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Global Market Report - 8 February

Lex Hall  |  08 Feb 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to fall today after a negative lead from Wall Street overnight and fears the stuttering US and China trade talks will hurt global growth.

The SPI200 futures contract was down 41 points, or 0.68 per cent, at 6,005.0 at 8am Sydney time, suggesting a drop for the benchmark S&P/ASX200 on Friday. Yesterday, the ASX enjoyed its fourth straight day of gains as the local currency slides further against the US dollar.

The benchmark S&P/ASX200 index closed up 66.4 points, or 1.1 per cent, at 6,092.5 points at 4.15pm on Thursday, while the broader All Ordinaries was up 67.3 points, or 1.1 per cent, at 6159.1.

On Wall Street, the Dow Jones Industrial Average is down 0.876 per cent, the S&P 500 is down 0.94 per cent and the Nasdaq Composite is down 1.18 per cent.

The price of oil fell more than 2 per cent overnight while gold gained amid concerns US-China trade talks would fail to reach an agreement before a March 1 deadline.

The Aussie dollar is buying 71.04 US cents from 70.99 US cents on Thursday.

The Reserve Bank of Australia will issue its statement on monetary policy on Friday.

ASIA

Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 1.30 per cent and the Hang Seng rose 0.21 per cent.

The Nikkei 225 lost 0.59 per cent.

Huawei wants cybersecurity to be viewed as a technical rather than ideological issue and is open to supervision by European governments to prove the point, a senior company executive is expected to say on Thursday evening, Reuters reports.

EUROPE

European shares fell sharply on Thursday ending a seven-session run of gains as a batch of worrying trading updates in a wide range of sectors combined with the European Union cutting its growth forecasts to weigh on markets.

Europe's STOXX 600 ended the day down 1.5 per cent, its biggest retreat since December 27, while Germany’s DAX sank 2.7 per cent as disappointing December industrial data reinforced worries about the euro zone’s economic powerhouse.

London's FTSE was down 1.1 per cent after the Bank of England said Britain faces its weakest economic growth in a decade this year as uncertainty over Brexit mounts and the global economy slows.

France's CAC fell 1.84 per cent. Societe Generale was down 6.8 per cent after the French bank slashed its profitability targets.

NORTH AMERICA

Wall Street stocks sank on Thursday as worries that the US and China would not be able to reach a trade deal increased concerns about slowing global economic growth.

US President Donald Trump said he did not plan to meet with Chinese President Xi Jinping before the March 1 deadline set by the two countries for reaching an agreement.

US stocks had already been under pressure after the European Commission slashed its euro zone growth forecasts for 2019 and 2020 due to an expected slowdown in the largest countries of the bloc, partly due to trade tensions.

Stocks pared losses toward the end of the session. The benchmark S&P 500 index hit a key technical level - 2,700 - that likely prompted buying, said Michael Antonelli, managing director of institutional sales trading at Robert W. Baird in Milwaukee.

Still, among the S&P 500's major sectors, only the defensive utilities and real estate indexes were positive, illustrating Thursday’s risk-off sentiment.

The Philadelphia SE Semiconductor Index tumbled 2.2 percent. Chipmakers get a large chunk of their revenue from Chinese customers.

Disappointing financial forecasts from several US companies, including Twitter, have also given investors pause.

More than half of S&P 500 companies have reported fourth-quarter results, with about 71 per cent beating profit estimates, according to IBES data from Refinitiv. However, current-quarter earnings growth estimates have shrunk to 0.1 per cent from 5.3 percent at the start of the year.

The Dow Jones Industrial Average fell 220.77 points, or 0.87 percent, to 25,169.53, the S&P 500 lost 25.56 points, or 0.94 per cent, to 2,706.05 and the Nasdaq Composite dropped 86.93 points, or 1.18 per cent, to 7,288.35.

Energy stocks fell 2.1 percent, the largest percentage drop among S&P 500 sectors, as crude prices sank on worries of tapering demand because of trade tensions.

Twitter shares fell 9.8 percent after the social media company forecast that revenue in the first quarter would be weaker than expected and that its full-year operating costs would rise.

SunTrust Banks shares jumped 10.2 percent after the bank agreed to be bought for about $28 billion in stock by fellow regional lender BB&T Corp, whose shares rose 4.0 per cent.

is content editor for Morningstar Australia

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