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Global Market Report - 7 June

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

The Australian share market is expected to open higher after a positive lead from Wall Street and optimism over a mooted delay to tariffs on Mexican imports.

The SPI200 futures contract was up 28 points, or 0.44 per cent, at 6,414.0 at 8am Sydney time, suggesting an early bounce for the benchmark S&P/ASX200 on Friday. The Australian share market finished yesterday higher despite losses in the heavyweight mining sector.

The benchmark S&P/ASX200 index closed up 24.5 points, or 0.39 per cent, to 6,383 points at on Thursday, while the broader All Ordinaries was up 22.8 points, or 0.35 per cent, to 6,466.4.

Wall Street finished higher overnight, with the Dow Jones Industrial Average up 0.71 per cent, the S&P 500 up 0.61 per cent and the tech-heavy Nasdaq Composite up 0.53 per cent.

The Australian Bureau of Statistics is expected to release lending data for April at 1130 Sydney time.

The Aussie dollar is buying 69.77 US cents from 69.72 US cents on Thursday.

Asia

China’s major stock indexes fell on Thursday to close at near four-month lows, as worries persisted over the country’s economic momentum amid a bruising trade war with the US which shows no signs of easing.

The blue-chip CSI300 index fell 0.9 per cent to 3,564.68, while the Shanghai Composite Index closed down 1.2 per cent at 2,827.80.

The Hang Seng index rose 0.3 per cent, to 26,965.28, while the China Enterprises Index lost 0.1 per cent, to 10,334.32. For the holiday-shortened week, Hang Seng rose 0.2 per cent. Hong Kong markets will be closed for Dragon Boat Festival on Friday.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.21 per cent, while Japan’s Nikkei index closed down 0.01 per cent.

Europe

Euro zone shares underperformed their broader European peers on Thursday, hit by a stronger euro after the European Central Bank matched investors’ expectations in keeping rates untouched but refrained from providing as dovish an outlook as hoped.

Euro zone equities fell 0.2 per cent, while the pan-European STOXX 600 marked time. A firmer euro trims the value of euro zone companies’ overseas earnings when converted back to the common currency, hitting their overall profitability.

Germany’s DAX shed 0.2 per cent, while French stocks fell 0.3 per cent. London-traded equities eked out a gain.

Thursday’s performance trims the degree to which euro zone stocks have relatively outperformed the European benchmark in the quarter to date.

European lenders had a torrid day, flipping into negative territory and ending 1 per cent lower, as the ECB did not detail as generous a cheap loan lending program for banks as investors had expected.

Milan-traded equities edged up, although Italian lenders reversed early gains to slide 1.2 per cent with UniCredit falling 1.1 per cent, while Banco BPM dropped 2 per cent.

Auto-makers and their suppliers declined 0.9 per cent, as Renault SA dived 6.4 per cent after Fiat Chrysler Automobiles walked away from an over $35 billion merger with the French carmaker.

Real estate stocks fell 2.2 per cent as reports Berlin authorities were planning to impose a cap on rents hit German property firms Vonovia and Deutsche Wohnen to the tune of 4.7 per cent and 7.7 per cent, respectively.

Utilities stocks, considered a defensive sector, clocked the biggest gains in Europe as they rose 1.3 per cent.

Stocks in Copenhagen rose 1.6 per cent. Mette Frederiksen, leader of the Social Democrats, said she would launch talks to form a government after a center-left election victory put her on course to become the country’s youngest ever prime minister.

North America

Wall Street's main indexes have closed higher after a choppy session as investors grew more optimistic on trade after reports that the US is considering a delay in imposing tariffs on Mexican imports.

The market added to gains on Thursday after a Bloomberg report cited unidentified sources saying that President Donald Trump could delay the tariffs he had threatened to put on Mexican goods as soon as Monday.

The Washington Post reported that under a possible immigration deal, Mexico would deploy 6000 troops to the Guatemalan border.

But strategists urged caution until a final US-Mexico deal is reached and followed by a US-China trade deal.

Earlier in the day, Trump said he would decide on more tariffs "probably right after the G20" meeting later this month, which followed his warning overnight that he would levy duties on at least another $US300 billion ($430 billion) worth of Chinese goods.

The Dow Jones Industrial Average rose 181.09 points, or 0.71 per cent, to 25,720.66, the S&P 500 gained 17.34 points, or 0.61 per cent, to 2,843.49 and the Nasdaq Composite added 40.08 points, or 0.53 per cent, to 7,615.55.

It was the first time since mid-May that the three major indexes gained ground for three sessions in a row.

The energy sector, which was the hardest-hit last month by heightening trade tensions, rose 1.7 per cent as crude prices made some gains late in the day, making it the biggest percentage gainer of the S&P's 11 major sectors.

The trade-sensitive industrial sector regained some ground late in the session and ended the day up 0.01 per cent after falling as much as 0.86 per cent earlier.

While investors are hopeful that the US Federal Reserve could be open to cutting interest rates if needed, they were cautious before the US jobs report due on Friday morning after private data was weaker than expected on Wednesday.

Federal Reserve policymakers have hinted they would be ready to cut rates if the US-China trade spat threatens a decade-long expansion. Since early May, Trump has slapped tariffs on Chinese imports and warned of US levies on Mexico.

Earlier in the day, the European Central Bank also underscored the threat to global economic expansion from the trade disputes by trimming the region's growth forecasts for the next two years.

is content editor for Morningstar Australia

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