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Global Market Report - 9 May

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

Australian shares are expected to open higher despite a late fall on Wall Street.

The SPI200 futures contract was up 14 points, or 0.22 per cent, at 6,253.0 at 7am Sydney time, suggesting a slight rise for the benchmark S&P/ASX200 on Thursday.

Australian shares closed lower yesterday amid renewed concerns about US-China trade tensions, but a feared rout of the market was avoided.

The benchmark S&P/ASX200 index finished down 26.6 points, or 0.42 per cent, to 6,291.1 points on Wednesday, while the broader All Ordinaries was down 31.7 points, or 0.5 per cent, to 6,351.8.

On Wall Street overnight, the Dow Jones Industrial Average was up 0.01 per cent, the S&P 500 was down 0.16 per cent and the tech-heavy Nasdaq Composite was down 0.26 per cent.

Vodafone Hutchison Australia says it and TPG Telecom will fight for the right to merge, hours after Australia's competition watchdog declared it would oppose the $15 billion tie-up.

The Aussie dollar is buying 69.88 US cents from 70.20 US cents on Wednesday. 

Asia

The Chinese stock market fell on Wednesday on weaker-than-expected exports numbers, adding to investor concerns over Beijing and Washington’s protracted tariff tussle.

The Shanghai Composite index fell 1.1 per cent to 2,893.76, while the blue-chip CSI300 index lost 1.4 per cent

Hong Kong stocks closed lower on Wednesday, tracking a decline in global markets, as China’s mixed bag of trade data and fears of an escalation in the Sino-U.S. tariff spat stoked an investor exodus from riskier assets.

At the close of trade, the Hang Seng index was down 1.2 per cent at 29,003.20 points.

Around the region, MSCI’s Asia ex-Japan stock index lost 0.7 per cent, while Japan’s Nikkei index closed down 1.5 per cent. 

Europe

European shares rose on Wednesday from the previous session’s more than one-month closing low on positive sentiment underpinned by easing fears over the path ahead for US-China trade ties and strong results from some German firms.

Resolute earnings from Siemens and Wirecard aided sentiment, while the White House said China has indicated it wants to strike a trade deal.

The pan-European STOXX 600 index rose 0.2 percent, lifting off Thursday’s more than one-month closing low. Germany’s trade-sensitive DAX gained 0.7 per cent, while French stocks tacked on 0.4 per cent.

Chinese Vice Premier Liu He will travel to Washington on Thursday for two days of trade talks. As it currently stands, US tariffs on $200 billion worth of Chinese imports will rise to 25 per cent from 10 percent effective Friday, according to a notice posted to the Federal Register.

Siemens posted better-than-expected quarterly earnings and said it would spin off its faltering gas-turbines business.

Investors responded by sending the German firm’s shares 4.6 per cent higher, which helped industrial stocks tack on 0.7 per cent.

Payments firm Wirecard raised its 2019 outlook, as it sought to shake off allegations of fraud and false accounting to post a 40.7 per cent rise in core profits in the first quarter.

Wirecard shares climbed 4.9 per cent to a more than three month closing peak after its chief executive said the payments firm is mulling over buying back shares with some of the proceeds of a 900 million euro convertible bond that Softbank Group Corp will buy.

Signs of Brexit-linked uncertainty capped sentiment towards London-traded stocks. The FTSE 100 index recovered from early losses to add 0.2 per cent, amid a half-percent slide in the pound. Exporters on the benchmark broadly benefit from a softer pound which swells their overseas earnings’ value.

Bank stocks moved in the other direction, extending losses as they slipped 0.3 per cent.

Travel and leisure stocks fell 1.3 per cent as Deutsche Lufthansa traded ex-dividend, down 4.4 percent. Additionally, Berenberg cut its target price on the airline to 21.50 euros per share from 22 euros. 

North America

The benchmark S&P 500 has fallen for the third day in a row as investors remained cautious about the latest developments on US-China trade talks even after hopeful comments from the White House regarding an eventual agreement.

A late slide in shares of Intel contributed to losses in the last half-hour of trading on Wednesday. Shares of the chipmaker fell 2.5 per cent after the company's outlook during its investor day presentation disappointed.

Wall Street had edged higher for much of the session after White House spokeswoman Sarah Sanders said the US had received an indication from Beijing that China wants to make a trade deal. China's lead negotiator, Vice Premier Liu He, is due to visit Washington on Thursday and Friday.

Still, the US government said in its official journal that it would raise tariffs on $US200 billion ($286 billion) worth of Chinese goods to 25 per cent on Friday. China's commerce ministry later said it would have to take retaliatory measures if US tariffs were raised.

The mixed tone of trade developments made it difficult for US stocks to sustain their rally, investors said.

Even as the S&P 500 rose in the afternoon, defensive sectors such as real estate and health care were among the index's top gainers. The trade-sensitive industrial sector ended little changed while Intel's decline dragged down technology shares.

The Dow Jones Industrial Average rose 2.24 points, or 0.01 per cent, to 25,967.33; the S&P 500 lost 4.63 points, or 0.16 per cent, to 2,879.42; and the Nasdaq Composite dropped 20.44 points, or 0.26 per cent, to 7,943.32.

The benchmark S&P 500 is now 2.5 per cent below its record high of 2,954.13 hit last week.

Shares of Walt Disney rose 1.2 per cent ahead of its quarterly results. Disney was the top boost to the S&P 500.

Disney shares were last up 0.8 per cent in aftermarket trading.

McKesson shares climbed 4.8 per cent after the drug distributor's quarterly results eased concerns about pricing pressures and costs related to opioid-related litigation.

Conversely, TripAdvisor shares tumbled 11.4 per cent, the most among S&P 500 companies, after the online travel company's quarterly revenue missed analysts' estimates.

With earnings season entering its final stretch, first-quarter profits are now seen rising 1.2 per cent, a sharp improvement from the 2.3 per cent decline expected at the start of the season.

Of the 426 S&P companies that have reported so far, about 75 per cent have beaten profit estimates, according to Refinitiv data. 

 

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