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Global Market Report - 17 December

Lex Hall  |  17 Dec 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open higher after a positive lead from overseas.

At 7am Sydney time the SPI200 futures contract was up 24.0 points, or 0.35 per cent, at 6,873.0, suggesting a rise for the benchmark S&P/ASX200.

The Australian share market rallied to its second-best day of the year yesterday on optimism that a resolution to the US-China trade war and Brexit are finally close at hand.

The benchmark S&P/ASX200 index closed on Monday up 110 points, or 1.63 per cent, to 6,849.7 points, while the broader All Ordinaries finished up 107.7 points, or 1.57 per cent, to 6,952.3 points.

On Wall Street overnight, the Dow Jones Industrial Average was up 0.36 per cent, the S&P 500 was up 0.73 per cent and the tech-heavy Nasdaq Composite was up 0.91 per cent.

The FTSE 100 in the UK surged by 2.3 per cent and the wider pan-European STOXX 600 index closed up 1.4 per cent to a record high.

The Aussie dollar is buying US68.89 cents from US68.73 cents on Monday.

Asia

China stocks rose to a six-week closing high on Monday, as investors cheered a preliminary Sino-US trade deal and upbeat data pointing to resilience in the world's second-largest economy.

The blue-chip CSI300 index rose 0.5 per cent, to 3,987.55, while the Shanghai Composite Index added 0.6 per cent to 2,984.39, its highest close since 8 November.

Hong Kong’s Hang Seng index, however, was down 0.34 per cent during its last hour of trading.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.22 per cent, while Japan's Nikkei index was down 0.29 per cent.

Europe

European shares hit record highs on Monday, rising for the fourth successive session as a preliminary US-China trade deal helped extend a rally sparked by the British Conservative Party’s election victory.

London's FTSE 100  jumped 2.3 per cent, leading gains among regional indexes, as investors took British Prime Minister Boris Johnson's election triumph last week as a signal to buy back into a market that has underperformed on concerns over Brexit.

Shares of big dollar earners such as British American Tobacco, Glencore and BHP rose between 3 per cent and 5 per cent. Banks exposed to Brexit uncertainties, including Royal Bank of Scotland and Barclays also rose.

Bearish bets unwound even as the pound, whose gains tend to weigh on the exporter-heavy FTSE 100, extended its rise to above 1.33 per dollar. 

Gains for London, along with general optimism over the US-China trade deal, drove the pan-European STOXX 600 index to a record high. The index was up 1.4 per cent at 417.75, logging a new closing high.

Trade-sensitive miners rose after Washington said a “phase one” US-China trade deal will nearly double US exports to China over the next two years and is “totally done”.

Germany’s DAX lagged its European peers, with automaker Volkswagen weaker.

Markit’s Purchasing Managers’ index, released earlier, showed German private sector activity shrank for the fourth successive month in December as a downturn in manufacturing offset services sector growth.

Investors also overlooked lackluster data from the euro zone and the United Kingdom as the focus remained on trade and Brexit - two factors that have weighed on global markets this year.

Swedish appliance maker Electrolux AB tumbled 10.6 per cent after warning that its North American business would take a bigger-than-expected hit, partly because of costs from its move into a new plant in South Carolina.

Tullow Oil slid 10.2 per cent after S&P Global downgraded its long-term credit rating, days after the company’s chief executive officer stepped down and it scrapped its dividend. 

North America

Wall Street stocks notched record closing highs on Monday as cooling trade tensions between Washington and Beijing and upbeat economic data from China boosted investor sentiment.

The Dow surpassed its November closing high, while the S&P 500 and Nasdaq marked record closes for the third straight session.

Friday’s announcement of an interim trade deal between the world’s two biggest economies has lifted prospects for the global economy, several analysts said. Although growth in China is expected to continue moderating, the trade developments brightened the country’s economic outlook.

Adding to the optimism, data released early on Monday showed China’s industrial output and retail sales growth accelerated in November.

The US-China trade deal suspended tariffs scheduled to take effect on 15 December on a variety of consumer products, including Apple Inc's iPhone. Apple shares rose 1.7 per cent and provided the biggest boost to the S&P 500 and Nasdaq.

Shares of chipmakers, among the most trade-sensitive stocks, also rose. The Philadelphia SE Semiconductor index gained 1.0 per cent.

Accommodative monetary policy by the Federal Reserve this year and mostly encouraging US economic data have also helped push Wall Street stocks to record levels. The benchmark S&P 500 index is up more than 27 per cent this year and on track for its highest annual percentage gain in six years.

The Dow Jones Industrial Average rose 100.51 points, or 0.36 per cent, to 28,235.89, the S&P 500 gained 22.65 points, or 0.71 per cent, to 3,191.45 and the Nasdaq Composite added 79.35 points, or 0.91 per cent, to 8,814.23.

Shares of UnitedHealth Group and Amgen Inc jumped after Goldman Sachs added both companies to its “conviction list.” UnitedHealth shares rose 2.3 per cent, and Amgen shares moved 2.7 per cent higher.

Boeing Co shares fell 4.3 per cent, limiting gains on the Dow, on reports that the planemaker was considering whether to cut or halt production of its grounded 737 MAX aircraft. 

is content editor for Morningstar Australia

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