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Global Market Report - 18 January

Lex Hall  |  18 Jan 2019Text size  Decrease  Increase  |  
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Australia

The Australian sharemarket is expected to open higher after Wall Street made solid gains overnight.

The SPI200 futures contract was up 21 points, or 0.33 per cent, 5807 at 8am Sydney time on Friday, indicating the benchmark ASX/200 will be higher at the open. Yesterday, commodity-based stocks have helped the ASX hit a new nine-week high, following the release of several encouraging earnings reports, while online retailer Kogan.com surged on strong Christmas trade.

The benchmark S&P/ASX200 index was up 14.9 points, or 0.26 per cent, to 5850.1 at 4.15pm Sydney time on Thursday, while the broader All Ordinaries was 16.1 points, or 0.27 per cent, higher at 5909.8.

US Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback during trade discussions scheduled for January 30, the Wall Street Journal reported on Thursday, citing people familiar with the internal deliberations.

In the final hour of trade on Wall Street, the major US stock indexes are higher, thanks to gains in defence shares as well as healthcare stocks.

The S&P 500 industrials rose, led by defence contractors Lockheed Martin and Northrop Grumman after US President Donald Trump unveiled a revamped US missile defence strategy.

The Dow Jones Index was 0.67 per cent higher, the broader S&P 500 index is up 0.76 per cent, and the tech-heavy Nasdaq gained 0.71 per cent.

The Aussie dollar is higher, buying 72.00 US cents from 71.58 US cents on Thursday.

ASIA

Shares traded lower overnight after reports that US authorities may soon indict Chinese technology giant Huawei Technologies Co. for allegedly stealing trade secrets from American partner companies like T-Mobile US.

Markets finished lower with shares in Hong Kong leading the region. The Hang Seng closed down 0.54 per cent while China's Shanghai Composite fell 0.42 per cent and Japan's Nikkei 225 fell by 0.20 per cent.

Meanwhile, China has been quietly guiding interbank rates lower without actually cutting official interest rates, with the latest move a record one-day injection of cash into the market.

It also announced plans to further open its bond market to foreign investors, Bloomberg reports.

In Hong Kong, there was something of a flash crash as a wave of selling saw some stocks drop as much as 75 per cent in a matter of minutes.

EUROPE

European markets closed lower with shares in London leading the region. The FTSE 100 is down 0.40 per cent while France's CAC 40 is off 0.34 per cent and Germany's DAX is lower by 0.12 per cent.

Associated British Foods rose 6.8 per cent on healthy sales growth. Media group ITV fell 5.9 per cent on the back of a downgrade by Bank of America Merrill Lynch.

NORTH AMERICA

US stocks have advanced as a published report that the United States was considering lifting tariffs on Chinese imports lifted investor sentiment.

US Treasury Secretary Steven Mnuchin discussed lifting some or all tariffs imposed on Chinese imports and suggested offering a tariff rollback during trade discussions scheduled for 30 January 30, the Wall Street Journal reported on Thursday, citing people familiar with the internal deliberations.

Stocks spiked higher after having posted modest gains in early afternoon trading, though they pared gains slightly after a Treasury spokesperson told CNBC that Mnuchin had not made any such recommendations.

Industrial stocks, which have been sensitive to trade developments, jumped 1.4 per cent after the report. They had earlier erased early losses as shares of defence contractors Northrop Grumman Corp and Lockheed Martin Corp rose after Donald Trump unveiled a revamped US missile defence strategy.

Shares of Apple, which had previously warned of weaker sales in China, rose 0.5 per cent.

The S&P 500 financial index rebounded to trade 0.5 per cent higher after having dropped as much as 1 per cent after Morgan Stanley reported a lower-than-expected quarterly profit. The investment bank's shares were 3.7 per cent lower.

With Thursday's gains, the financial index is on track to post gains for seven straight sessions.

The Dow Jones Industrial Average rose 162.94 points, or 0.67 per cent, to 24,370, the S&P 50 gained 19.86 points, or 0.76 per cent, to 2,635.96 and the Nasdaq Composite added 49.77 points, or 0.71 per cent, to 7084.47.

The S&P remains about 10.5 per cent away from its September 20 record close after a recent rally saw it claw back from a 20-month low on Christmas Eve on concerns over a global economic slowdown.

Shares of Netflix, which is scheduled to report quarterly results after the bell, rose 0.3 per cent. The video-streaming company raised US subscription rates this week.

Analysts have cut their fourth-quarter profit growth forecast for S&P 500 companies to 14.2 per cent from 20.1 per cent estimated on October 1, according to IBES data from Refinitiv.

is content editor for Morningstar Australia

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