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Global Market Report - 19 November

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

The Australian share market is expected to open flat after a mixed lead from Wall Street.

The SPI200 futures contract was down 2.0 points, or 0.03 per cent, at 6773.0 at 8am Sydney time, suggesting a steady start for the benchmark S&P/ASX200 on Tuesday.

The Australian share market closed lower yesterday, with every sector falling except for consumer stocks.

The benchmark S&P/ASX200 index finished Monday down 26.9 points, or 0.4 per cent, to 6766.8 points, while the broader All Ordinaries was down 27.2 points, or 0.39 per cent, to 6871.7 points.

On Wall Street overnight, the Dow Jones Industrial Average was up 0.05 per cent, the S&P 500 was down 0.01 per cent and the tech-heavy Nasdaq Composite was up 0.08 per cent.

The minutes of the Reserve Bank of Australia's 5 November meeting are due to be released at 11.30am on Tuesday.

The Aussie dollar is buying 68.12 US cents from 68.11 US cents on Monday.

Asia

China stocks ended Monday firmer, as investors hoped for more stimulus measures to shore up the slowing economy after an interbank lending rate cut.

The blue-chip CSI300 index rose 0.8 per cent, to 3,907.93, while the Shanghai Composite Index added 0.6 per cent to 2909.20.

Hong Kong stocks closed higher on Monday, following steep losses the previous week, as lacklustre economic data stoked hopes of fresh stimulus measures to revive flagging growth in the Asian financial hub.

The Hang Seng index ended up 1.4 per cent at 26,681.09, while the China Enterprises Index gained 1.3 per cent to 10,556.56.

Government data confirmed on Friday that Hong Kong has sunk into recession for the first time in a decade in the third quarter, weighed down by increasingly violent anti-government protests and the US-China trade dispute.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.41 per cent, while Japan’s Nikkei index closed up 0.49 per cent.

Europe

European stocks ended flat on Monday as a spurt of defensive buying over uncertainty surrounding US-China trade talks helped temper losses in the auto sector.

The pan-European STOXX 600 index finished little changed, after having spent most of the session in negative territory.

The European automobiles and parts sector dropped 2.1 per cent, its steepest fall in about four weeks, with Germany’s Volkswagen leading declines after it slashed its operating profit and sales growth outlook due to slowdown in the auto sector.

This comes after a string of automakers including fellow German peer Daimler and part supplier Continental warned of tough times for an industry facing higher investments into cleaner and self-driving technologies.

Also weighing on the sector was an over 3 per cent decline in shares of France’s Peugeot after Deutsche Bank downgraded the stock to “hold.”

Conflicting trade headlines kept investors cautious with sectors traditionally considered defensive, such as real estate, utilities and healthcare leading gains.

News on the trade war was conflicting. Sentiment in the afternoon took a hit after a CNBC report said the mood in Beijing about a deal was pessimistic due to US President Donald Trump’s reluctance to roll back tariffs.

However, late in the session, the Trump administration issued a new 90-day extension allowing US companies to continue doing business with China’s Huawei Technologies Co Ltd.

Gains in defensive stocks including AstraZeneca, GlaxoSmithKline and British American Tobacco helped London's blue-chip FTSE 100 rise 0.1 per cent, to outperform the broader market.

Optimism surrounding a Sino-US trade talks and better than expected corporate results had helped STOXX 600 hit a four-year high last week.

In a bright spot, shares of Bolsas y Mercados Espanoles rocketed 38 per cent as stock market operator Euronext and Switzerland’s SIX sparked a bidding war for the Spanish firm, with both trying to snap up one of Europe’s last standalone stock exchanges.

Qiagen jumped 8 per cent after the German genetic testing company said it would start talks with several potential suitors.

North America

Wall Street’s three main indexes on Monday barely extended the previous session’s closing records as investors waited for concrete progress on US-China trade relations after mixed headlines.

The market appeared to welcome Washington’s extension for US companies to do business with Huawei after the Chinese telecommunications equipment maker was put on a US blacklist in May.

But investors were concerned about a CNBC report that the mood in Beijing over the potential for a trade deal was pessimistic due to President Donald Trump’s reluctance to roll back tariffs.

This was after Chinese state media said on Saturday that the two sides had “constructive” trade talks, after White House economic adviser Larry Kudlow said they were close to a deal.

The Dow Jones Industrial Average rose 31.33 points, or 0.11 per cent, to 28,036.22, the S&P 500 gained 1.57 points, or 0.05 per cent, to 3,122.03 and the Nasdaq Composite added 9.11 points, or 0.11 per cent, to 8,549.94.

Seven of the 11 major S&P 500 sectors were trading higher, with defensives such as consumer staples and real estate leading the percentage gains.

The energy sector was the biggest percentage loser dropping 1.33 per cent as oil prices fell.

Trading was relatively slow with 6.55 billion shares changing hands on US exchanges compared with the 6.93 billion average in the last 20 sessions.

Later this week, the Federal Reserve will release minutes from its latest policy meeting, where the central bank cut interest rates for the third time this year. Also ahead are results from US retailers, including Home Depot Inc, Kohl’s Corp and Target Corp.

Coty Inc gained 2.60 per cent after the cosmetics maker said it would pay $600 million for a majority stake in Kylie Jenner’s make-up and skincare businesses.

is content editor for Morningstar Australia

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