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Global Market Report - 9 April

Lex Hall  |  09 Apr 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open marginally higher after a mixed lead from Wall Street overnight as investors brace for a contraction in earnings.

At 8am Sydney time the SPI200 futures contract was up 10 points, or 0.16 per cent, at 6,220.0, suggesting a small rise for the benchmark S&P/ASX200.

Australian shares started the week on a positive note yesterday as investors hoped for a US-China trade deal, with miners, the energy sector and health care posting the most gains.

The benchmark S&P/ASX200 index closed up 40.1 points, or 0.65 per cent, to 6,221.4 points, while the broader All Ordinaries was up 40.2 points, or 0.64 per cent, to 6,310.8.

On Wall Street, the Dow Jones Industrial Average was down 0.32 per cent, the S&P 500 was up 0.10 per cent and the tech-heavy Nasdaq Composite was up 0.19 per cent.

The Aussie dollar is buying US71.27 cents from US70.99 cents yesterday.

Out today: housing finance data for February.

Asia

Hong Kong shares closed firmer on Monday, capping a more than nine-month peak as an increase in US payrolls and hints of more stimulus in China boosted sentiment.

High oil prices lifted energy stocks.

At the close of trade, the Hang Seng index was up 140.83 points or 0.5 per cent at 30,077.15, its highest close since June 15, 2018. The Hang Seng China Enterprises index rose 0.9 per cent to 11,793.65.

China’s main Shanghai Composite index closed down 0.1 per cent at 3244.81 points, while the blue-chip CSI300 index ended 0.1 per cent lower.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.2 per cent, while Japan’s Nikkei index closed down 0.2 per cent.

Europe

Most European stocks slid on Monday amid losses across most sectors, with German bank and real estate shares drawing investor attention as did European suppliers of US planemaker Boeing following a production cut announced late on Friday.

The pan-region STOXX 600 index fell 0.2 per cent, further distancing itself from a near eight-month peak hit last week.

Bank stocks dropped 0.4 per cent, with German lender Commerzbank among the top losers on the sector index with a 2.4 per cent fall. Deutsche Bank, with whom Commerzbank is exploring a merger, dropped 1.9 per cent.

European bank supervisors demanded a detailed roadmap outlining the pace and scale of staff cuts in the two banks as they explore a merger, according to a report by German daily Handelsblatt.

France’s Safran SA slid 2 per cent as Boeing Co revealed a plan to cut 737 aircraft production by nearly a fifth.

Safran’s joint venture with General Electric Co provides Boeing with engines for the 737.

Melrose Industries , another supplier to Boeing, slid 2 per cent, while Meggitt recouped early losses to end 0.2 per cent higher.

Boeing’s French rival Airbus rose 1.7 per cent.

Real estate stocks fell 1.3 per cent with Deutsche Wohnen dropping 3.1 per cent following protests over the weekend demanding expropriation of apartments in Berlin that have been sold off to big private landlords.

Germany’s DAX index fell 0.4 per cent, snapping a seven-day winning streak. Data showed German exports and imports fell more than expected in February, the latest sign that Europe’s biggest economy will probably post meager growth in the first quarter.

Software firm SAP dropped as much as 2.2 per cent after it said the head of its cloud business group had quit, but regained some ground to close 0.6 per cent lower.

Continental AG slipped 1.1 per cent after Kepler Cheuvreux downgraded the auto parts maker to “hold” from “buy”.

Auto stocks gave up a fraction of the ground they gained during a 6.9 per cent jump over the course of last week as they edged lower.

Daimler ended little changed. The German auto giant had been weighed down by the prospect of potentially hefty fines after EU antitrust regulators charged the firm along with Volkswagen and BMW with colluding to block the rollout of clean emissions technology.

Fiat Chrysler Automobiles NV (FCA) gained 1.9 per cent after agreeing to pay electric carmaker Tesla hundreds of millions of euros to allow Tesla vehicles to be counted in its fleet to avoid fines for violating new EU emission rules.

North America

The S&P 500 and the Nasdaq edged into positive territory on Monday, with gains held in check by falling industrials as investors braced for what analysts now expect to be the first quarter of contracting earnings since 2016.

While the Dow ended the session lower, the S&P 500 extended its winning streak. The benchmark index has now seen eight straight days of gains for the first time since October 2017.

First-quarter reporting period begins in earnest, with Delta Airlines, JPMorgan Chase & Co and Wells Fargo & Co results due this week.

Analysts expect it to be the first quarter to show a year-on-year decline in S&P 500 earnings since 2016. January-March profits for S&P 500 companies are seen contracting by 2.3 per cent from last year, according to Refinitiv data.

Investors are also grappling with increasing signs of a global economic slowdown.

Boeing Co was the heaviest drag on the blue-chip Dow, falling 4.4 per cent after the company said it would cut production of its 737 MAX aircraft in response to a worldwide grounding of the jets after the fatal Ethiopian Airlines crash on March 10.

Boeing woes also weighed on the plane maker’s suppliers. Spirit AeroSystems and Triumph Group ended the session down 5.1 per cent and 6.2 per cent, respectively.

The Dow Jones Industrial Average fell 83.97 points, or 0.32 per cent, to 26,341.02, the S&P 500 gained 3.03 points, or 0.10 per cent, to 2,895.77 and the Nasdaq Composite added 15.19 points, or 0.19 per cent, to 7,953.88.

Of the 11 major sectors in the S&P 500, six closed in the black, led by energy which got a boost from rising crude prices.

Utilities and industrials were the biggest per centage losers.

General Electric dropped 5.2 per cent after JPMorgan downgraded the industrial conglomerate’s stock to “underweight” from “neutral.”

New Age Beverage Corp shot up 38.6 per cent on news that it would expand its tea and coffee brand Marley with Walmart Inc.

Snap Inc gained 3.6 per cent following RBC Capital Markets’ upgrade of the stock to “outperform.”

Drugmaker Histogenics Corp soared 56.0 per cent on news it would merge with privately-held Ocugen Inc.

Chipmaker Micron Technology Inc dipped 1.0 per cent after Cowen downgraded the stock to “market perform,” citing expected margin pressures.

is content editor for Morningstar Australia

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