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Global Market Report - August 3, 2018

Lex Hall  |  03 Aug 2018Text size  Decrease  Increase  |  
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Australia

Australian shares look set to open higher despite a flat performance on Wall Street overnight which as trade-sensitive industrial companies helped drag the blue-chip Dow slightly lower.

In futures trading, the SPI200 futures contract was up 21 points, or 0.34 per cent, to 6213 points at 8.30am Sydney time. The Australian dollar is buying 73.64 US cents, from 73.80 US cents on Thursday.

On Wall Street the Dow Jones Industrial Average is down 7.66 points, or 0.03 per cent at 25,326 points, while the S&P500 is up 13.86 points or 0.49 per cent at 2827 points.

The tech-heavy NASDAQ index is up 95.39 points or 1.24 per cent at 7802 points, driven by Apple shares as the iPhone maker became the first publicly traded US company worth a trillion dollars.

The smartphone maker led the S&P technology index 1.4 per cent higher, the biggest percentage gainer among the 11 major sectors of the S&P 500.

Among the other members of the so-called FAANG group of momentum stocks, Facebook rose 2.7 per cent, Alphabet edged up 0.7 per cent, Netflix rose 1.8 per cent and Amazon.com advanced 2.1 per cent.

In the local market, resources companies could see gains after Australian thermal coal prices hit fresh six-year highs, as a heatwave across the northern hemisphere triggered a spike in demand for coal-fired power.

Investors will also be focused on local retail trade data for June.

Asia

MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.6 per cent down, dragged down by a 1.8 percent fall in Chinese H-shares.

At the close, the Shanghai Composite index was down 2 per cent at 2824.53 in heavy trade and the blue-chip CSI300 index fell 2.3 per cent.

The smaller Shenzhen index ended 2.4 per cent lower and the start-up board ChiNext Composite index fell 2.1 per cent.

Shares in Hong Kong also fell, with the Hang Seng index and the China Enterprises Index both ending down 2.2 per cent.

On Thursday, China's state planner said that slower income growth and soft home sales were standing in the way of higher consumer spending growth in China.

The slump in share prices comes a day after the Shanghai Composite index fell 1.8 per cent on trade worries and as property stocks dropped on speculation new measures to curb the rise of property prices may be in the pipeline.

The decline on Thursday, however, was more widespread with the CSI300's financial sector sub-index lower by 2.5 per cent, the consumer staples sector down 2.8 per cent and the real estate index down 3.4 per cent.

Europe

A selloff in European shares extended on Thursday with Germany's DAX taking the brunt of anxieties over trade tensions, while results from industrial group Siemens disappointed but Europe’s biggest asset manager, Amundi, impressed the market.

The pan-European STOXX 600 fell 0.8 per cent to a one-week low as investors sold risky assets on President Donald Trump’s threat to increase US tariffs on Chinese imports.

The DAX, the most sensitive to trade, dropped 1.5 per cent as heavyweights like Siemens tumbled.

Siemens, which makes everything from turbines to trains, fell 4.7 percent after reporting lower than expected revenues, though its profit slightly beat expectations.

North America

The tech sector's gain helped offset escalating trade tensions, as China urged the United States to "calm down" after US Trade Representative Robert Lighthizer said he had been directed to increase previously proposed tariffs on Chinese imports. At a news briefing, China's foreign ministry spokesman called the US’s tactics "blackmail."

Shares of Tesla jumped 16.2 per cent after quarterly results convinced investors of future profitability and chief executive Elon Musk apologised for his behaviour on the previous earnings call.

For the second-quarter reporting season, 79.7 per cent of the 380 companies in the S&P 500 that reported so far have beaten consensus estimates, according to Thomson Reuters data.

Chemical producer DowDuPont posted profit that beat consensus estimates for the fourth straight quarter, driven by price increases and strong demand. But its stock fell 2.2 per cent after the company warned of rising raw materials costs.

On the deal front, Cisco Systems announced it would buy venture capital-backed cyber security firm Duo Security for $US2.35 billion in cash. Cisco stock rose 1.6 per cent on the news.

 

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Morningstar with AAP, Reuters and Bloomberg 

Lex Hall is a Morningstar content editor, based in Sydney.

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

 

is content editor for Morningstar Australia

© 2019 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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