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Global Market Report - 7 January

Lex Hall  |  07 Jan 2020Text size  Decrease  Increase  |  
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Australia

The Aussie share market is poised for a modest recovery after the US market rebounded despite ongoing conflict between the US and Iran.

The SPI200 futures contract was up 35 points, of 0.52 per cent, at 6708.0 at 7am Sydney time, seemingly replicating the mood of US investors and hinting at an early rise for the benchmark ASX/200.

Gold is tipped to be in demand after it reached its highest price in nearly seven years in the US.

The ASX on Monday closed up 2.2 points, or 0.03 per cent, at 6735.7.

On Wall Street, the Dow Jones Industrial Average rose 0.24 per cent, the S&P 500 gained 0.35 per cent, and the Nasdaq Composite added 0.56 per cent.

The Australian dollar was buying 69.34 US cents, down from 69.38 US cents at Monday's close.

Asia

China’s blue-chip index gave up early gains to end lower on Monday as rising tensions in the Middle East dampened sentiment, forcing investors to overlook positive cues such as progress in US-China trade talks and Beijing’s policy support to prop up the economy.

The blue-chip CSI300 index ended 0.4 per cent lower at 4129.30, while the Shanghai Composite Index was flat at 3083.41.

Hong Kong stocks closed lower on Monday, tracking broad weakness in Asian peers, as mounting tensions in the Middle East spurred geopolitical uncertainty and demand for safe-haven assets.

The Hang Seng index ended 0.8 per cent lower at 28,226.19, while the China Enterprises Index closed 0.8 per cent weaker at 11,165.41.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.90 per cent, while Japan’s Nikkei index was down 1.91 per cent. 

Europe

European shares slipped on Monday as investors continued to trim risky bets amid escalating tensions between the US and Iran, but shares of jeweller Pandora soared after it said it would meet 2019 sales targets.

Iran vowed to avenge the killing of a top general by the US, while US President Donald Trump warned that Washington would strike back if Tehran retaliated.

The pan-European STOXX 600 index dropped 0.4 per cent, well off its session lows but down for the second straight day. Bourses in Germany and Britain suffered the steepest losses in the region.

The European oil and gas stock index closed at its highest level in nearly three months on the oil price rises.

All but two of the European sub-sectors were lower.

The prospect of higher fuel costs hit airline stocks. British Airways’ owner, Easyjet, Lufthansa and Ryanair all pulled the travel and leisure sector 1.2 per cent lower.

German polymer maker Covestro slipped nearly 5 per cent on reports of negative comments on the stock from brokers. Its shares pulled the chemicals index down 0.9 per cent.

Pandora jumped 12 per cent after its preliminary results showed it would meet its 2019 sales and profit margin forecast, a sign that attempts to turn around the struggling jeweller could be starting to pay off.

The food and beverage index eked out a gain while telecoms and utilities outperformed the wider markets, indicating a preference for defensive plays.

North America

Wall Street stocks shrugged off early weakness and pushed higher as investors weighed whether escalating US-Iran tensions would significantly affect the economy.

Stocks opened the session lower, extending Friday’s skittishness following the US killing of Qasem Soleimani.

But equities picked up support later in the day as investors seemed to remember that market pullbacks induced by unexpected geopolitical events are frequently short-lived.

The Dow Jones Industrial Average rose 68.67 points, or 0.24 per cent, to 28,703.55, the S&P 500 gained 11.44 points, or 0.35 per cent, to 3,246.29 and the Nasdaq Composite added 50.70 points, or 0.56 per cent, to 9,071.47.

The Soleimani killing and the ensuing back-and-forth between Washington and Tehran has challenged sentiment on Wall Street compared with late 2019, when markets repeatedly hit new records amid easing worries over US-China trade talks.

Several large technology companies enjoyed banner days, including Google-parent Alphabet and Salesforce, which jumped 2.5 per cent and 4.4 per cent, respectively, following analyst upgrades.

Other gainers were Netflix, up 3.1 per cent, and Amazon, up 1.5 per cent. SmileDirectClub, which sells teeth straightening medical devices, surged 21.6 per cent as it sealed a deal to sell a suite of products exclusively at Walmart. Walmart slipped 0.2 per cent.

Key economic indicators this week include a report on the services sector and the December US jobs report.

 

 

is content editor for Morningstar Australia

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