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Global Market Report - 15 February

Lex Hall  |  15 Feb 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open flat after a mixed lead from overseas.

The SPI200 futures contract was down 11 points, or 0.18 per cent, at 6,002.0 at 8am Sydney time, suggesting an early dip for the benchmark S&P/ASX200 on Friday. Yesterday, the ASX closed flat after being tugged in opposite directions by mixed earnings reports from 16 of the nation's top 200 companies.

The benchmark S&P/ASX200 index closed down 4.2 points, or 0.07 per cent, at 6,059.4 points at 4.15pm on Thursday, while the broader All Ordinaries was down 0.6 points, or 0.01 per cent, at 6,139.6.

On Wall Street overnight, the Dow Jones Industrial Average was down 0.41 per cent, the S&P 500 was down 0.27 per cent and the Nasdaq Composite was up 0.09 per cent.

The price of oil, iron ore and gold all rose overnight as the US dollar dipped following lower-than-expected US retail sales data from December.

Investors will be looking to earnings reports from companies including Medibank and The Star Entertainment Group on Friday.

The Aussie dollar is buying 71.00 US cents from 71.21 US cents on Thursday.

ASIA

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Asian markets finished lower today with shares in Hong Kong leading the region. The Hang Seng is down 0.23 per cent while China's Shanghai Composite is off 0.05 per cent.

Analysts say a potential extension of the March 1 deadline of the trade talks has largely been priced in, the South China Morning Post reports.

Beijing reported better than expected export growth in January, a 9.2 per cent year-on-year increase that beat a median forecast of a 3.3 per cent drop by economists polled by Bloomberg.

Japan's Nikkei 225 is lower by 0.02 per cent.

EUROPE

European shares gave up three-month highs on Thursday after a surprise sharp decline in US retail sales pulled stocks lower in afternoon trading, spoiling an initially upbeat session that saw blue-chips such as Nestle shine on strong earnings.

The pan-European STOXX 600 closed down 0.2 per cent after spending the first half of the day in positive territory.

Wall Street opened in the red, albeit moderately, after data showing the largest drop in retail sales since September 2009, when the economy was emerging from a recession.

Frankfurt’s DAX, which had showed resilience after GDP data revealed the euro zone’s largest economy only just escaped falling into recession in the fourth quarter, ended the day as the worst performer.

Some European industrial and consumer staple heavyweights managed to pull out a decent day. Airbus delivered better-than-expected results, taking some of the sting out of news that Europe’s largest aerospace group has abandoned its flagship A380 program. Its shares jumped at the open and ended the day up 2.7 per cent.

NORTH AMERICA

The S&P 500 and the Dow slipped while the Nasdaq posted a slim gain on Thursday as investors struggled to square grim retail sales data with hopes that high-level talks in Beijing could resolve the ongoing US-China trade dispute.

Paring earlier losses, the S&P 500 held above its 200-day moving average, a key technical level, for the third straight session.

All three major US stock indexes were held back by rate-sensitive financial stocks as US Treasury yields fell on the weaker-than-expected economic data.

Talks to defuse the ongoing tariff dispute between the world’s two largest economies moved to a higher level as US-China negotiations progressed in Beijing ahead of the March 1 deadline.

But trade optimism was undercut by a report from the US Commerce Department showing retail sales in December suffered their biggest drop in more than nine years, stoking fears of an economic slowdown.

With the fourth-quarter reporting season now more than three-fourths complete, analysts now see earnings growth of 16.2 percent for the quarter, according to Refinitiv data.

But first-quarter estimates are less favourable. They show a 0.3 percent year-on-year decline, which would mark the first quarter of negative growth since the earnings recession that ended in 2016.

The Dow Jones Industrial Average fell 103.88 points, or 0.41 per cent, to 25,439.39, the S&P 500 lost 7.3 points, or 0.27 percent, to 2,745.73 and the Nasdaq Composite added 6.58 points, or 0.09 per cent, to 7,426.96.

Of the 11 major sectors in the S&P 500, 6 closed in negative territory, with consumer staples and financials showing the biggest percentage declines.

Cisco Systems rose 1.9 per cent on the heels of a better-than-expected earnings report as the network gear maker benefited from strength in newer businesses and shrugged off the impact of the US-China trade war.

Shares of American International Group slid 9.0 per cent, on marking its worst day in four years after the global insurer posted a quarterly loss.

Coca-Cola Co shares fizzled, dropping 8.4 percent and providing the biggest drag on the Dow after its full-year profit forecast fell well below Wall Street expectations.

Amazon.com dipped 1.1 per cent after pulling the plug on its planned headquarters in New York due to local opposition.

Canada Goose's quarterly results and profit forecasts beat analyst expectations, but said higher labour costs and expansion investments hit profit margins. The luxury coat maker's US-listed shares sank 12.9 percent.

Avon Products plunged 11 per cent after the multi-level marketing cosmetics brand missed quarterly revenue estimates.

is senior editor for Morningstar Australia

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