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Global Market Report - 8 October

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

The Australian share market is expected to open higher despite a dip on Wall Street overnight as the US-China trade front kept investors cautious ahead of scheduled talks later in the week.

At 7am Sydney time the SPI200 futures contract was up 24 points, or 0.37 per cent, at 6,564.0, suggesting an early bounce for the benchmark S&P/ASX200.

The Australian share market has posted gains across the board after jobs figures from the US reassured traders that the world's largest economy wasn't on the brink of recession after all.

The benchmark S&P/ASX200 index closed Monday up 46.5 points, or 0.71 per cent, to 6,563.6 points, while the broader All Ordinaries was up 49.8 points, or 0.75 per cent, to 6,686.7 points.

On Wall Street, the Dow Jones Industrial Average was down 0.23 per cent, the S&P 500 was down 0.42 per cent and the tech-heavy Nasdaq Composite was down 0.15 per cent.

The Aussie dollar is buying US67.31 cents from US67.48 cents on Monday.

Asia

US and Chinese deputy trade negotiators launched a new round of talks on Monday, Washington time, aimed at resolving the two nations' 15-month trade war, with neither side showing any signs of giving ground.

The White House officially confirmed that the high-level talks, involving Chinese Vice Premier Liu He, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin would begin on Thursday.

The talks are getting underway about a week before a scheduled increase in US tariffs on $US250 billion worth of Chinese goods, to 30 per cent from 25 per cent. US President Donald Trump has said the tariff increase will take effect if no progress is made in the negotiations.

Japanese shares slipped on Monday, pressured by concerns Sino-US trade talks may face new hurdles this week although moderate US jobs growth in September offered some support.

The benchmark Nikkei average dropped 0.3 per cent to 21,346.63 by the midday break, while the broader Topix eased 0.2 per cent to 1,569.98.

Europe

European shares rose on Monday, after their steepest weekly loss in two months, as bids in defensive shares outweighed nervousness ahead of crucial US-China trade talks and Brexit negotiations.

The food and beverage sector was among the top gainers, while Bayer’s 1.4 per cent rise helped the healthcare index climb 0.9 per cent.

Bayer’s gain, which also lifted peers in the chemical sector , was spurred by the company saying a pending US lawsuit over claims related to glyphosate-based herbicide Roundup has been delayed until further notice.

Tracking a rise in oil prices, energy stocks were also among the biggest sectoral gainers on the day.

The pan-European STOXX 600 index closed up 0.7 per cent, after it tumbled 3 per cent last week on tensions over a possible transatlantic trade war and a spate of weak US and European data.

Germany’s DAX erased early losses to end 0.7 per cent higher, while Spain’s IBEX rose almost 1 per cent.

The inflow of poor economic prints continued on Monday, as data showed German industrial orders in August fell slightly more than expected, underscoring concerns of a recession in Europe’s largest economy.

Market participants were also watching for higher-level China-US trade talks set to begin on Thursday. A report said that Chinese officials are increasingly reluctant to agree to a broad trade deal with the United States.

Among individual stocks, Austria’s AMS slipped 0.9 per cent after the company said it failed in its 4.5 billion euro ($4.9 billion) takeover attempt of German lighting group Osram . Osram was down 3.3 per cent.

French video game maker Ubisoft dropped 5.5 per cent to the bottom of STOXX 600 on weak reviews of its newly launched game, Ghost Recon.

Chemicals giant BASF rose 1.3 per cent. The firm said it would invest 20 million euros in Quantafeul, a specialist for pyrolysis of mixed plastic waste and purification of pyrolysis oil.

North America

US stocks eased on Monday as reports on the US-China trade front kept investors cautious ahead of scheduled talks later in the week.

A report that Beijing was increasingly reluctant to agree to a broad trade deal pursued by President Donald Trump weighed on sentiment early.

But White House economic adviser Larry Kudlow helped ease some anxiety, saying it was possible US and Chinese trade negotiators could make progress when they meet in Washington, and said the United States was open to looking at what proposals Beijing brought.

Stocks briefly traded higher in the afternoon after a Fox reporter tweeted that the Chinese commerce ministry said China is ready to do a deal with the United States on parts of negotiations.

US and Chinese deputy trade negotiators launched a new round of talks on Monday aimed at resolving the two nations’ 15-month trade war, while the White House officially confirmed that the high-level talks, involving Chinese Vice Premier Liu He, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin would begin on Thursday.

The Dow Jones Industrial Average fell 95.7 points, or 0.36 per cent, to 26,478.02, the S&P 500 lost 13.22 points, or 0.45 per cent, to 2,938.79 and the Nasdaq Composite dropped 26.18 points, or 0.33 per cent, to 7,956.29.

Tariff concessions from the US and China last month had fuelled hopes of a resolution to the prolonged dispute.

Anxiety over the trade war and mixed economic indicators has been offset by increased expectations of a third interest rate cut this year by the Federal Reserve.

Investors will soon turn their focus to third-quarter earnings, which begin next week with US banks reporting, and many hope to see more clarity on the impact of the trade war on corporate America.

Analysts expect the lowest quarterly profit performance since 2016, with S&P 500 earnings seen falling nearly 3 per cent from a year earlier, based on IBES data from Refinitiv.

General Motors Co eased 0.5 per cent after the UAW rejected the carmaker’s latest offer of a four-year labour contract.

is content editor for Morningstar Australia

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