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Global Market Report - 15 January

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

The Australian share market is expected to rise when it opens despite falls on overseas stock markets and base metals prices.

The SPI200 futures contract was up eight points, or 0.14 per cent, to 5724 at 8am Sydney time on Tuesday, hinting the benchmark ASX/200 will be higher at the open.

Yesterday, the poor Chinese trade data hurt Australia's mining and energy sectors and kept the broader market flat after what promised to be a positive start to the week. The benchmark S&P/ASX200 index closed 1.2 points, or 0.02 per cent, lower at 5,773.4 at 4.30pm on Monday as early gains on US-China trade hopes evaporated.

US stocks closed lower as an unexpected drop in China's exports reignited worries of a global economic slowdown and prompted caution among investors as the corporate earnings season kicked off.

The Dow Jones Industrial Average is down 86.11 points, or 0.36 per cent, at 23,909.84, the S&P 500 is down 13.65 points, or 0.53 per cent, at 2582.61 and the Nasdaq Composite is down 65.56 points, or 0.94 per cent, at 6905.91.

Data from China showed imports fell 7.6 per cent year-on-year in December while analysts had predicted a 5 per cent rise. Exports fell 4.4 per cent, confounding expectations for a 3 per cent gain.

The Aussie dollar is higher, buying 77.98 US cents from 77.86 US cents on Monday.

ASIA

Shares in Hong Kong and China fell amid the worse-than-expected trade data.

Adding to policymakers' worries, data on Monday also showed China posted its biggest trade surplus with the US on record in 2018, which could prompt Donald Trump to turn up the heat on Beijing in their cantankerous trade dispute.

Benchmark conglomerate Tencent Holdings fell 2.8 per cent.

Carmakers fell 4.1 per cent amid poor sales. Geely Automobile Holdings fell 3.1 per cent.

One of the rare gainers was Lenovo Group, the world’s top personal computer producer, which surged 5.3 per cent following an upgrade from Goldman Sachs.

EUROPE

The index of Europe's leading 300 shares slipped 0.7 per cent in early trade to 1365 points. Germany's DAX and France's CAC fell about 0.6 per cent, with shares in European luxury goods companies and the automotive sector suffering some of the biggest declines.

The FTSE 100 is down 0.91 per cent.

NORTH AMERICA

Technology shares have pulled Wall Street lower after an unexpected drop in China's exports in December reignited worries of a slowdown in global economic growth.

The China trade data reinforced concerns that US tariffs on Chinese goods were taking a toll on the world's second-largest economy, prompting companies such as Apple to issue a profit warning.

Chipmakers, which get a sizeable portion of their revenue from China, took a hit, with the Philadelphia SE semiconductor index slipping 1.60 per cent. Trade-sensitive Boeing and Caterpillar fell more than 1 per cent.

Citigroup shares reversed course to rise 3 per cent despite reporting lower-than-expected revenue after chief financial officer John Gerspach said the slowdown in China was not particularly disruptive to its global operations and that the bank saw improvements in trading conditions in the first few days of the quarter.

Citigroup kicked off fourth-quarter earnings season for large US banks, with JPMorgan Chase and Wells Fargo set to report earnings on Tuesday.

Ten of the 11 major S&P sectors were lower, with the technology sector's 0.87 per cent fall being the biggest drag on the S&P 500. The S&P financial sector was the only gainer, lifting US stocks off their early lows.

A recent rally in stocks, fuelled by US-China trade optimism and hopes of a slow pace of interest rate hikes, has driven a 10 per cent gain in the S&P 500 from its Christmas Eve low.

The benchmark index is about 12 per cent away from its September 20 record close.

The Dow Jones Industrial Average was down 86.11 points, or 0.36 per cent, at 23,909.84, the S&P 500 was down 13.65 points, or 0.53 per cent, at 2,582.61 and the Nasdaq Composite was down 65.56 points, or 0.94 per cent, at 6,905.91.

Adding to the downbeat mood was a partial government shutdown, which entered its 24th day, making it the longest shuttering of federal agencies in US history.

Analysts expect S&P 500 companies to post a 14.3 per cent growth in fourth-quarter earnings, according to IBES data from Refinitiv. Profit for 2019 is likely to increase by 6.3 per cent this year, much slower than the estimated 23.4 per cent growth in 2018 that was mostly fuelled by a cut in corporate tax rates.

Among other stocks, PG&E plunged 49.22 per cent after the biggest US power utility said it was preparing to file for Chapter 11 bankruptcy for all of its businesses.

is content editor for Morningstar Australia

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