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Global Market Report - 15 January

Lex Hall  |  15 Jan 2020Text size  Decrease  Increase  |  
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Australian share prices are set for a flat start to trading after US stocks fell late on news that the US would likely maintain tariffs on Chinese goods until November as part of a trade deal.

The SPI200 futures contract was up 5 points, or 0.07 per cent, to 6914.0 at 0800 on Wednesday following a new high on the ASX of 6962.2 points on Tuesday.

The Aussie market has been buoyed by the looming US-China trade deal, however overseas investors have reacted to news of the tariffs details.

The tariffs are expected to remain in place until after the presidential election.

The trade deal is expected to be signed by Thursday.

China has pledged to buy nearly an additional $80 billion of manufactured goods from the US over the next two years, and over $50 billion more in energy supplies, according to Reuters.

On Wall St, the Dow Jones Industrial Average rose 0.11 per cent, to 28,939.2, the S&P 500 lost 0.15 per cent, and the Nasdaq Composite fell 0.24 per cent.

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Meanwhile, the Australian Bureau of Statistics is due to publish building data later this morning.

The Australian dollar was buying 69.04 US cents, up from 69.0 US cents at Tuesday's close. 


China stocks shed early gains on Tuesday as investors booked profits from the rally underpinned by optimism ahead of the signing of phase one trade deal between Washington and Beijing.

The blue-chip CSI300 index rose as much as 0.5 per cent to a near two-year high before ending 0.3 per cent lower at 4189.89. The Shanghai Composite Index eased 0.3 per cent to 3,106.82.

The CSI300 index climbed 7 per cent in December and has gained 2.3 per cent so far this year.

Hong Kong stocks reversed gains to end lower on Tuesday as investors pocketed gains following a strong rally underpinned by optimism towards the signing of a phase one Sino-US trade deal.

The Hang Seng index closed lower 0.2 per cent at 28,885.14 after rising as much as 0.7 per cent to an eight-month high, while the China Enterprises Index lost 0.4 per cent to 11,355.37.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.11 per cent, while Japan’s Nikkei index closed up 0.73 per cent.


A record high for Louis Vuitton owner LVMH and a rally in homebuilder Taylor Wimpey helped to push European shares higher on Tuesday, with investors looking ahead to the signing of an initial US-China trade deal.

While most major country indices traded flat to lower, the pan-European STOXX 600 index closed up 0.3 per cent after two sessions of losses. The index had hit a record high last week on de-escalation in US-Iran tensions and hopes of a phase one US-China trade deal.

The deal, due to be signed in Washington on Wednesday, marks the first step in winding down the damaging trade war that has troubled markets for 18 months.

Luxury stocks were boosted when UBS analysts said they were expecting 2020 to be another busy year for the sector, supported by consumer sentiment being at record levels and continued M&A speculation. LVMH rose 1 per cent to touch record highs.

Homebuilder Taylor Wimpey rose 3.9 per cent after it reported a 22 per cent jump in its order book in 2019 and struck a positive tone about 2020.

Germany's DAX index closed flat as a 4.7 per cent jump in payment's company Wirecard offset losses in healthcare group Fresenius, which fell after the company said it expected limited profit growth in 2020.

Oil stocks were the biggest decliners among the main sectors in Europe. A 5 per cent slump in Tullow Oil after a ratings downgrade led losses, while BP slipped after Berenberg said increased shareholder payouts will likely have to wait until the second half of the year.

France’s Total fell after the energy company said it would move its finance department back to Paris from London due to Britain’s impending exit from the European Union, and to reduce costs.

Italian tyre-maker Pirelli slid to the bottom of the auto index after UBS cut its recommendation to “neutral” on lower price-mix contribution and weaker volume growth.

North America

US stocks dipped on Tuesday, reversing earlier intraday record highs, following a report that the US would likely maintain tariffs on Chinese goods until after November’s presidential election.

The eventual removal of tariffs by Washington would depend on Beijing’s compliance with the phase one trade accord, which is expected to be signed on Wednesday, Bloomberg reported, citing sources.

With the S&P 500 at record levels, equivalent to around 18 times expected earnings, algorithmic traders and human investors interpreted the Bloomberg report as a reason to sell.

The Dow Jones Industrial Average, S&P 500 and Nasdaq each touched intraday record highs before losing ground in afternoon trade. The Dow ended the session with a modest gain.

Wall Street has surged in recent weeks, fueled by optimism that a truce in US President Trump’s trade war with China would boost corporate earnings.

China has pledged to buy nearly an additional $80 billion of manufactured goods from the US over the next two years, and over $50 billion more in energy supplies, Reuters reported, citing a source briefed on the Phase 1 trade deal.

Kicking off the fourth-quarter earnings season, JPMorgan Chase & Co rose 1.2 per cent after reporting a better-than-expected profit on strength in its trading and underwriting businesses.

Wells Fargo & Co tumbled 5.4 per cent after reporting a slump in profit as it set aside $1.5 billion for legal expenses. Citigroup Inc rose 1.6 per cent as it topped Wall Street profit estimates.

Analysts expect profits at S&P 500 companies to drop 0.5 per cent for the second consecutive quarter, according to Refinitiv IBES data, largely due to a drag in energy and industrial earnings that have been hit by the prolonged Sino-US trade war.

The Dow Jones Industrial Average ended up 0.11 per cent at 28,939.67 points, while the S&P 500 lost 0.15 per cent to 3,283.15.

The Nasdaq Composite dropped 0.24 per cent to 9,251.33.

FedEx rallied 1.8 per cent after CNBC reported that Amazon had lifted a ban on its sellers using the company for ground deliveries.

Delta Air Lines Inc rose 3.3 per cent after better-than-expected quarterly profit, boosted by customers gained from rival airlines’ 737 MAX cancellations. The S&P 1500 airlines index climbed 1.5 per cent.

Pinterest surged 9.6 per cent after a report that the online scrapbook’s US user base had surpassed Snap Inc’s, making it the third-largest social media platform.



is senior editor for Morningstar Australia

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