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Global Market Report - 6 December

Lex Hall  |  06 Dec 2018Text size  Decrease  Increase  |  
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Australia

A subdued open looms for the Australian share market with Wall Street providing little lead after halting trade for the funeral of former US President George Bush Sr.

At 8am Sydney the SPI200 futures contract is up just 8 points, or 0.14 per cent, to 5671.0, pointing to a flat or slightly stronger open for the ASX. The Aussie edged lower again overnight, and is buying US72.65 cents, down from US72.92 cents yesterday.

The bourse shed almost 1 per cent the previous session in a broad-based sell-off sparked by worries there won’t be a trade truce between China and the US. The benchmark

S&P/ASX200 index was down 44.7 points, or 0.78 per cent, at 5668.4 on Tuesday, while the broader All Ordinaries fell 0.83 per cent.

Markets across the world have been rattled by recession fears, reflected in the flattening US Treasury yield curve.

The benchmark Treasury 10-year yield fell to its lowest point since mid-September on Tuesday, while the spread between the 10-year yield over its two-year counterpart also shrank to the smallest since the start of the financial crisis in January 2008.

That signalled to some investors an approaching US economic slowdown.

The flattening of the curve gained momentum after last week's signal by the Federal Reserve it might be nearing an end to its three-year rate-increase cycle.

Out today: Australian balance of trade data for October; retail sales for October; RBA deputy governor Guy Debelle speaks.

ASIA

Growing fears of a US slowdown and the disillusion over a trade truce weighed on Asian markets.

The Shanghai Composite Index dipped 0.6 per cent and the Hang Seng Index sank 1.62 per cent. Benchmarks across Asia all fell, with Japan's Nikkei 225 index slightly paring losses to end down 0.5 per cent after an earlier 1.4 per cent loss.

The top gainer on the Hang Seng was China Resources Power Holdings, which gained 2.19 per cent. At the other end, Chinese carmaker BAIC Motor fell 11.3 per cent following a media report saying Germany's Daimler was considering increasing its stake in its joint venture.

Sunny Optical Technology Group fell 7.3 per cent. Tencent fell 2.3 per cent.

China's blue-chip CSI300 index ended 0.5 per cent lower at 3252.00 points, and the Shanghai Composite Index fell 0.6 per cent to 2649.81.

EUROPE

Markets sank across the board in Europe amid growing uncertainty over Brexit, global trade and a slowdown in the British economy.

The Stoxx Europe 600 Index sank 1.2 per cent to the lowest in more than a week on the biggest tumble in six weeks.

The UK's FTSE 100 Index fell 1.4 per cent to the lowest in more than eight months on the largest tumble in almost eight weeks, as a survey showed uncertainty about Brexit left the economy at risk of contracting.

On the FTSE 250, embattled travel operator Thomas Cook, which fell dramatically earlier in the week, rose 51.4 per cent on hopes it would not need to issue new equity.

The British pound rose off 17-month lows of $US1.2659 hit on Tuesday to about $US1.2751, up 0.3 per cent on the day, amid creeping optimism that Britain could opt to stay in the EU after all.

In France, the CAC 40 fell 1.36 per cent, while Germany's DAX Index fell 1.2 per cent to the lowest in more than a week on the biggest dip in more than two weeks.

The MSCI Emerging Market Index fell 1.3 per cent, the biggest dip in more than two weeks.

NORTH AMERICA

Wall Street was closed for the funeral of former president George HW Bush.

The benchmark Treasury 10-year yield fell to its lowest point since mid-September on Tuesday, while the spread between the 10-year yield over its two-year counterpart also shrank to the smallest since the start of the financial crisis in January 2008.

That signalled to some investors an approaching US economic slowdown.
The flattening of the curve gained momentum after last week's signal by the Federal Reserve it might be nearing an end to its three-year rate-increase cycle.

The US dollar steadied on Wednesday after it took a hard hit in the early reaction to recession concerns and the initial thaw in trade tensions between Washington and Beijing sapped demand for the safe-haven greenback.

The greenback rose 0.32 per cent against the Japanese yen and the euro gave up all its early gains to trade down 0.04 per cent against the dollar.

Gold slipped on expectations of more rate hikes following remarks from a US Federal Reserve official and as some investors booked profits after prices climbed to their highest in more than five weeks.

 

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