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Global Market Report - 13 February

Lex Hall  |  13 Feb 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open higher after stocks on Wall Street rallied overnight.

The SPI200 futures contract was up 27 points, or 0.45 per cent, at 6,043.0 at 7am Sydney time, suggesting a positive start for the benchmark S&P/ASX200 on Wednesday. Yesterday, the ASX closed modestly higher after a day of choppy trading marked by mixed local economic data.

The benchmark S&P/ASX200 index closed up 18.3 points, or 0.3 per cent, at 6,079.1 points at 4.15pm on Tuesday, while the broader All Ordinaries was up 20.1 points, or 0.33 per cent, at 6,148.7.

On Wall Street, the Dow Jones Industrial Average was up 1.49 per cent, the S&P 500 was up 1.29 per cent and the Nasdaq Composite was up 1.46 per cent.

Investors will be looking to earning results from companies including CSL, Virgin Australia and Tabcorp on Wednesday.

The Melbourne Institute and Westpac monthly consumer sentiment survey results are also expected to be released on Wednesday morning.

The Aussie dollar is buying 70.99 US cents from 70.81 US cents on Tuesday.

ASIA

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Asian markets finished broadly higher today with shares in Japan leading the region.

The Nikkei 225 is up 2.61 per cent while China's Shanghai Composite is up 0.68 per cent and Hong Kong's Hang Seng is up 0.10 per cent.

EUROPE

European shares closed higher on Tuesday as investors cheered positivity around US-China trade talks and signs of a compromise to avoid another US government shutdown, while Michelin’s results pumped up automotive stocks.

The pan-European STOXX 600 was up 0.5 per cent, with Germany’s trade-sensitive DAX advancing 1 per cent and France’s CAC 40 up 0.8 per cent. London's FTSE 100 is up 0.06 per cent.

Carmakers and their suppliers were the biggest gainers, up 2.9 per cent after Michelin delivered better than expected results and pledged further gains in operating profit this year despite challenging conditions.

The French tire maker’s shares rallied 13 per cent for their best day in nearly a decade.
London indices underperformed their eurozone peers as the pound rose slightly after a parliamentary address by British Prime Minister Theresa May, in which she asked for more time to secure a Brexit deal.

NORTH AMERICA

Wall Street rallied on Tuesday as investors were heartened by a tentative congressional spending deal to avoid another partial federal government shutdown and by optimism surrounding US-China trade negotiations.

All three major US stock indexes posted their biggest one-day percentage gains for the month so far, each advancing more than 1 percent. The S&P 500 ended the session above its 200-day moving average for the first time since early December.

President Donald Trump said he would be willing to let the 1 March tariff deadline slide as top US officials arrived in Beijing for high-level talks later in the week to hammer out a solution to the trade dispute between the world’s two largest economies.

Congressional negotiators cobbled together a tentative bipartisan border security deal late on Monday to avert another partial government shutdown.

However, Trump on Tuesday expressed displeasure with the agreement and said he had yet to decide whether to support it. Funding for the Department of Homeland Security and a host of other agencies is due to expire on Friday.

The fourth-quarter earnings season is nearing the home stretch, and 71 per cent of S&P 500 companies that have reported have beaten consensus estimates.

The outlook for 2019, however, is less rosy. First-quarter earnings are now expected to post a year-on-year decline of 0.3 percent, which would be the first loss since the earnings recession ended in the second quarter of 2016.

The Dow Jones Industrial Average rose 372.65 points, or 1.49 per cent, to 25,425.76, the S&P 500 gained 34.93 points, or 1.29 per cent, to 2,744.73 and the Nasdaq Composite added 106.71 points, or 1.46 per cent, to 7,414.62.

Tuesday’s rally was broad-based. Of the 11 major sectors of the S&P 500, all but real estate closed in positive territory. Technology stocks provided the biggest boost to the S&P 500, and they also led the Nasdaq’s advance.

Tariff-sensitive industrials headed up the Dow's gain, led by 3M Co, Caterpillar, United Technologies Corp and Boeing Co.

Amazon.com provided the biggest lift to the S&P 500 and the Nasdaq, rising 3 per cent after Walmart ended its partnership with logistics firm Devi for a rival same-day grocery delivery service.

Electronic Arts announced that its Apex Legends video game has signed up 25 million players in the week since its release, sending its stock up 5.2 per cent. The video game maker’s shares have soared by nearly 28 per cent since the game's release.

Under Armour jumped 6.9 per cent after the sportswear company beat analysts’ profit forecasts for the holiday quarter.

is senior editor for Morningstar Australia

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