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Global Market Report - 11 October

Lex Hall  |  11 Oct 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open higher as investors hope for at least a partial deal in US-Chinese trade talks.

The SPI200 futures contract was up 42 points, or 0.64 per cent, at 6,571.0 at 8am Sydney time, suggesting a rise for the benchmark S&P/ASX200 on Friday.

The Australian share market closed flat after a volatile day prompted by conflicting reports about US-Chinese negotiations.

The benchmark S&P/ASX200 index finished Thursday up 0.4 points, or 0.01 per cent, to 6,547.1 points, while the broader All Ordinaries was down 4.1 points, or 0.06 per cent, to 6,662.9 points.

On Wall Street overnight, the Dow Jones Industrial Average was up 0.57 per cent, the S&P 500 was up 0.64 per cent and the tech-heavy Nasdaq Composite was up 0.60 per cent.

The Aussie dollar is buying 67.61 US cents from 67.46 US cents on Thursday.

Asia

China’s stocks climbed to a two-week high on Thursday as investors hoped for a partial trade deal between Washington and Beijing, but a report stating Chinese officials are looking to cut short their visit to the US capped gains.

The Shanghai Composite index closed up 0.8 per cent at 2,947.71 points, its highest level since September 26. The blue-chip CSI300 index also gained 0.8 per cent on Thursday.

Trade optimism led to gains in both Hong Kong and mainland markets Thursday.

The Hang Sang eked out teensy gains, closing up 0.1 per cent at 25,707.93, largely over the trade talks that begin in Washington tonight.

The big winner of the day in Hong Kong was fresh face 360 Ludashi, a Chinese software developer that closed up a whopping 218.5 per cent at HK$8.6 from its initial public offering price on its first day of trading.

Around the region, MSCI’s Asia ex-Japan stock index was flat, while Japan’s Nikkei index was up 0.2 per cent.

Europe

European shares rose on Thursday as signs of progress in US-China trade talks and hopes of a Brexit deal helped investors look past weak economic data and negative corporate updates.

and autos led the charge, surging more than 2 per cent each, while upscale retailers also rallied and banks .SX7P posted their best day in a month.

Investors took heart after US President Donald Trump tweeted he would meet Chinese Vice Premier Liu He on Friday for further trade talks, confirming the Chinese delegation would not be cutting the two-day negotiations short.

The pan-regional STOXX 600 index closed up 0.7 per cent. Louis Vuitton owner LVMH’s 5.6 per cent jump on strong sales was the biggest boost to the index and lifted stocks across the luxury goods sector.

Gucci-owner Kering, Burberry, Christian Dior and Moncler climbed between 0.7 per cent and 4.2 per cent, with the Paris listed names pushing the French index to its best day in six-weeks.

The latest trade comments fueled optimism that had been dulled after China urged the United States to stop unreasonable pressure on Chinese companies. The South China Morning Post also reported that the two sides made no progress in deputy-level trade talks earlier in the week.

Without significant progress, the next round of US tariff hikes on $250 billion worth of Chinese goods will take effect on 15 October.

Frankfurt's export reliant DAX rose 0.6 per cent, reversing losses posted after data showed a steeper-than-expected fall in Germany's August exports.

London's FTSE 100 climbed 0.3 per cent, despite a rallying pound, after the UK and Irish Prime Ministers said they saw a pathway to a possible Brexit deal after a last-ditch meeting aimed at finding a way for the UK to leave the European Union in an orderly way.

There was a clear move out of defensives with utilities and food and beverages both losing around 0.4 per cent, while a batch of bad news for healthcare companies hurt the healthcare index.

Danish biosciences company Chr. Hansen hit its lowest level in a year and a half, sliding to the bottom of the STOXX 600 index after saying next year’s organic sales growth would fall short of long-term guidance.

Health technology company Philips lost 8.8 per cent after the firm said it would miss its 2019 target for profit margin improvement.

North America

US stocks have gained on hopes that top-level US-China trade talks would yield at least a partial deal, while a rise in Apple's shares lifted the technology sector.

Wall Street's main indexes moved higher after US President Donald Trump tweeted he would meet Chinese Vice Premier Liu He on Friday for further trade talks.

Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York, said the announcement had given investors hope for an agreement.

Separately, Liu said Beijing was willing to reach an agreement with Washington to prevent any further escalation in the trade war, Chinese state news agency Xinhua reported.

The latest comments fuelled optimism that had been dulled earlier after China urged the US to stop unreasonable pressure on Chinese companies.

The South China Morning Post reported that the two sides made no progress in deputy-level trade talks earlier in the week.

But Bloomberg said late on Wednesday that the US was weighing a currency pact with China as part of a partial deal.

Equity markets have also been rankled by weak economic indicators showing a sharp contraction in US manufacturing and a bleak reading on business activity, bolstering bets of another interest rate cut by the Federal Reserve to combat a slowdown.

Apple rose 1.2 per cent on Thursday, lifting the technology sector by 0.7 per cent, after Longbow Research upgraded the company's stock to "buy", citing higher iPhone 11 demand.

Apple suppliers Skyworks Solutions and Qorvo gained six per cent and five per cent respectively, after Cowen and Co upgraded its rating on both the companies, expecting them to benefit from higher iPhone demand.

At 10.38am local time the Dow Jones Industrial Average was up 160.81 points, or 0.61 per cent, at 26,506.82, the S&P 500 was up 18.27 points, or 0.63 per cent, at 2937.67 and the Nasdaq Composite was up 50.16 points, or 0.63 per cent, at 7953.90.

If Thursday's gains hold, the three main indexes will log their second straight day of gains this week.

Cisco Systems dropped 1.8 per cent after a report that Goldman Sachs downgraded the network gear maker's shares to "neutral".

The S&P index recorded one new 52-week high and two new lows, while the Nasdaq recorded eight new highs and 58 new lows.

is content editor for Morningstar Australia

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