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Global Market Report - 8 November

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

The Australian share market is expected to open higher after a positive lead from overseas, including record highs for the Dow and S&P 500.

The SPI200 futures contract was up 14.0 points, or 0.21 per cent, at 6,717.0 at 7am Sydney time, suggesting a rise for the benchmark S&P/ASX200 on Friday.

The Australian share market has had its best day in nearly 10 weeks, with every sector except energy posting strong gains.

The benchmark S&P/ASX200 index finished Thursday up 66.4 points, or 1.0 per cent, to 6,726.6 points, while the broader All Ordinaries was up 63.7 points, or 0.94 per cent, to 6,836.9 points.

On Wall Street, the Dow Jones Industrial Average was up 0.70 per cent, the S&P 500 was up 0.30 per cent and the tech-heavy Nasdaq Composite was up 0.60 per cent.

The Aussie dollar is buying 69.01 US cents from 68.71 US cents on Thursday.

Asia

China stocks ended little changed on Thursday, as caution reigned on news that a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping to sign an interim trade deal could be delayed.

The blue-chip CSI300 index rose 0.2 per cent, to 3,991.87, while the Shanghai Composite Index was flat, at 2,978.71 points.

Hong Kong stocks ended higher on Thursday as signs of progress in the China-US trade negotiations triggered a rally during the final 30 minutes of trading.

The Hang Seng index ended up 0.6 per cent at 27,847.23, while the China Enterprises Index closed 0.7 per cent higher at 10,935.89 points.

Japanese shares posted small gains to close at a one-year high on Thursday, although worries over possible delays in a first-phase Sino-US trade deal capped gains, while Softbank Group slid on its first quarterly loss in 14 years.

The Nikkei share average ended up 0.11 per cent at 23,330.32, its highest finish since early October last year.

Europe

European shares rose for a fifth straight session on Thursday to hit fresh four year highs as investors cheered signs of progress in US-China trade talks and largely positive earnings reports from a host of companies.

Shares of Siemens hit their highest in more than a year after the German industrial company beat fourth-quarter profit expectations, while Italy’s biggest bank UniCredit rose 6 per cent after announcing its first share buyback in more than a decade after solid third-quarter earnings.

Lufthansa jumped 6.8 per cent on plans to cut costs at some of its units to revive profit. The German airline’s shares helped boost the wider travel and leisure index by 1.3 per cent, making it one of the top gainers among the major European sub-sectors.

On the trade front, China’s commerce ministry said the world’s two economic giants were working on a deal that would roll back trade tariffs in different stages.

The news sparked a broad-based rally in Europe, while Wall Street was pushed to a record high. Trade-sensitive Frankfurt shares rose 0.8 per cent to close at their highest level since February 2018.

It also helped investors shrug off another weak data point from Germany showing industrial output fell more than expected in September.

London's FTSE 100 rose 0.1 per cent as the pound weakened after two Bank of England officials voted to lower interest rates on Thursday, contrary to expectations of a unanimous decision to hold rates.

But a 9.7 per cent tumble in insurer Hiscox on brokerage downgrades and a 2.7 per cent slip in London Stock Exchange Group after it said it would consult with members regarding a shorter trading day, saw the FTSE post the smallest gains among regional peers.

The FTSE midcap index and Irish stocks gained 1.1 per cent and 1.3 per cent, respectively.

The pan-European STOXX 600 index closed up 0.4 per cent. It is now a little over 2 per cent away from its record high hit in April 2015.

Among the top gainers across European sub-sectors were automakers and miners, while defensive plays such as telecoms and utilities fell, suggesting higher risk appetite.

The world’s largest steelmaker ArcelorMittal jumped 6.7 per cent on better-than-expected results. Shares in wind turbine maker Vestas rose 11 per cent to the top of the STOXX 600 after it reported forecast-beating quarterly operating profit.

French gas and power group Engie posted its worst day in more than eight months on less optimistic guidance, taking the utility sector down 1.9 per cent for its worst day in a month.

North America

The Dow and S&P 500 notched record closing highs on Thursday as the latest signs of progress in US-China trade relations relieved investors, but a report raising fresh worries about the outlook for a deal limited the day’s gains.

China said it had agreed with the United States to remove tariffs in phases, while state-owned Xinhua News Agency said Beijing was also considering removing restrictions on poultry imports.

But indexes pared gains in afternoon trading after a Reuters report, citing sources, said that the White House’s plan to roll back China tariffs faces internal opposition and that no final decision has been made yet.

An interim US-China trade deal is expected to include a US pledge to scrap tariffs scheduled for 15 December.

The latest batch of earnings offered some upbeat news.

The S&P 500 technology index ended up 0.7 per cent, with shares of Qualcomm Inc up 6.3 per cent after it forecast current-quarter profit above analysts’ estimates.

Together with Qualcomm, other chipmakers, which have a sizeable exposure to China, also rose, propping the Philadelphia Semiconductor index up 0.7 per cent.

The trade-sensitive industrials sector finished up 0.2 per cent.

The Dow Jones Industrial Average rose 182.24 points, or 0.66 per cent, to 27,674.8, the S&P 500 gained 8.4 points, or 0.27 per cent, to 3,085.18 and the Nasdaq Composite added 23.89 points, or 0.28 per cent, to 8,434.52.

The day’s gains resumed the recent record run for stocks, which have been bolstered, along with trade deal hopes, by some upbeat earnings.

Also on Thursday, Ralph Lauren Corp surged 14.7 per cent after it topped second-quarter profit expectations, helped by a tighter control on expenses and strong demand for its Polo shirts and tweed jackets in China and Europe.

On the down side, Expedia Group Inc plunged 27.4 per cent as the online travel booking company missed quarterly profit estimates.

is content editor for Morningstar Australia

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