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Global Market Report - 13 January

Lex Hall  |  13 Jan 2020Text size  Decrease  Increase  |  
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Australian share prices appear headed for a flat start to the trading week but a looming US-China trade deal could change investors' mood.

The SPI200 futures contract was down 52 points, or 0.76 per cent, to 6817.0 points at 8am Sydney time on Monday after slower-than-expected December US jobs growth prompted Wall Street prices to fall late last week.

US domestic jobs increased by 145,000 last month, below the forecast for a 164,000 rise, but the pace of hiring remained more than enough to keep the longest economic expansion in history on track.

A US-China trade deal, expected to be signed on 15 January, is likely to lift prices.

The Australian share market will resume trading after its best week in nearly a year.

The 186.7-point, 2.72 per cent gains for the week were the ASX's strongest weekly gains since a 200.8-point surge for the week ending February 8, 2019.

Housing approvals and retail sales figures for November beat expectations, while the trade balance swelled more than expected.

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The Australian dollar was buying 68.98 US cents, up from 68.79 US cents at Friday's close. 


China’s benchmark equity indexes edged lower on Friday, but posted their sixth consecutive weekly gain against a backdrop of easing Mideast tensions and signs of economic recovery, and ahead of the signing of a Sino-US trade deal next week.

At the close, the Shanghai Composite index was down 0.08 per cent at 3,092.29. It rose 0.28 per cent for the week, its sixth straight weekly gain.

The blue-chip CSI300 index was down 0.03 per cent, but gained 0.44 per cent for the week, also its sixth straight weekly rise.

Hong Kong stocks closed higher for the sixth straight week on Friday as investors remained upbeat in the run up to the signing of the phase one trade deal between China and the US.

At the close of trade, the Hang Seng index was up 0.3 per cent at 28,638.20, near its highest level since 3 January hit earlier in the session. The index ticked up 0.7 per cent from the previous week.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.5 per cent, while Japan’s Nikkei index closed up 0.47 per cent.


European shares fell modestly on Friday on weaker than expected US jobs growth, but travel and leisure stocks gained after Ryanair raised its profit forecast and Evolution Gaming Group announced an online US casino deal.

The better than expected Christmas and New Year numbers from Europe’s largest low-cost operator lifted its shares to a two-year high and boosted budget carriers Easyjet and Wizz Air, which gained about 4 per cent and 7 per cent each.

Sweden’s Evolution Gaming Group jumped 6 per cent after it announced an agreement with US-based Parx Casino to deliver online services.

The travel and leisure subsector closed at its highest in more than one and a half years.

The pan-European STOXX 600 slipped in the final minutes of trading after spending most of the session in positive territory. It was the first decline in four days.

Slower-than-expected US jobs growth in December pressured Wall Street’s advance. However, the pace of hiring remained more than enough to keep the world’s largest economy humming.

The benchmark STOXX 600 had pulled back from record levels at the start of the week on concerns about an all-out conflict between the US and Iran.

However, indications from both sides that they would refrain from further military action, as well as signals that a US-China trade deal will be inked next week helped markets resume their record run.

British retailer B&M suffered its sharpest fall in more than a year after it said sales growth slowed in the key Christmas quarter partly due to a tough market.

Superdry also plunged about 7 per cent, joining a spate of reports this week that signalled UK retailers struggled for sales growth in the run-up to Christmas.

The European retail index ended Friday with its steepest weekly drop in 14.

Utilities were the best performing European subsector on the day, helped by shares of Germany’s RWE which hit a more than five-year high.

The firm could expect around 2 billion euros (US$2.2 billion) in compensation over government orders to turn off lignite power stations, government and industry sources said.

North America

US stocks fell on Friday from record-high levels as investors took profit and data showed slower-than-expected December US jobs growth, but the major indexes posted gains for the week.

Domestic jobs increased by 145,000 last month, below the forecast for a 164,000 rise, the US government data showed, as the pace of hiring remained more than enough to keep the longest economic expansion in history on track.

Friday’s report also showed the jobless rate held near a 50-year low of 3.5 per cent and average hourly earnings rose 0.1 per cent in the previous month.

That has given investors reason to take some profit, but next week the focus will turn to earnings, he said.

The Dow Jones Industrial Average fell 133.13 points, or 0.46 per cent, to 28,823.77, the S&P 500 lost 9.35 points, or 0.29 per cent, to 3265.35 and the Nasdaq Composite dropped 24.57 points, or 0.27 per cent, to 9,178.86.

For the week, the S&P 500 rose 0.9 per cent and the Dow added 0.7 per cent. The Nasdaq climbed 1.8 per cent in its fifth consecutive week of gains.

The gains followed easing tensions between the United States and Iran and firmer hopes of a US-China trade deal. The S&P 500 technology index .SPLRCT, which gained 2.2 per cent for the week, was down 0.2 per cent on Friday.

White House economic adviser Larry Kudlow told Fox Business the trade deal is on track to be signed on 15 January.

Boeing Co fell 1.9 per cent after the company released hundreds of internal messages that contained harshly critical comments on 737 MAX development.

With the fourth-quarter earnings season set to begin in earnest next week, analysts expect profits for S&P 500 companies to have declined 0.6 per cent in their second consecutive quarterly decline, according to Refinitiv IBES data.


is senior editor for Morningstar Australia

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