly upbeat, with the majority of S&P 500 companies beating profit expectations so far, according to Refinitiv data.

All three major indexes posted record closing highs on Monday, extending a recent run of gains, on hopes of a US-China trade deal and an improving US economy.

The Dow Jones Industrial Average rose 115.36 points, or 0.42 per cent, to 27,462.72, the S&P 500 gained 11.46 points, or 0.37 per cent, to 3,078.37 and the Nasdaq Composite added 46.80 points, or 0.56 per cent, to 8,433.20.

Last week’s interest rate cut by the Federal Reserve, hopes of a trade deal and a better-than-feared October jobs growth report have been the main catalysts of the recent rally.

Financial stocks gained 0.90 per cent, helped by a 1.2 per cent rise in shares of Berkshire Hathaway Inc after it topped estimates for quarterly operating profit.

Limiting the day’s gains was a roughly 3 per cent drop in shares of McDonald’s Corp, which dismissed chief executive Steve Easterbrook over a consensual relationship with an employee.

Under Armour Inc fell more than 19 per cent as the sportswear maker lowered its full-year revenue forecast for a second straight time this year, a day after it confirmed a federal probe related to its accounting practices.

is content editor for Morningstar Australia

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