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Global Market Report - 1 March

Lex Hall  |  01 Mar 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open flat following a slightly negative lead from Wall Street.

The SPI200 futures contract was up 6 points, or 0.10 per cent, at 6,155.0 at 8am Sydney time, suggesting a marginal increase for the benchmark S&P/ASX200 on Friday morning.

On Wall Street, the Dow Jones Industrial Average was down 0.27 per cent, the S&P 500 was down 0.05 per cent and the Nasdaq Composite was down 0.29 per cent.

The local currency tumbled overnight as the US dollar firmed on US GDP data.

The Aussie dollar is buying 70.93 US cents from 71.44 US cents on Thursday.

The AiG Performance of Manufacturing Index for February is expected to be released on Friday morning.

ASIA

Asian markets finished lower today with shares in Japan leading the region. The Nikkei 225 is down 0.79 per cent while China's Shanghai Composite is off 0.44 per cent and Hong Kong's Hang Seng is lower by 0.43 per cent.

Despite the daily falls, however, Chinese stocks posted their best monthly performance in early four years, with investors buoyed by beneficial policies on and a thaw in trade tensions.

The Shanghai Composite Index surged 14 per cent, or 356.38 points, over February, its best monthly performance since April 2015.

“A dramatic rally at the beginning of this week – the Shanghai benchmark surged by 6 per cent on Monday – accentuated the stunning run-up, given that China was the world’s worst performing major market in 2018. Now it is the best,” writes The South China Morning Post.

EUROPE

European shares scored a second straight month of gains in February after a choppy session on Thursday when optimism about European banks offset caution over US-China trade.

The CAC 40 gained 0.29 per cent and the DAX rose 0.25 per cent.

The FTSE 100 lost 0.46 per cent.

After spending much of the day in the red, the pan-regional STOXX 600 index closed up 0.1 per cent, in touching distance of four-month highs.

On a monthly basis, European shares rose 3.9 per cent after a 6.2 per cent increase in January.

Traders blamed the uncertainty over the outcome of the US-China talks for the lack of a decisive directional trend.

Miners were the biggest sectoral fallers, down 2.1 per cent, as copper prices fell after surveys showed that factory activity in China shrank for the third straight month in February.

Milan scored the best performance among regional bourses with a 0.8 per cent rise, helped by the weight of Italian banks in Italy's FTSE MIB index.

The European banking index rose 0.95 per cent amid hopes the European Central Bank may embark in a new program to ease refinancing in the sector.

Other winners of the day included media stocks which rose 1.4 percent.

Vivendi shares led rivals higher, up 5.4 per cent, after sources told Reuters that US buyout fund KKR and China's Tencent Music Entertainment Group were exploring rival bids for up to half of its Universal Music division.

European shares are up a bit more than 10 per cent so far this year as global equities have recovered from a brutal sell-off in the last three months of 2018.

NORTH AMERICA

Wall Street’s main indexes fell slightly on Thursday as support from better-than-feared U.S. GDP data was countered by concerns about earnings and US-China trade relations.

Also on Thursday, President Donald Trump said he had walked out of his Vietnam summit with Kim Jong Un because of demands from the North Korean leader to lift US-led sanctions.

Commerce Department data on Thursday showed that while the US economy missed a 3 per cent annual growth target for 2018, a better-than-expected fourth quarter pushed gross domestic product up 2.9 per cent for the year.

But investors were cautious, nothing that the S&P has risen 11 per cent year-to-date at the same time as expectations for current quarter earnings have turned negative.
Wall Street analysts now expect first-quarter earnings to fall 1.1 per cent compared with 1

January estimates for 5.3 per cent growth, according to IBES data from Refinitiv.

The Dow Jones Industrial Average fell 69.16 points, or 0.27 percent, to 25,916, the S&P 500 lost 1.52 points, or 0.05 per cent, to 2,792.38 and the Nasdaq Composite dropped 21.98 points, or 0.29 per cent, to 7,532.53.

The S&P and Dow both registered their third straight day of losses on Thursday.

Of the 11 major S&P 500 sectors, the materials sector was the biggest percentage decliner with a 1.27 per cent drop, while the energy sector was the second biggest percentage loser, with a 0.97 per cent fall.

The healthcare sector fell 0.3 per cent with drags from UnitedHealth, down 3 per cent on concerns about the potential for a single-payer U.S. healthcare system.

Also, Celgene Corp fell 8.6 percent after activist investor Starboard Value LP said it will vote against drugmaker Bristol-Myers Squibb Co’s proposed $74 billion acquisition of the biotech company. Bristol-Myers rose 1.4 per cent.

Booking Holdings fell 10.96 per cent after missing quarterly earnings expectations and was the biggest single-stock drag on the S&P. Also dragging on the S&P was HP, which plunged about 17.3 per cent after it reported revenue that missed analysts' estimates.

Monster Beverage Corp jumped 8.7 per cent, making it the biggest percentage gainer on the S&P, after it beat Wall Street estimates for quarterly revenue and profit.

is content editor for Morningstar Australia

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