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Global Market Report - July 16, 2018

Lex Hall  |  16 Jul 2018Text size  Decrease  Increase  |  
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Australia

Despite positive results among US banks, the Australian share market is set to open flat as investors fret over ongoing global trade tensions.

The Australian futures index is down 7 points at 6124 at 8.30am, Sydney time. The Australian dollar is buying 74.16 US cents, slightly up from Friday's 74.03 US cents.

Along with some continuing weakness in the iron ore price on Friday after the Australian market closed, it made for a slow start to the week.

Continued speculation of a Trump trade war is keeping investors anxious, but the market seems to be factoring in the US President’s treatment of his allies to some degree.

Locally, the Reserve Bank minutes will be released this week and are likely to reinforce the bank’s optimism for growth.

The June job figures will also be released, with another solid rise predicted but unemployment to continue staying about 5.4 per cent.

US stock index futures were little changed on Friday as robust results from JP Morgan aided sentiment at a time of continuing fear over the trade conflict between the US and China.

On Friday, the benchmark S&P/ASX200 closed up 0.1 points, or zero per cent, at 6268.4 points, while the broader All Ordinaries rose 2.1 points, or 0.03 per cent, at 6351.9 points.

Asia

2018 growth forecasts for China's economy have risen from 6.5 per cent to 6.6 per cent, according to a Reuters poll.

China’s monthly trade surplus with the US rose to a record last month and exports to the nation also soared, underlining the escalating trade war between the world's two largest economies.

China's main Shanghai Composite index closed down 0.2 per cent at 2837.6586 points, while its blue-chip CSI300 index ended 0.4 per cent firmer.

In Hong Kong, the Hang Seng index ended up 0.2 per cent at 28,525.44, while the China Enterprises Index closed 0.1 per cent lower at 10,746.45 points.

Japan's Nikkei surged to three-week highs on Friday, helped by a weaker yen and gains from index-heavy stock Fast Retailing after it jumped on the back of strong third-quarter results.

Tech shares also attracted buyers after tracking strength in their US counterparts, which sent the Nasdaq index to a record high.

Europe

European shares rose on Friday, scoring their second week of gains as fears of a full-blown trade war were kept in check and optimism about the next corporate earnings season grew.

The pan-regional STOXX 600 index rose 0.2 per cent supported by a broad range of sectors, from industrials to technology, bringing its weekly gain to 0.8 per cent.

Euro zone stocks blue chips rose 0.3 per cent.

Europe's second-quarter corporate earnings season begins in earnest next week with analysts predicting robust average growth of 8.1 per cent year-on-year. The figures will be heavily flattered by the energy sector, where profits have been boosted by the near 50 per cent leap in oil prices over the last year. 

North America

The results from the banks kick off earnings season in earnest, with profits of S&P 500 companies expected to have surged about 21 per cent in the second quarter, according to Thomson Reuters I/B/E/S.

JPMorgan's shares rose 0.4 per cent in premarket trading after the lender reported second-quarter profit that topped Wall Street expectations on gains from higher interest rates, increased loan demand and higher trading revenue.

Wells Fargo and Citigroup, reporting results at 8am, were up 0.4 per cent and 0.7 per cent respectively. PNC Financial rose 1.4 per cent after the regional bank posted a quarterly profit that beat analysts' estimates.

However, investors and analysts will also keep an eye out for company forecasts and management commentary to gauge the impact of the US-China trade war on results in the coming quarters.

Earlier in the day, data showed China's trade surplus with the US swelled to a record in June as its overall exports grew at a solid pace, a result that could further inflame the bitter dispute with Washington.

President Donald Trump, who has demanded Beijing cut the trade surplus, could use the latest result to further ratchet up pressure on China.

Treasury Secretary Steven Mnuchin said on Thursday the countries could reopen trade talks if Beijing was willing to make significant changes.

Trump also criticised British Prime Minister Theresa May's Brexit strategy, saying it had probably killed off hope of a trade deal between the countries. Hours later he said the relationship between the countries was "very, very strong".

 

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Morningstar with AAP

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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