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Global Market Report - 16 January

Lex Hall  |  16 Jan 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open flat after finance markets were pulled in opposite directions by optimism about the Chinese economy and pessimism about the UK House of Commons defeat of the proposed Brexit deal.

The SPI200 futures contract was up four points, or 0.07 per cent, 5754 at 8am Sydney time on Wednesday indicating the benchmark ASX/200 will flat or slightly higher at the open.

Yesterday the ASX closed the day higher, boosted by signs from China the country is considering fresh measures to stimulate stuttering growth.

The benchmark S&P/ASX200 index rose 41.2 points, or 0.71 per cent, to a new nine-week high of 5814.6 at 4.15pm on Tuesday, recovering from a subdued open after China's state planner hinted the country will strengthen monitoring of its economic situation and improve its "reserve" of economic policies.

Wall Street closed higher on the back of hopes that action from the Chinese central bank will stimulate the economy and help it through its current rough patch.

However, US stocks handed back some of those gains after British MPs have rejected Theresa May's Brexit deal by 432 votes to 202, adding more uncertainty about the UK's exit from the European Union.

The Dow Jones Index closed 0.65 per cent higher, the broader S&P 500 index is up 1.07 per cent, and the tech-heavy Nasdaq gained 1.71 per cent.

The Aussie dollar is lower, buying 72.01 US cents from 72.14 US cents on Tuesday.

ASIA

Asian markets finished broadly higher today on news that China will seek to cut taxes “on a larger scale” to prop up the slowing economy.

Stocks in the region reacted positively to the announcement, rebounding from a loss on Monday that was driven by China’s disappointing trade data.

Shares in Hong Kong led the region. The Hang Seng is up 2.02 per cent while China's Shanghai Composite is up 1.36 per cent.

Lending numbers for December gave more reasons to be bullish, with aggregate financing coming in at 1.59 trillion yuan (US$235 billion), well above expectations for 1.3 trillion yuan.
In Japan, the Nikkei 225 is up 0.96 per cent.

EUROPE

European markets largely shrugged off the Brexit turmoil engulfing the UK. Markets finished higher today with shares in London leading the region.

The FTSE 100 is up 0.58 per cent while France's CAC 40 is up 0.49 per cent and Germany's DAX is up 0.33 per cent.

The euro declined 0.5 per cent to $1.1407. The British pound rose 0.2 per cent at $1.284 after falling as much as 1.5 per cent.

NORTH AMERICA

US stocks rose on Tuesday as technology and internet stocks gained on Netflix’s plans to raise fees for US subscribers and hopes of more stimulus for China’s slowing economy fostered a risk-on mood among investors.

Netflix shares jumped 6.5 per cent after the video streaming company said it was raising prices for its US subscribers. Other internet stocks, including shares of Alphabet, Amazon.com and Apple, also rose following the announcement.

The S&P 500 communication services index, which includes Netflix and Alphabet, climbed 1.7 per cent. S&P 500 technology stocks advanced 1.5 per cent.

Stocks also found support from hints by Chinese officials at more stimulus in the near term, easing concerns about a slowdown in the world’s second-largest economy.

Wall Street’s major indexes briefly pared some gains after the British parliament defeated Prime Minister Theresa May’s Brexit divorce deal by a wide margin.

The S&P 500 and the Nasdaq still closed near the session's highs, however.

The Dow Jones Industrial Average rose 155.75 points, or 0.65 per cent, to 24,065.59, the S&P 500 gained 27.69 points, or 1.07 per cent, to 2610.3 and the Nasdaq Composite added 117.92 points, or 1.71 per cent, to 7023.83.

Earlier in the day, gains were capped by disappointing earnings reports from big U.S. banks.
JPMorgan Chase & Co, the largest US bank by assets, missed quarterly profit estimates due to a slump in bond trading revenue, while Wells Fargo & Co said its loan book shrank and quarterly revenue fell in all of its major businesses.

JPMorgan shares erased the early losses and ended 0.7 percent higher. Wells Fargo shares pared losses to end 1.5 per cent lower.

Health insurer UnitedHealth Group jumped 3.6 per cent and was the top gainer on the Dow after reporting better-than-expected quarterly profit. UnitedHealth shares helped boost the S&P 500 healthcare index 1.7 per cent.

Analysts expect S&P 500 profits to have grown 14 per cent in the fourth quarter, much lower than the 20.1 per cent growth forecast in October, according to IBES data from Refinitiv.

is content editor for Morningstar Australia

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