Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

Global Market Report - 17 February

Lex Hall  |  17 Feb 2020Text size  Decrease  Increase  |  
Email to Friend

Australia

Australian shares are expected to dip when trading resumes this week, with investors feeling cautious as the market teeters near record highs.

The SPI200 futures contract was down 17 points, or 0.24 per cent, at 7049 at 8am Sydney time on Monday.

The benchmark S&P/ASX200 index finished Friday up 27 points, or 0.38 per cent, to 7130.2, just under the all-time record close of 7132.7.

The broader All Ordinaries index added 22.5 points, or 0.31 per cent, to finish at 7227.1. US markets ended mixed.

On Wall Street, the Dow Jones Industrial Average fell 25.23 points, or 0.09 per cent, to 29,398.08, the S&P 500 gained 0.18 per cent and the Nasdaq Composite added 0.2 per cent.

CommSec chief economist Craig James says Monday's expected weaker start is likely due to investors playing it safe.

Investors will be eyeing the financial results of Altium, Bendigo & Adelaide Bank, Brambles and QBE on Monday as they report to the market.

They will be waiting to see later this week the RBA's monetary policy minutes and Australian wage growth and jobs data.

The Australian dollar was trading at 67.24 US cents at 8am on Monday, up from 67.18 US on Friday as the market closed.

Asia

Stocks in China and Hong Kong advanced Friday on expectations of extra stimulus out of Beijing and eventual defeat of the coronavirus.

In China, the Shanghai Composite Index rose 0.4 per cent to 2917, also leaving it with a weekly 1.4 per cent gain.

The Shenzhen Component Index rose 0.5 per cent to 10,916.31, while the CSI 300 gauge of large caps traded in Shanghai and Shenzhen rose by 0.7 per cent to 3987.73.

In Hong Kong, the Hang Seng Index rose 0.3 per cent to 27,815.6. That left Hong Kong’s benchmark with a 1.4 per cent weekly gain.

Europe

A handful of negative company updates from Britain and France knocked European shares off record highs hit earlier in the session on Friday, while investors grappled with the impact of the coronavirus outbreak on global growth.

The pan-European STOXX 600 closed down 0.1 per cent after notching up a new high of 432.26 points in early afternoon trading.

London's FTSE 100 underperformed its European peers with a 0.6 per cent drop, as drugmaker AstraZeneca forecast a possible slowdown in revenue growth this year, assuming a hit from China's coronavirus epidemic.

France's CAC 40 fell 0.4 per cent as Barclays downgraded several consumer stocks, saying the outbreak will a have major impact on Chinese consumption.

Cosmetics group L’Oreal as well as spirits makers Remy Cointreau and Pernod Ricard fell between 0.5 per cent and 1.2 per cent after the rating cut.

Despite the uncertainties, the main STOXX 600 recorded its second consecutive weekly gain as investors clung to hopes that the damage to the global economy from China’s coronavirus outbreak will be short-lived.

The World Health Organisation said a large jump in new coronavirus cases seen on Thursday was due to a change in classification methods, and did not necessarily reflect the “tip of an iceberg” of a wider epidemic.

That helped investors to take a batch of downbeat data in stride. Figures showed euro zone economic growth slowed as expected in the fourth quarter, but employment growth picked up more than expected.

Other data showed the German economy stagnated in the same period due to weaker private consumption and state spending, raising the risk of a recession in an economy hit by weak manufacturing activity.

German stocks ended flat, but recorded a weekly gain of 1.7 per cent.

Real estate and utilities were the best performing European sectors for the day, rising about 1.5 per cent each.

Utilities were boosted by France’s Electricite de France, which topped the STOXX 600 after its annual core earnings beat expectations.

Meanwhile, French carmaker Renault fell 0.9 per cent after posting its first annual loss in 10 years.

German payments company Wirecard dropped 3.5 per cent even as it reported strong quarterly results, in-line with analyst expectations.

However, there was no update on an outside audit to address Financial Times allegations of fraud and false accounting that have dogged the Munich-based company. Wirecard has said the allegations are unfounded.

Royal Bank of Scotland’s slumped 6.8 per cent after flagging a new strategy to cut back its investment bank and rename the company.

UK’s exporter-heavy index finished the week with a 0.8 per cent drop, hit by a pound that has firmed on expectations the new British finance minister would unveil a more expansionary budget next month.

North America

The S&P 500 ended modestly higher on Friday following strong earnings from Nvidia and a report late in the session that the White House was considering a tax incentive for Americans to buy stocks.

Uncertainties surrounding the coronavirus epidemic and downbeat economic data had put a damper on investor sentiment for much of the day.

But a CNBC report that the Trump administration could introduce a tax incentive for people earning less than US$200,000 to invest up to US$10,000 in US stocks gave the markets a late boost.

While the S&P 500 and the Nasdaq closed modestly higher, the Dow lost ground.

The three major stock averages headed into the US holiday weekend having posted their second consecutive weekly advances.

The coronavirus, now called Covid-19, has taken 1,380 lives and infected 63,851 people, according to Chinese authorities.

In a recent Reuters survey of 40 economists, the respondents see China’s economy in the current quarter suffering its slowest growth since the financial crisis, but believe the downturn will be short-lived if the outbreak is contained.

Indeed, of the 387 companies in the S&P 500 having reported fourth-quarter results, 77.4 per cent have surprised Wall Street expectations to the upside, according to Refinitiv data.

Analysts now see fourth-quarter earnings rising at an annual pace of 2.6 per cent, a striking reversal of the 0.3 per cent decline seen on Jan 1.

In economic news, lackluster retail sales and industrial production data appeared to justify the US Federal Reserve’s wait-and-see stance regarding its accommodative monetary policy, reiterated by Fed chair Jerome Powell earlier this week in Washington.

The Dow Jones Industrial Average fell 25.23 points, or 0.09 per cent, to 29,398.08, the S&P 500 gained 6.22 points, or 0.18 per cent, to 3,380.16 and the Nasdaq Composite added 19.21 points, or 0.2 per cent, to 9731.18.

Seven of the 11 major sectors in the S&P 500 closed in the black, with defensive real estate and utilities stocks seeing the biggest gains.

Energy shares were the biggest losers.

NVIDIA Corp jumped 7.0 per cent after the chipmaker’s beat-and-raise earnings report, even as it forecast a US$100 million hit from the coronavirus.

Online travel services platform Expedia surged 11.0 per cent after the online travel services company forecast strong quarterly core earnings despite uncertainties surrounding the Covid-19 virus.

EBay gained 2.6 per cent after providing better-than-expected current-quarter profit guidance.

is content editor for Morningstar Australia

AAP logo

© 2021 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

Email To Friend