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Global Market Report - 15 November

Lex Hall  |  15 Nov 2019Text size  Decrease  Increase  |  
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The Australian share market is expected to open higher despite a mostly negative lead from overseas.

At 8am Sydney time the SPI200 futures contract was up 21.0 points, or 0.31 per cent, at 6,760.0, suggesting a positive start for the benchmark S&P/ASX200 on Friday.

The Australian share market rose broadly yesterday while the dollar slumped to a one-month low after a rise in unemployment increased hopes for a fourth cash rate cut.

The benchmark S&P/ASX200 index closed Thursday up 36.7 points, or 0.55 per cent, to 6,735.1 points, while the broader All Ordinaries was up 6,840.8 points, or 0.52 per cent, to 6,840.8 points.

On Wall Street overnight, the Dow Jones Industrial Average closed down 0.01 per cent, the S&P 500 was up 0.08 per cent and the tech-heavy Nasdaq Composite was down 0.04 per cent.


China’s Shanghai Composite Index slipped 0.3 per cent to 2,905.24, with insurance companies and brokerages pacing the decline.

In Hong Kong, the Hang Seng Index slid 1.8 per cent, or 493.82 points, to 26,571.46 at the close on Wednesday, the lowest level since 23 October.

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Japanese shares hit 1½-week lows on Thursday after profit-taking set in as doubts over an interim U.S.-China trade deal grew, while Line Corp and Z Holdings jumped on news the Yahoo Japan operator was in merger talks with messaging app firm Line.

The Nikkei share average retreated 0.8 per cent to 23,141.55, its lowest since Nov. 5, and the broader Topix dropped 0.9 per cent to 1,684.40, also a 1-½ week low.


European shares closed lower on Thursday as a warning from German carmaker Daimler and weak economic data from major economies added to concerns about a global slowdown.

The pan-European STOXX 600 index slipped 0.3 per cent, with most sectors in the red and automakers leading losses, down 1.4 per cent.

Daimler dropped about 3 per cent, the biggest decline on Germany’s blue-chip index after the carmaker said tougher emissions rules would hit earnings in 2020 and 2021. It said it was cutting staff costs at its Mercedes-Benz business to seek more than 1 billion euros ($1.1 billion) in savings.

Subdued global auto sales have hit German carmakers with weakness in China - the biggest market - casting a pall, while a new emissions-testing regime added to the sector’s pains.

To add to the dour mood, Germany, Europe’s biggest economy, narrowly avoided slipping into recession in the third quarter, while growth indicators from China and Japan remained weak, stoking fears of a global slowdown.

The gloom took European shares further away from a four-year peak hit last week driven by optimism about the chances of a ‘phase one’ trade deal between the US and China and some better-than-expected earnings.

Defensive plays like utilities, healthcare and telecoms, which investors had taken refuge in earlier in the week when trade uncertainties hit risk appetite, started to wear out. All were down between 0.3 per cent and 1 per cent.

London’s FTSE 100 slid 0.8 per cent as a 6 per cent drop in private equity company 3i and a handful of stocks trading ex-dividend overshadowed an earnings-driven jump in luxury brand Burberry which climbed 3 per cent.

STOXX 600’s biggest gainer was genetic testing company Qiagen, up 14 per cent after Bloomberg reported scientific instruments maker Thermo Fisher Scientific had approached the company about a potential deal.

North America

The benchmark S&P 500 stock index posted a slim gain to end with a record closing high on Thursday, as a dour forecast from tech stalwart Cisco Systems was offset by a strong report from big box retailer Walmart.

The Dow index ended barely negative, after posting a closing high on Wednesday, while the Nasdaq also ended fractionally lower.

Cisco shares tumbled 7.3 per cent after the network gear maker forecast second-quarter revenue and profit below expectations as increasing global economic uncertainties kept clients away from spending more on its routers and switches.

Cisco’s share decline weighed the most on the major indexes and helped drag the technology sector down 0.1 per cent.

In contrast, Walmart raised its annual outlook, and the world’s largest retailer posted better-than-expected earnings, comparable sales and e-commerce growth in its largest market during the third quarter.

Walmart shares fell 0.3 per cent after hitting a record high earlier in the session, but the S&P 500 retail and consumer discretionary indexes finished higher after the company’s report.

The Dow Jones Industrial Average fell 1.63 points, or 0.01 per cent, to 27,781.96, the S&P 500 gained 2.59 points, or 0.08 per cent, to 3,096.63 and the Nasdaq Composite dropped 3.08 points, or 0.04 per cent, to 8,479.02.

Stocks have recently run to all-time highs, helped by the Federal Reserve’s interest rate cuts, third-quarter earnings topping low expectations, and signs the economy may be bottoming.

Third-quarter corporate reporting season is drawing to a close with about three-fourths of S&P 500 companies posting profits above expectations, but with earnings expected to have declined 0.4 per cent overall from the year-earlier period, according to Refinitiv.

Fed Chair Jerome Powell on Thursday said the risk of the U.S. economy facing a dramatic bust is remote, and investors will next be looking to U.S. retail sales data on Friday to gauge the health of the economy.

On Thursday, real estate was the top-performing S&P 500 sector, rising 0.8 per cent, while energy and consumer staples lagged along with tech.

Dillard’s Inc shares jumped 14.2 per cent after the department store chain’s quarterly results.

is senior editor for Morningstar Australia

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