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Global Market Report - 17 January

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

The Australian share market is expected to open slightly higher after US stocks rose following British Prime Minister Theresa May's defeat of a no-confidence vote in parliament.

The SPI200 futures contract was up nine points, or 0.16 per cent, 5790 at 8am Sydney time on Thursday, indicating the benchmark ASX/200 will be higher at the open.

Yesterday, the ASX largely avoided fresh Brexit vote drama to close the day higher, though mining shares weighed on the local market. The benchmark S&P/ASX200 index was up 20.6 points, or 0.35 per cent, to 5835.2 at 4.15pm on Wednesday, with the gains for the financial sector offset by falls in the large mining stocks.

Wall Street, closed higher, with the S&P 500 supported by sharply higher US bank shares after some strong company earnings reports.

Sentiment was also supported by the UK government's defeat of the no-confidence motion launched by the Labour opposition following the previous day's failure to pass Brexit deal legislation put forward by the British prime minister.

The Dow Jones Index was 0.59 per cent higher, the broader S&P 500 index is up 0.22 per cent, and the tech-heavy Nasdaq gained 0.15 per cent.
The Aussie dollar is lower, buying 71.74 US cents from 71.98 US cents on Wednesday.

ASIA

Asian shares had responded well to China's central bank injecting a record amount of money into the country's financial system to help stabilise the slowing economy.

Markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.27 per cent, while Japan's Nikkei 225 was off 0.55 per cent. Shares in China were unchanged with the Shanghai Composite at 2570.42.

China's biggest maker of chips for light-emitting diodes Sanan Optoelectronics fell by 10 per cent amid doubts over its accounting practices.

China pumped in roughly $83 billion into the financial system, the biggest one-day addition on record, to ensure there's liquidity during the peak season for tax payments.

In Hong Kong however, bank deposits are at a record high. After the looming vacancy tax played a part in driving prices down almost 9 per cent from their August high, a high savings rate should prevent any collapse in the housing markets.

EUROPE

European markets finished mixed as of the most recent closing prices. The CAC 40 gained 0.51 per cent and the DAX rose 0.36 per cent. The FTSE 100 lost 0.47 per cent.

The broader Euro STOXX 600 was up 0.3 per cent.

The euro was steady against the dollar at 1.1418. The single currency has lost nearly 1.5 per cent from a 12-week high hit on January 10.

Euro zone banks shares boosted European indexes, rising 2.4 per cent to their highest in over a month as investors bet that a disruptive no-deal Brexit was less likely after the parliamentary vote.

Deutsche Bank gained more than 8 per cent after regulators were said to favour a merger with a European lender.

NORTH AMERICA

Wall Street's major indexes have hit one-month highs as strong earnings from Bank of America Corp and Goldman Sachs boosted investor sentiment.

Goldman Sachs shares surged 9.5 per cent, providing the greatest boost to the Dow, after the bank reported quarterly revenue and earnings that topped estimates. The shares registered their biggest daily percentage gain in nearly 10 years.

Bank of America shares jumped 7.2 per cent, leading the S&P 500 higher, after the bank reported a higher-than-expected quarterly profit on growth in its loan book. The shares posted their biggest one-day percentage gain in 6-1/2 years.

The two banks' results drove a 2.2 per cent gain in the S&P 500 financial index which was by far the biggest advancer among the S&P's major sectors. The S&P banking sub-sector climbed 2.7 per cent.

A strong start to the US earnings season, along with trade optimism and hopes of a slower pace in the Federal Reserve's interest-rate hikes, have helped S&P 500 recoup some of its losses from a recent rout.

The index is now 10.7 per cent away from its September 20 record close after having fallen as much as 19.8 per cent below that level.

With Wednesday's gains, the S&P 500 came within striking distance of its 50-day moving average, a key indicator of short-term trends, for the first time since December 4. The Nasdaq crossed its 50-day moving average on Tuesday for the first time since December 3.

The Dow Jones Industrial Average rose 141.57 points, or 0.59 per cent, to 24,207.16, the S&P 500 gained 5.8 points, or 0.22 per cent, to 2,616.1 and the Nasdaq Composite added 10.86 points, or 0.15 per cent, to 7,034.69.

Stocks slightly pared gains in the last half-hour of trading after the Wall Street Journal reported federal prosecutors were investigating Huawei Technologies, the world's largest telecommunications equipment maker, for allegedly stealing trade secrets from US businesses.

Among other stocks, United Continental Holdings shares rose 6.4 per cent after the airline posted a quarterly profit that beat expectations.

Shares of First Data Corp soared 21.1 per cent after Fiserv said it had agreed to buy the payment processor for $US22 billion in the biggest-ever deal within the digital payments industry. Fiserv's shares fell 3.3 per cent.

is content editor for Morningstar Australia

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