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Global Market Report - 13 November

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

The Australian share market is expected to open higher after a mixed lead from Wall Street and muted optimism over trade talks.

The SPI200 futures contract was up 21.0 points, or 0.31 per cent, at 6,765.0 at 8am Sydney time, suggesting a rise for the benchmark S&P/ASX200 on Wednesday.

The Australian share market has given up some of Monday's gains, pulled lower by ex-dividend Westpac and the health care sector.

The benchmark S&P/ASX200 index closed on Tuesday, down 19.5 points, or 0.29 per cent, to 6,753.0 points, while the broader All Ordinaries was down 20.0 points, or 0.29 per cent, to 6,857.0 points.

On Wall Street overnight, the Dow Jones Industrial Average was down 0.05 per cent, the S&P 500 was up 0.14 per cent and the tech-heavy Nasdaq Composite was up 0.20 per cent.

The Aussie dollar is buying 68.42 US cents from 68.51 US cents on Tuesday.

Asia

Shares in Shanghai ended firmer on Tuesday, after having dithered either side of flat, ahead of a key speech by US President Donald Trump at the Economic Club of New York that may offer clues on the likelihood of a trade deal with China.

At the close, the Shanghai Composite index ticked up 0.2 per cent to 2,914.82 points, while the blue-chip CSI300 index finished the session at 3903.69, largely unchanged from Monday’s close.

Hong Kong stocks rebounded on Tuesday from losses incurred by escalating protests in the previous session, as the market hoped for better news on trade from US President Donald Trump.

At the close of trade, the Hang Seng index was up 0.5 per cent at 27,065.28 points. The Hang Seng China Enterprises index rose 0.7 per cent.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.5 per cent, while Japan’s Nikkei index closed up 0.8 per cent.

Europe

European shares climbed back to a four-year high on Tuesday as positive German investor sentiment data and a slew of upbeat earnings lifted the mood, but Spanish stocks lagged after socialist and far-left parties joined forces to form a coalition.

Frankfurt-listed shares rose 0.6 per cent to hover near a 22-month high after a ZEW survey showed the mood among German investors improved more than expected in November, suggesting a more favourable outlook after recent developments in trade conflicts.

The data comes ahead of German GDP numbers that are expected to show a technical recession for Europe’s largest economy, which analysts say is mostly baked in by markets.

The pan-European STOXX 600 index, rose 0.4 per cent, trading just 2 per cent below its all-time highs hit in April 2015.

The gains were led by telecoms stocks, which gained 1.4 per cent boosted by the world’s second largest mobile operator Vodafone after it increased its full-year earnings guidance.

French mobile operator Iliad jumped 20 per cent to the top of STOXX 600, after announcing plans for a 1.4 billion euro ($1.5 billion) share buyback guaranteed in full by founder Xavier Niel.

Among trade-sensitive chipmakers, Dialog Semiconductor took the spotlight, jumping 7 per cent after it lifted its gross and operating margin forecasts.

Infineon Technologies gained 6 per cent despite forecasting slower growth in the year ahead as analysts said the outlook suggests a strong recovery in the second half of 2020.

Among losers, Barry Callebaut’s 6 per cent slide stood out, after investment firm Jacobs Holding said it was selling a 2.85 per cent stake in the company.

Spanish stocks underperformed the broader market to slip 0.9 per cent after the Socialists and far-left Unidas Podemos reached a preliminary coalition deal to form a government following a weekend general election that delivered a highly fragmented parliament.

The unexpectedly fast preliminary agreement between two parties that recently refused to work together would require further steps, including bringing in smaller parties and agreeing cabinet positions.

State-controlled lender Bankia, whose privatisation Podemos has been against, slipped 4.5 per cent after the coalition deal was announced.

All eyes will now turn to US President Donald Trump, set to speak to the Economic Club of New York later in the day, potentially offering clues on Phase One trade deal between the US and China.

North America

The benchmark S&P 500 stock index eked out a slim gain on Tuesday as Donald Trump said the US is close to signing an initial trade deal with China but offered no new details about negotiations.

The S&P 500 and Nasdaq hit all-time highs during trading but stocks ended off session highs after a highly anticipated midday speech from Trump, with investors concerned ahead of time about any comments that would worsen the tariff dispute that has convulsed markets for more than a year.

Trump said US and Chinese negotiators were “close” to a “phase one” trade deal, but largely repeated well-worn rhetoric about China’s “cheating” on trade in remarks at The Economic Club of New York.

Investors have pointed to US-China trade tensions as the main market uncertainty as stocks have climbed to record levels, fuelled by rate cuts by the Federal Reserve, third-quarter earnings coming in above low expectations, and signs the economy may be bottoming.

On Tuesday, the Dow Jones Industrial Average remained unchanged at 27,691.49, the S&P 500 gained 4.83 points, or 0.16 per cent, to 3,091.84 and the Nasdaq Composite added 21.81 points, or 0.26 per cent, to 8,486.09.

Most S&P 500 sectors finished in positive territory, with healthcare .SPXHC the top gainer. Real estate lagged the most, falling 0.8 per cent.

Among stocks, Walt Disney Co rose 1.3 per cent as the company said demand for its much-anticipated streaming service, Disney+, was well above its expectations in a launch.

Shares of Netflix Inc fell 0.7 per cent.

Rockwell Automation Inc shares jumped 10.5 per cent after the US factory equipment maker easily beat quarterly results and forecast 2020 earnings above estimates.

CBS Corp shares dropped 3.6 per cent after the media company missed quarterly revenue estimates. Shares of Viacom Inc, which is merging with CBS, slid 3.8 per cent.

With third-quarter earnings season drawing to a close, about three-quarters of S&P 500 companies have topped profit estimates, but overall they are expected to have posted a 0.5 per cent drop in earnings, according to Refinitiv.

Earnings from big firms including Walmart Inc, Nvidia Corp and Cisco Systems Inc, as well as a fresh set of economic data, are due this week.

is content editor for Morningstar Australia

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