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Global Market Report - 7 November

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

The Australian share market is expected to open higher despite a mixed lead from Wall Street, including news the US-China trade deal could be delayed until December. 

The SPI200 futures contract was up 25.0 points, or 0.38 per cent, at 6,655.0 at 7am Sydney time, suggesting a rise for the benchmark S&P/ASX200 on Thursday.

The Australian share market wiped out all of its gains from its three-day winning streak yesterday, and then some.

The benchmark S&P/ASX200 index, which had gained 33.7 points between Friday and Tuesday, on Wednesday closed down 36.9 points, or 0.55 per cent, to 6,660.2 points.

On Wall Street, the Dow Jones Industrial Average was down nearly flat, the S&P 500 was up 0.03 per cent and the tech-heavy Nasdaq Composite was down 0.29 per cent.

The Aussie dollar is buying 68.79 US cents from 68.98 US cents on Wednesday.

Asia

China’s equity markets, which had risen for three consecutive sessions on the buoyant mood around trade talks, stepped back on Wednesday.

The country’s benchmark Shanghai Composite Index gave up early gains to end the day down 0.43 per cent. The blue-chip CSI300 index lost 0.45 per cent.

Hong Kong’s Hang Seng was barely changed, up just 0.02 per cent, while Hong Kong-listed H-shares finished 0.15 per cent lower.

Europe

European stocks scaled a fresh four-year peak on Wednesday driven by a surge in shares of consumer-focused companies that helped offset declines in autos and miners, while investors awaited new developments from US-China trade talks.

The pan-European STOXX 600 index closed 0.2 per cent higher and was about 2 per cent away from reclaiming its record high level, hit last in April 2015.

European shares have logged strong gains this week on growing optimism over a trade truce between the US and China. But minutes after the market closing bell struck, a Reuters report cited sources to say that a Phase-1 deal could be delayed until December.

Gains on the benchmark index were led by food and beverage as well as the retail sector with some earnings to digest.

Ahold Delhaize emerged as the top gainer on the STOXX 600 after the Dutch supermarket operator reported upbeat third-quarter results, citing strong sales in its Food Lion and Hannaford chains in the US

A 4 per cent rise in shares of Brenntag boosted the chemicals sub-sector after the German distributor posted better-than-expected third-quarter profits.

Adidas was among the few disappointments, down 5 per cent after the German sportswear company said its third-quarter growth was held back by a weaker performance from Yeezy shoes designed by Kanye West.

Among the main drags, car makers fell 0.3 per cent with BMW’s better-than-expected third-quarter results doing little to cheer up the sector, while commodity-linked stocks fell for the first time in three sessions.

Banks ended flat after rallying as much as 1 per cent earlier in the day after French lender Societe Generale raised its capital ratio despite a profit fall in the third-quarter and on hopes that a new banking reform may soon take shape for the euro trading bloc.

European banks which closed at their highest levels since May are up 6 per cent year-to-date, leaving to Telecoms the trophy of worst performing sector, up less than 5 per cent this year.

North America

US stocks ended little changed on Wednesday as a report the US-China trade deal could be delayed until December was offset by gains in healthcare shares.

The Nasdaq broke a three-day string of record closing highs, and the Dow barely snapped its two-day run of record highs.

A senior official of the Trump administration told Reuters a meeting between US President Donald Trump and Chinese President Xi Jinping to sign a long-awaited interim trade deal could be delayed until December, as discussions continue over terms and a venue.

That renewed worries over how long the trade war may continue and caused stocks to trade lower briefly.

The Trump administration official said it was still possible the “phase one” agreement would not be reached, but a deal was more likely than not.

The recent rally to record highs had been fuelled by signs of progress in the US-China trade talks along with some upbeat earnings reports.

On Wednesday, Humana Inc rose 3.5 per cent as the health insurer reported quarterly profit that beat estimates on higher sales of its government-backed Medicare Advantage health plans.

CVS Health Corp gained 5.4 per cent after the pharmacy chain posted a better-than-expected quarterly profit, boosted by its Aetna health insurance business and pharmacy benefit management unit. The S&P health care was up 0.6 per cent.

The Dow Jones Industrial Average fell 0.07 points to 27,492.56, the S&P 500 gained 2.16 points, or 0.07 per cent, to 3,076.78 and the Nasdaq Composite dropped 24.05 points, or 0.29 per cent, to 8,410.63.

Also in health care, DaVita shares jumped 12.9 per cent following its results.

The S&P 500 financials index extended recent gains, rising 0.4 per cent, while the S&P 500 energy index fell 2.3 per cent following declines in oil prices.

Match Group Inc fell 2.5 per cent as the Tinder owner forecast fourth-quarter revenue below estimates in the face of stiff competition from rival online dating services. Its parent firm, IAC/InterActiveCorp, dropped 4.3 per cent.

is content editor for Morningstar Australia

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