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Global Market Report - 17 July

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

The Australian share market is expected to open lower after a negative lead from Wall Street overnight.

The SPI200 futures contract was down 13 points, or 0.20 per cent, at 6,569.0 at 8am Sydney time, suggesting an early fall for the benchmark S&P/ASX200 on Wednesday.

The Australian share market closed down for a third day yesterday, its first three-day losing streak since late May.

The benchmark S&P/ASX200 index finished down 12 points, or 0.18 per cent, to 6,641 points at on Tuesday, while the broader All Ordinaries was down 10.4 points, or 0.15 per cent, to 6,735.8.

On Wall Street, the Dow Jones Industrial Average finished down 0.09 per cent, the S&P 500 was down 0.34 per cent and the tech-heavy Nasdaq Composite was down 0.43 per cent.

The Aussie dollar is buying 70.11 US cents from 70.31 US cents on Tuesday.

Out today: UK June CPI; US housing starts June, Building permits June, Fed's Beige Book

Asia

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China’s blue-chip CSI300 index fell 0.3 per cent as investors fretted over slower growth in the world’s second-largest economy and the impact of the Sino-US trade war, even as new data highlighted Beijing’s efforts to boost spending.

In Hong Kong, the Hang Seng Index added 0.1 per cent, or 64.74 points, to 28,619.62, for a fifth straight day of gains.

Japan’s Nikkei stock index ended down nearly 0.7 per cent.

Europe

British fashion brand Burberry’s shares jumped on Tuesday, lifting other luxury goods makers, while upbeat earnings from big Wall Street banks spurred gains for the region’s lenders, driving major European markets to their highest closing levels in a week.

Burberry’s shares surged 14.4 per cent, their biggest one-day gain in 7 years, as quarterly results showed demand for new designs by creative chief Riccardo Tisci picking up.

Upscale retailers in Europe, including Hermes, Louis Vuitton owner LVMH and Gucci parent Kering, rose between 0.4 per cent and 2 per cent, helping France's CAC 40 index outperform its European peers with a 0.65 per cent gain.

Britain's FTSE 100 rose 0.6 per cent, as a weaker pound boosted London-listed multinationals.

The euro was also dented after data pointed to a deterioration in confidence among German investors, helping exporters on the pan-European STOXX index, which rose 0.35 per cent at 389.10, its highest closing level since 8 July.

The second-quarter earnings season gets going in Europe this week, with major companies such as SAP, ASML and Novartis set to report results over the next two days.

That will be a test for the recovery in stock markets since May on the back of expectations that an easing of central bank monetary policy globally would prop up consumer demand and avert a recession.

Companies listed on the STOXX 600 index are expected to report earnings growth of 0.2 per cent in the quarter, among the weakest in years and down from 0.8 per cent estimated a week ago, according to data from I/B/E/S Refinitiv.

North America

US stocks edged lower on Tuesday as quarterly results from banks added to concerns about lower interest rates dampening their profits, while comments from US President Donald Trump on trade also dragged down Wall Street’s major indexes.

JPMorgan Chase & Co and Wells Fargo & Co beat quarterly profit estimates but reported weaker net interest income, pointing to rising deposit costs. Those results followed Citigroup’s results on Monday, in which the bank reported a drop in its net interest margin.

JPMorgan shares erased early losses to end 1.1 per cent higher. Wells Fargo shares, however, slipped 3.0 per cent as the bank tempered its outlook for cutting costs.

Stocks also moved lower after Trump said there was a long way to go with China on trade and threatened to put tariffs on another $325 billion of Chinese goods.

The major indexes briefly pared losses after Federal Reserve chair Jerome Powell reiterated that the central bank would “act as appropriate” to keep the US economy humming, but they later moved back to their previous levels.

Shares of Goldman Sachs Group, which also announced results, rose 1.9 per cent. Goldman Sachs is considered the least rate-sensitive of the three major banks that gave quarterly reports on Tuesday.

The Dow Jones Industrial Average fell 23.53 points, or 0.09 per cent, to 27,335.63, the S&P 500 lost 10.26 points, or 0.34 per cent, to 3,004.04 and the Nasdaq Composite dropped 35.39 points, or 0.43 per cent, to 8,222.80.

Johnson & Johnson shares slipped 1.6 per cent after the diversified healthcare company warned that competition from generic and copycat drugs could impact its third-quarter results. Johnson & Johnson was the second-biggest drag on the S&P 500.

Shares of J.B. Hunt Transport Services jumped 5.6 per cent, the greatest percentage gain among S&P 500 stocks, after the trucking company posted strong quarterly performance in its second-largest unit DCS, which provides final-mile delivery.

The rise in J.B. Hunt shares helped lift the Dow Jones Transportation Average 1.8 per cent and aided a 0.7 per cent rise in industrials.

In economic news, a better-than-expected June retail sales report pointed to strong consumer spending. The data did not change the expectations of a rate cut this month, though it lowered hopes of an aggressive cut.

is senior editor for Morningstar Australia

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