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Global Market Report - 8 January

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

Australian shares are set for a subdued open despite the imminent resumption of US-China trade talks, which helped fuel an overnight Wall Street rally.

The SPI200 futures contract was down four points, or 0.07 per cent, to 5628.0, at 8am Sydney time on Tuesday, hinting the benchmark ASX/200 will edge slightly lower after surging to its best mark in a month the previous session.

Yesterday, the ASX shook off most of its losses from its dismal December, closing at its highest level in over a month. The benchmark S&P/ASX200 index was up 63.8 points, or 1.14 per cent, to close at 5683.2 at 4.15pm on Monday, with confidence high on the back of strong US jobs data.

The Aussie dollar continues to climb, buying 71.45 US cents from 71.35 US cents on Monday.

Tech companies Microsoft and Amazon helped Wall Street lift late in the session, with the resumption of US-China trade talks and Friday's strong jobs data easing fears that have rocked global markets in recent months.

The Dow Jones Industrial Average rose 0.42 per cent to end at 23,531.35 points, while the S&P 500 gained 0.70 per cent to 2,549.69. The Nasdaq Composite added 1.26 per cent to 6823.47.

Oil prices are higher on support from OPEC production cuts and steadying equities markets, while copper and other industrial metals are steady.

Gold is also up and palladium is at an all-time high.

Meanwhile, the Australian Bureau of Statistics is set to release data on the November trade balance at 11.30am Sydney time.

Elsewhere, the head of the World Bank Korean-American Jim Yong Kim has resigned more than three years before his term ends. He had pushed financing for green energy projects and largely dropped support for coal power investments

ASIA

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

The Nikkei 225 rose 2.44 per cent while Hong Kong's Hang Seng is up 0.82 per cent and China's Shanghai Composite is up 0.72 per cent.

The MSCI Asia Pacific Index added 1.8 per cent as optimism over trade talks boosted equities in the region, with Japan's Topix index closing 2.8 per cent higher.

EUROPE

European markets finished lower today with shares in London leading the region. The FTSE 100 is down 0.39 per cent while France's CAC 40 is off 0.38 per cent and Germany's DAX is lower by 0.18 per cent.

Hopes of advances in trade talks have been undermined by Brexit tensions and the US shutdown.

The pan-European STOXX 600 index closed down 0.2 per cent.

Although UK stocks opened higher, the FTSE 100 - which makes about 70 per cent of its income abroad - erased those early gains to slip 0.4 per cent on the day, with tobacco and consumer staples, including AstraZeneca , Reckitt Benckiser, Unilever, the biggest drags, weighed down by a weaker dollar.

NORTH AMERICA

Amazon.com and Netflix have fuelled a second straight session of gains on Wall Street, as the resumption of US-China trade talks helped ease concerns that have pummelled the market in recent months.

The benchmark S&P 500's advance added to a 3.4 per cent surge on Friday, when strong US jobs data eased worries over the economy and remarks by the Federal Reserve head calmed investors nervous that interest rate hikes would crimp growth.

Fears of a global slowdown have led to a sharp pullback in the markets over the last few months and in analysts' estimates for corporate growth. But after hitting a 20-month low on Christmas Eve, the S&P has gained over 9 per cent.

China has the "good faith" to work with the US to resolve trade frictions, China's Foreign Ministry said, while US Commerce Secretary Wilbur Ross said he saw "a very good chance that we will get a reasonable settlement" as the two countries started their first face-to-face talks since a 90-day truce was agreed in December.

Nine of the 11 major S&P sectors rose.

The consumer discretionary index was the biggest gainer, jumping 2.36 per cent, led by a 3.44 per cent rise in Amazon. That made Amazon Wall Street's most valuable company at $US797 billion, eclipsing Microsoft's market capitalisation, which reached $US784 billion following a 0.13 per cent rise in its stock.

Video-streaming service Netflix, the second-largest contributor to the S&P 500's increase on Monday, climbed 5.97 per cent.

Those companies and other high-profile technology and consumer stocks have rebounded after falling sharply in the final quarter of 2018.

Much of Monday's upbeat sentiment was an extension of Friday's rally. The S&P energy index gained 1.29 per cent as oil prices rose on support from OPE Cproduction cuts.

The Philadelphia Semiconductor index, which includes many companies dependent on China for revenue, jumped 1.95 per cent.

The Dow Jones Industrial Average rose 0.42 per cent to end at 23,531.35 points, while the S&P 500 gained 0.70 per cent to 2549.69. The Nasdaq Composite added 1.26 per cent to 6823.47.

The utilities index dipped 0.71 per cent, dragged lower by PG&E Corp's 22 per cent slump.
Reuters reported that the California utility is exploring filing for bankruptcy protection related to potential liabilities from wildfires.

With earnings season approaching, investors expect a slowdown in fourth-quarter profit growth, and they will scrutinise forecasts for signs of further weakness.

is content editor for Morningstar Australia

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