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Global Market Report - July 31, 2018

Lex Hall  |  31 Jul 2018Text size  Decrease  Increase  |  
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Australia

Australian shares look set to open steady on the back of a fall on Wall Street overnight following a broad sell-off of technology stocks that pushed the three major US stock indexes lower.

In futures trading, the SPI200 futures contract was down two points, or 0.03 per cent, to 6,224 points at 8.30am Sydney time. The Australian dollar is buying 74.07 US cents, from 73.93 US cents on Monday.

On Wall Street the Dow Jones Industrial Average is down 144.23 points, or 0.57 per cent at 25,306 points, while the S&P500 is down 16.22 points or 0.58 per cent at 2802 points.

The tech-heavy NASDAQ index is down 107 points or 1.39 per cent at 7630 points.

Oil prices started the week up, as investors continued to gauge the relative influence of a spate of bullish and bearish factors.

Brent crude, the global benchmark, was up 0.54 per cent at $US74.69 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 1.09 per cent at $US69.45 a barrel.

Investors will also be turning their attention this week to monetary policy, with the Federal Reserve, Bank of Japan and Bank of England holding meetings. Of the three central banks, only the BOE is expected to raise interest rates, in what would be only its second increase in a decade.

Out today: Building approvals for June; June private sector credit data; NZ building permits for June; ANZ business confidence for July.

Asia

Japanese stocks closed lower on Monday as possible changes this week in the Bank of Japan’s monetary policy weighed on sentiment, while quarterly earnings were also in focus.

Japan’s Nikkei share average closed down 0.74 percent at 22,544.84.

The broader Topix ended 0.43 per cent lower at 1768.15 while the JPX-Nikkei Index 400 dipped 0.47 per cent to 15,620.76.

Hong Kong's Hang Seng index closed weaker on Monday, pulled down by a slump in healthcare shares amid an ongoing vaccine scandal, but China's H-shares index ended flat. The Hang Seng index fell 71.15 points, or 0.3 per cent, at 28,733.13. The Hang Seng China Enterprises index was nearly unchanged at 11,046.32.

Healthcare firms followed their A-share counterparts lower, with a sub-index of the Hang Seng following healthcare firms ended down 2.3 per cent as an ongoing vaccine scandal drove investors to sell.

The blue-chip CSI300 index fell 0.2 per cent to 3515.08, while the Shanghai Composite Index slipped 0.1 per cent to 2869.05

Europe

European shares fell from a six-week high on Monday as industrials and tech stocks slipped and poor earnings, including from brewer Heineken, hurt confidence.

The pan-European STOXX 600 fell 0.3 per cent, starting a packed earnings week on the back foot after sealing on Friday its strongest weekly gain in nearly five weeks. Germany's DAX edged down 0.5 per cent.

A negative open on Wall Street also comforted traders to stick to a risk-off mode until the close.

Shares in Heineken fell 6.5 per cent to the bottom of the STOXX after the world's second largest beer maker reported weaker than expected first-half earnings and cut its full-year margin guidance.

British bookmaker GVC, which owns the Ladbrokes and Coral brands, climbed 5.4 per cent to a record high after announcing it had sealed a joint venture with MGM Resorts to set up an online betting platform in the US.

Deutsche Bank shares also rose 2.9 per cent after the German lender said it had moved a large part of its euro clearing activity to Frankfurt from London.

North America

A broad sell-off of technology stocks has pushed the three major US stock indexes lower, with the Nasdaq Composite posting its third consecutive loss of more than 1 per cent for the first time in three years just days after hitting a record high.

Shares of Facebook and Netflix slid 2.2 per cent and 5.7 per cent, respectively, pulling their fellow so-called FAANG stocks lower. Other FAANG stocks include Apple, Amazon.com, and Google parent Alphabet.

But technology fell across the board, pushing all three major US stock indexes into negative territory.

The tech-heavy Nasdaq has also seen a sharp uptick in the number of stocks striking 52-week lows. On Monday, 102 Nasdaq-listed stocks fell to their lowest price in a year or more, 65 more than those hitting new highs.

Control of both the US House of Representatives and Senate are at stake in the November midterm elections.

With second-quarter reporting season now well past its midpoint, analysts now expect S&P earnings to have increased by 22.6 per cent, up from the 20.7 per cent seen on July 1. Of the 270 companies that have posted results, 82.6 per cent have beat consensus estimates.

The Dow Jones Industrial Average fell 144.23 points, or 0.57 per cent, to 25,306.83, the S&P 500 lost 16.22 points, or 0.58 per cent, to 2,802.6, and the Nasdaq Composite dropped 107.42 points, or 1.39 per cent, to 7,630.00.

Of the 11 major sectors of the S&P 500, seven closed in negative territory.
Shares of CBS Corp extended their fall, dropping 5.1 per cent. The media company's board met on Monday to discuss personal misconduct allegations against CEO Leslie Moonves and said it was selecting outside counsel to conduct an investigation.

Tyson Foods slid 7.6 per cent after the company cut its full-year profit forecast, citing the potential impact of tariffs.

Industrial bellwether Caterpillar lost 2 per cent, erasing earlier gains after it exceeded second-quarter expectations and raised its full-year profit outlook.

Energy stocks were among the gainers, up 0.8 per cent as oil prices rose on potential supply disruptions.

 

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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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