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Global Market Report - 19 March

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

Australian shares are expected to open higher, with a rise in the iron ore price likely to boost mining companies, while investors are watching for the Fed's vow to be "patient" on rate cuts.

The SPI200 futures contract was up 20 points, or 0.32 per cent, at 6,211.0 at 8am Sydney time, suggesting a positive start for the benchmark S&P/ASX200 on Tuesday.

The ASX started the week higher, buoyed by iron ore producers as the price of the resource spiked.

The benchmark S&P/ASX200 index closed up 15.3 points, or 0.25 per cent, to 6190.5 points, while the broader All Ordinaries was up 18.5 points, or 0.3 per cent, at 6283.6.

On Wall Street overnight, the Dow Jones Industrial Average was up 0.25 per cent, the S&P 500 was up 0.37 per cent and the tech-heavy Nasdaq Composite was up 0.34 per cent.

The Aussie dollar is buying 71.05 US cents from 71.12 US cents on Monday.

Elsewhere, restrictions on imports of Australian coal appear to be expanding to more ports in China, including Fangcheng in the south.

ASIA

China’s major stock indexes closed near their 6½-month highs on Monday, as sentiment was bolstered by high expectations of the US Federal Reserve taking a dovish stance at its policy meeting this week and Beijing’s policy boost for growth.

At the close, the blue-chip CSI300 index settled 2.9 per cent higher at 3,851.75 points, while the Shanghai Composite Index ended up 2.5 per cent at 3,096.42 points
Hong Kong stocks tracked the mainland Chinese markets.

The Hang Seng index rose 1.4 per cent, to 29,409.01, while the China Enterprises Index gained 1.5 per cent, to 11,674.83 points.

The Chinese government has additional monetary policy measures that it can take to support economic growth this year, and will even cut “its own flesh” to help finance large-scale tax cuts, Premier Li Keqiang said on Friday.

Li’s comments suggest Beijing is ready to roll out more stimulus measures to ensure the economy grows within a targeted range of 6 to 6.5 per cent.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.95 per cent, while Japan’s Nikkei index closed up 0.62 per cent.

EUROPE

European stocks rose for the fourth session in a row on Monday as a flurry of dealmaking, including merger talks between Deutsche Bank and Commerzbank, spurred gains in the financial services sector.

Shares in the two German lenders rose between 4 and 7 per cent, and boost banking stocks across the region, despite the likelihood of fierce opposition from local unions as a merger could threaten as many as 30,000 jobs over the long term.

Europe’s banking sector rose more than 1 per cent, with Italian lenders Banco BPM and UBI Banca gaining. That sent the pan-European STOXX 600 index’s up 0.27 per cent to a fresh five-month high.

Also caught in the merger wave was German insurer Allianz, which Bloomberg reported was exploring combining its asset management business with DWS, mostly owned by Deutsche Bank. DWS shares jumped 9 per cent to their highest since May.

London’s FTSE 100 rose the most among euro-peers with a near 1 per cent gain at the start of a week in which parliament is expected to vote for a third time on Prime Minister’s Theresa May’s Brexit plan after ruling out a near-term no-deal exit.

NORTH AMERICA

Banks and tech helped lead Wall Street higher on Monday, while Boeing and Facebook were a drag and investors eyed this week's US Federal Reserve meeting for affirmation of its commitment to "patient" monetary policy.

Following the S&P 500's best week since November, the benchmark index ended the session about 3.3 per cent below its all-time high reached in September. All three major US indexes closed in positive territory.

The Dow's fourth straight advance ran into headwinds from Boeing Co, which fell 1.8 per cent as the company faced increasing scrutiny following a fatal crash in Ethiopia on March 10. The drop in shares of the world's largest plane maker extended last week's 10.3 per cent decline and was the heaviest weight on the blue-chip index.

The Fed's two-day policy meeting begins on Tuesday. Investors anticipate the US central bank will reinforce its dovish approach toward further interest rate hikes.

The Dow Jones Industrial Average rose 65.23 points, or 0.25 per cent, to 25,914.1, the S&P 500 gained 10.46 points, or 0.37 per cent, to 2,832.94 and the Nasdaq Composite added 25.95 points, or 0.34 per cent, to 7,714.48.

Of the 11 major sectors in the S&P 500, eight closed in the black, with energy, consumer discretionary and financial companies enjoying the biggest percentage gains.

The prospect of extended OPEC supply cuts sent crude prices to four-month highs, which boosted energy companies, while news of upcoming initial public offerings, notably from ride-hailing service Lyft, sent the banking sector higher.

The communications services sector was the largest percentage loser, weighed down by Facebook.

Facebook shares were down 3.4 per cent after the European Commission's deputy head said "at some point, we will have to regulate" big tech and social media companies to protect citizens and a top-rated Needham analyst downgraded the stock to "hold" from "buy."

Apple surprised investors with the launch of new iPad devices ahead of the company's expected March 25 launch of a content streaming service. The stock closed up 1 per cent.

Shares of Apple supplier Synaptics plummeted 22.6 per cent after Mizuho downgraded it to "neutral" from "buy."

is content editor for Morningstar Australia

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