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Global Market Report - 19 December

Lex Hall  |  19 Dec 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open lower despite gains on Wall Street overnight as investors wait for the latest unemployment data.

The SPI200 futures contract was down 12.0 points, or 0.17 per cent, at 6,838.0 at 8am Sydney time, suggesting a dip for the benchmark S&P/ASX200 on Thursday.

The Australian share market closed flat for a second day yesterday, as banks and the mining sector weighed on gains by CSL and the energy sector.

The benchmark S&P/ASX200 index finished on Wednesday up 4.1 points, or 0.06 per cent, to 6,851.4 points, while the broader All Ordinaries was up 6.5 points, or 0.09 per cent, to 6,957 points.

The Dow Jones Industrial Average fell 0.1 per cent, the S&P 500 lost 0.04 per cent and the Nasdaq Composite 0.05 per cent.

The Australian Bureau of Statistics will release its jobs numbers for November at 1130am Sydney time on Thursday.

The Aussie dollar is buying 68.54 US cents from 68.45 US cents on Wednesday.

Asia

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China shares ended a three-session rally on Tuesday as investors sought concrete details on the initial trade deal between Beijing and Washington.

The Shanghai Composite index closed 0.2 per cent lower at 3,017.04, off the three-month high hit on Tuesday.

The blue-chip CSI300 index also fell 0.2 per cent, moving away from the highest level since April hit in the previous session.

CSI300’s financial sector sub-index was flat, the consumer staples sector ticked down 0.3 per cent, while the real estate index fell 0.5 per cent.

Stocks in Hong Kong hit their highest level since late July on Wednesday amid expectations of a phase one trade deal between Beijing and Washington, but pared gains as investors awaited further details.

At the close of trade, the Hang Seng index was up 0.2 per cent to 27,884.21, off its earlier peak - the highest level since late July. The Hang Seng China Enterprises index was up 0.5 per cent.

Around the region, MSCI’s Asia ex-Japan stock index was pretty much flat, while Japan’s Nikkei index fell 0.6 per cent.

Europe

European shares inched lower on Wednesday on worries over a potentially hard Brexit, while gains in defensive sectors capped losses.

Most regional bourses hovered around lows touched on Tuesday, when UK Prime Minister Boris Johnson set a hard deadline of December 2020 to reach a new trade deal over Britain’s exit from the European Union.

While a resounding conservative election victory in Britain and a de-escalation in Sino-US trade tensions had spurred stocks to record highs earlier this week, fears of a no-deal Brexit saw investors adopting a more defensive stance.

The main STOXX 600 index was 0.13 per cent lower for the day. The automobile makers’ sub-index served as the worst performer, with Continental and Compagnie Generale des Etablissements Michelin SCA leading losses.

Domestically focused UK stocks slightly extended Tuesday's losses, which had been their worst day in more than two months.

Swedish cash handling company Loomis was the worst performer on the STOXX 600 after German competition authorities prohibited the firm from acquiring German cash handler Ziemann.

German stocks dropped about 0.5 per cent, despite a survey showing that the country's business morale rose more than expected in December to hit a six-month high.

On the other hand, defensive sectors such as consumer goods led gains. Oil and gas stocks were also higher on strength in oil prices.

Export-reliant blue-chip stocks in Britain rose on the back of a weaker pound, which has shed most of its gains made since Johnson's election victory last week.

Shares in Volvo AB gained 3.6 per cent after Japan’s Isuzu Motors agreed to buy Volvo’s UD Trucks business and tie up with Volvo to cut costs and develop electric and self-driving technologies.

Volvo was one of the best performers on the STOXX 600.

Data showed that inflation in the eurozone accelerated as expected in November, thanks to a rise in food prices.

North America

The S&P 500 ended a five-day winning streak on Wednesday as investors’ optimism about global economic growth was countered by a steep drop in FedEx Corp shares, but the benchmark index managed to hover near all-time highs.

FedEx shares tumbled 10.0 per cent after the US parcel delivery company cut its fiscal 2020 profit forecast on heavy expenses, slowing global trade and fallout from its breakup with Amazon.com Inc.

The decline in FedEx shares weighed on the blue-chip Dow industrials. Shares of rival package delivery company United Parcel Service Inc fell 1.9 per cent. The FedEx and UPS losses sent the Dow Jones Transport Average down 0.9 per cent.

But the Nasdaq notched a record closing high for a fifth straight session.

Even with Wednesday’s nominal losses on the S&P 500, analysts said market sentiment remained largely upbeat following last week’s announcement of an initial US-China trade agreement. Earlier in the session, the S&P 500 hit its fifth consecutive record high.

The market largely shrugged off the likely impeachment of US President Donald Trump as the House of Representatives geared up for a historic vote later in the day on two charges accusing Trump of abusing his power and obstructing Congress.

The Dow Jones Industrial Average fell 27.88 points, or 0.1 per cent, to 28,239.28, the S&P 500 lost 1.38 points, or 0.04 per cent, to 3,191.14, and the Nasdaq Composite added 4.38 points, or 0.05 per cent, to 8,827.74.

The small-cap Russell 2000 hit its highest level in 14 months and ended 0.25 per cent higher.

Facebook Inc shares rose 2.1 per cent, providing the biggest boost to the S&P 500, as Deutsche Bank raised its price target on the stock.

 

is senior editor for Morningstar Australia

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