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Global Market Report - 18 June

Glenn Freeman  |  18 Jun 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open flat, despite gains on Wall Street overnight.

The SPI200 futures contract was up 1 point, or 0.02 per cent, at 6,542 at 8am Sydney time, suggesting an almost unchanged start for the benchmark S&P/ASX200 on Tuesday.

Wall Street finished higher, with the Dow Jones Industrial Average up 0.09 per cent, the S&P 500 up 0.09 per cent and the tech-heavy Nasdaq Composite up 0.62 per cent.

The benchmark S&P/ASX200 index yesterday closed 23 points lower at 6,530.91 - down 0.35 per cent, while the broader All Ordinaries finished down 24 points, or 0.09 per cent, to 6,609.45.

On Wall Street, the Dow Jones Industrial Average ended 0.09 per cent higher at 26,112.53 points, while the S&P 500 also gained 0.09 per cent to close at 2889.67. The Nasdaq Composite added 0.62 per cent to 7845.02.

The Aussie dollar is buying 68.54 US cents from 68.74 US cents on Monday.

Out today: The Reserve Bank of Australia releases the minutes of its last meeting, when it dropped the official cash rate by 25 basis points, at 11:30am Sydney time.

Asia

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China stocks were up slightly on Monday on expectations of further policy support, but trading remained subdued as investors awaited cues from the US-China trade negotiations at the G20 summit later this month.

At the close, the Shanghai Composite index was up 0.2 per cent at 2,887.62, while the blue-chip CSI300 index was flat.

The CSI300's financial and healthcare sub-indices were each up 0.4 per cent, while consumer staples and real estate lost 1 per cent and 0.3 per cent.

In Hong Kong, the Hang Seng index was up 0.4 per cent at 27,227.16 points – as protests de-escalated when officials announced a suspension of efforts to push for the controversial new China extradition law. But trading remained muted as investors await this week's US Federal Reserve meeting.

Elsewhere in the region, MSCI’s Asia ex-Japan stock index was weaker by 0.3 per cent, while Japan’s Nikkei index closed mostly flat.

The Nikkei share average ended 0.03 per cent higher at 21,124, helped by gains in a few of its heavyweights such as SoftBank Group and Fast Retailing.

Europe

European shares edged lower, including a profit warning from Germany's Lufthansa which hit the large airline stocks, while investors also braced for what is shaping up to be a crucial week for global monetary policy.

The pan-European STOXX 600 index finished 0.1 per cent lower. France’s CAC 40 was led higher by luxury stocks, while IT company Indra Sistemas’ 7.1 per cent slip took Spain’s IBEX 35 0.7 per cent lower.

The European travel and leisure sector underperformed other major European sectors, down 0.8 per cent, as Lufthansa plunged 11.6 per cent and kept Germany’s DAX pressured.

EasyJet and International Consolidated Airlines (IAG) also fell, declining 3.3 per cent and 2.5 per cent, respectively.

European banks had a mixed day, as HSBC rose 0.9 per cent – among the biggest boosts to the STOXX 600 – on its announcement of plans to expand its branch network by as much as 25 per cent.

Deutsche Bank gained 1.4 per cent, while the Nordic region's largest bank, Nordea, slipped 1.7 per cent.

North America

Wall Street edged higher, supported by Facebook, Amazon and Apple, as investors await a key Federal Reserve meeting that is expected to lay the groundwork for an interest rate cut later this year.

The US central bank is expected to leave borrowing costs unchanged at its two-day policy meeting starting on Tuesday, but its statement will provide insight into the impact of the US-China trade war, President Donald Trump's calls for a rate cut and weaker economic data.

With investors expecting a rate cut as early as July, the S&P 500 index has risen 5 per cent this month after tumbling in May due to fears about the US-China trade dispute.

Bolstering expectations of a rate cut this year, the New York Federal Reserve said its Empire State gauge of business growth in New York state posted a record fall this month to its weakest level in more than two-and-a-half years, suggesting an abrupt contraction in regional activity.

The Fed's rate-setting committee is due to release its statement at 2pm local time on Wednesday, with Fed Chair Jerome Powell holding a press conference shortly after.

The S&P banks index, which tend to benefit from a rising interest rate environment, dropped one per cent, while the broader S&P 500 financial sector fell 0.93 per cent.

The S&P 500 was up as much as 0.36 per cent during Monday's session before giving up most of its gain in the final few minutes of trade.

The Dow Jones Industrial Average ended 0.09 per cent higher at 26,112.53 points, while the S&P 500 also gained 0.09 per cent to close at 2889.67.

The Nasdaq Composite added 0.62 per cent to 7845.02.

US chip stocks have been whipsawed in recent weeks by uncertainty related to the trade dispute, and by Washington's move in May to blacklist Chinese technology company Huawei.

is senior editor for Morningstar Australia

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