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Global Market Report - 7 February

Lex Hall  |  07 Feb 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to edge higher at the open despite a slightly negative lead from Wall Street overnight.

The SPI200 futures contract was up 24 points, or 0.40 per cent, at 5,994.0 at 7am Sydney time, suggesting a positive start for the benchmark S&P/ASX200 on Thursday.

Yesterday, the ASX finished higher for a third straight day, while the Australian dollar hit the skids after the Reserve Bank opened the door to a possible rate cut.

The benchmark S&P/ASX200 index closed up 20.2 points, or 0.34 per cent, at 6026.1 points at 4.15pm on Wednesday, while the broader All Ordinaries was up 23.7 points, or 0.39 per cent, at 6091.8.

On Wall Street, the Dow Jones Industrial Average was down 0.06 per cent, the S&P 500 was down 0.25 per cent and the Nasdaq Composite was down 0.29 per cent.

The Aussie dollar continued to fall overnight, buying 71.15 US cents at 7am from 71.55 US cents on Wednesday.

Oil prices jumped about one per cent overnight while gold lost about half a per cent.

ASIA

Asian markets finished broadly higher today with shares in China leading the region.

The Shanghai Composite rose 1.30 per cent while Hong Kong's Hang Seng is up 0.21 per cent and Japan's Nikkei 225 is up 0.14 per cent.

Toyota Motor slipped into negative territory after the carmaker cut its annual net profit outlook during afternoon trade. The stock fell 0.7 per cent.

EUROPE

European shares inched up to touch 12-week highs on Wednesday, fuelled by strong gains in Italian banks and tech stocks, while Ubisoft sank following a revenue warning from US videogame maker Electronic Arts.

Europe’s STOXX 600 managed a 0.2 per cent gain by the close, having oscillated in and out of negative territory during the day.

The regional benchmark hid wide variations at country level: Germany’s trade-sensitive DAX was down 0.4 per cent and France’s CAC 40 fell 0.1 per cent while Italy’s FTSE MIB jumped 0.8 per cent.

Bank stocks, which began the day as a drag on the market, reversed course to rise thanks to a rally in Italian lenders after a new 30-year Italian bond drew record demand, a positive sign for government bonds.

Strong results from Dutch lender ING also helped lift the mood in bank stocks, which were the worst-performing in Europe last year.

ING shares climbed 6.1 per cent after it reported stronger-than-expected earnings driven by rising interest income and fees.

NORTH AMERICA

US stocks have edged lower as videogame makers gave disappointing revenue forecasts and investors awaited developments on US-China trade relations.

The benchmark S&P 500 and the Nasdaq were weighed by declines in shares of Electronic Arts Inc, which tumbled 13.3 per cent after the videogame publisher forecast full-year revenue below Wall Street estimates. The sharp drop pulled down shares of rival videogame publisher Activision Blizzard, which fell 10.1 per cent.

Shares of industry peer Take-Two Interactive Software Inc also dropped sharply, 13.8 per cent, after the company's similarly underwhelming forecast.

The slump in videogame stocks contributed to a 1.5 per cent decline in the S&P 500 communication services sector, the largest drop among the S&P's major sectors.

Despite the fall, Wall Street's indexes remained near two-month highs. A 7.3 per cent gain in the S&P 500 would put the index above its record closing September high.

Investors cited a void of catalysts for market gains.

The Dow Jones Industrial Average fell 21.22 points, or 0.08 per cent, to 25,390.3, the S&P 500 lost 6.09 points, or 0.22 per cent, to 2,731.61 and the Nasdaq Composite dropped 26.80 points, or 0.36 per cent, to 7,375.28.

US Treasury Secretary Steven Mnuchin said trade talks with China last week were "very productive" and confirmed that he and other officials will travel to Beijing for the next round of meetings.

Federal Reserve chairman Jerome Powell will speak on Wednesday in Virginia.

Though the major indexes drooped, the Philadelphia SE Semiconductor Index advanced 2.6 per cent. Shares of Apple supplier Skyworks Solutions Inc jumped 11.5 per cent after the company announced $US2 billion ($2.8 billion) in stock buybacks, while shares of Microchip Technology rose 7.3 per cent after the company suggested the chipmaker industry was close to recovery from its recent downturn.

Shares of Capri Holdings, formerly Michael Kors, climbed 11.3 per cent after the fashion company posted a better-than-expected quarterly profit and raised its revenue forecast.

Anadarko Petroleum Corp shares slid 7.4 per cent after the oil and gas producer's fourth-quarter profit missed analyst estimates.

is content editor for Morningstar Australia

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