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Global Market Report - 14 January

Lex Hall  |  14 Jan 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open higher, after base metals prices rose at the end of last week and US stocks pared losses, as hopes rise about an easing of trade tensions between the US and China.

The SPI200 futures contract was up 15 points, or 0.26 per cent, to 5743 at 7am Sydney time on Monday, hinting the benchmark ASX/200 will rise.

On Friday, copper prices and other industrial metals prices rose on hopes for a thaw in a trade dispute between Washington and Beijing, as the two sides prepared for more talks to resolve their issues.

US officials expect China's top trade negotiator to visit Washington this month, signalling that higher-level talks are likely to follow this week's talks with mid-level officials in Beijing.

Meanwhile, US stocks closed a touch lower, breaking a five-session rally, as energy shares declined and investors looked ahead to earnings season, which kicks off next week with Citigroup, JPMorgan and other big banks.

AMP Capital's chief economist Shane Oliver said share prices futures were pointing to a larger fall on US and European stock markets but that never eventuated.

The Dow Jones Industrial Average fell 5.97 points, or 0.02 per cent, to 23,995.95 and the S&P 500 lost 0.38 points, or 0.01 per cent, to 2,596.26.

Dr Oliver expects to see a fall in consumer confidence when Westpac releases its January figures on Wednesday this week.

He's tipping the same for November's housing finance figures on Thursday.
"They're expected to show a fall of 1.5 per cent, consistent with ongoing weakness in the housing sector," he said.

On Monday morning, the Aussie dollar is slightly lower, buying 72.13 US cents from 72.16 US cents on Friday.

ASIA

Asian markets finished higher on Friday amid talk of progress on the trade front.

The Hang Seng Index on Friday gained 0.6 per cent, or 145.84 points, to 26,667.27, while the Shanghai Composite Index added 0.7 per cent, or 18.73 points, to 2553.83.

Hong Kong’s benchmark ended up the week with a gain of 4.1 per cent, while the mainland’s equity gauge rose 1.6 per cent in the period. Telecom shares leds the gains, rising by as much as 10 per cent.

Smartphone and home appliances maker Xiaomi rose 3.7 per cent, rebounding from a record low to snap a run of losses for three straight days.

Shares in Japan rose, with the Nikkei 225 up 0.97 per cent.

EUROPE

European markets finished lower on Friday. The pan-European STOXX 600 ended 0.1 per cent higher on its fourth straight day in the black - its longest winning streak since November.

Shares in France led the falls. The CAC 40 is down 0.51 per cent while London's FTSE 100 is off 0.36 per cent and Germany's DAX is lower by 0.31 per cent.

Carmakers and parts suppliers suffered the most after last week’s news that car sales had fallen in China for the first time in 20 years.

Paris-based Valeo fell 6.4 per cent, the biggest faller on the CAC 40, while Continental and Volkswagen posted the biggest declines on the DAX.

NORTH AMERICA

Wall Street has closed a touch lower, breaking a five-session rally, as energy shares declined and investors looked ahead to earnings season.

The Dow Jones Industrial Average fell 5.97 points, or 0.02 per cent, to 23,995.95 on Friday, the S&P 500 lost 0.38 points, or 0.01 per cent, to 2,596.26 and the Nasdaq Composite dropped 14.59 points, or 0.21 per cent, to 6,971.48.

Underpinned by optimism over China-US trade talks and expectations of a slow pace of interest rate hikes from the Federal Reserve, the stock market's winning streak through to Thursday added 6 per cent to the S&P 500 and left it up about 10 per cent from the 20-month low it hit around Christmas.

The S&P 500 on Friday ended down just 0.01 per cent after recovering from a loss of 0.74 per cent earlier in the session.

The S&P energy index was off 0.63 per cent, leading declines among 11 sectors, as oil prices dropped after nine days of gains.

JPMorgan Chase, which reports on Tuesday, declined 0.48 per cent. Some bargain hunters are betting on a stronger 2019 for banks after the S&P 500 bank index fell 18.4 per cent in 2018.

US stocks took a severe beating in the last quarter of 2018 due to worries over trade, interest rate hikes and a slowdown in global growth.

Analysts expect S&P 500 companies' earnings per share to grow by 6.4 per cent this year, compared with 23.5 per cent in 2018, when they were supercharged by newly enacted corporate tax cuts, according to IBES data from Refinitiv.

General Motors gave a strong earnings forecast for 2019, sending the carmaker's shares surging 7.05 per cent.

For the week, the S&P 500 rose 2.5 per cent, the Dow added 2.4 per cent and the Nasdaq picked up 3.4 per cent.

Netflix rose 3.98 per cent, bringing its gain in 2019 to 26 per cent, helped by analysts' optimistic forecasts for subscriber growth ahead of its earnings next week.

Activision Blizzard slumped 9.37 per cent, the most on the S&P 500, after it transferred publishing rights for its "Destiny" video game franchise to Bungie.

is content editor for Morningstar Australia

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