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Global Market Report - 2 May

Lex Hall  |  02 May 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open lower after a negative lead from Wall Street and diminished hopes of an interest rate cut in the US later this year.

The SPI200 futures contract was down 30 points, or 0.47 per cent, at 6,320.0 at 8am Sydney time, suggesting an early drop for the benchmark S&P/ASX200 on Thursday.

A strong first-half performance by ANZ lifted the financial sector yesterday, pushing the Australian share market higher.

The benchmark S&P/ASX200 index closed up 50.4 points, or 0.8 per cent, to 6,375.9 points, while the broader All Ordinaries closed up 48.1 points, or 0.75 per cent, to 6,466.5

On Wall Street overnight, the Dow Jones Industrial Average was down 0.61 per cent, the S&P 500 was down 0.75 per cent and the tech-heavy Nasdaq Composite was down 0.57 per cent.

The Aussie dollar is buying 70.16 US cents from 70.49 US cents on Wednesday.

Asia

Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.52 per cent, while the Hang Seng led the Nikkei 225 lower. They fell 0.65 per cent and 0.22 per cent respectively.

Europe

European shares closed little changed on Tuesday as a decline in banks after disappointing earnings was countered by gains in oil stocks and a 21 percent surge in chipmaker AMS.

The pan-European STOXX 600 index was flat at the close after oscillating between positive and negative territory throughout the day.

On the month, the STOXX 600 rose 3.2 per cent, extending gains through a fourth straight month — its longest winning streak since May 2017.

Rising oil prices and positive eurozone economic growth and employment data helped calm investor sentiment bruised by some poor earnings from regional companies, and weak factory data from China that cast a shadow over global growth.

On the day, London’s FTSE 100 underperformed, down 0.3 per cent as miner Glencore weighed, while most other major country indices ended higher.

Banks were the biggest weight on the pan-regional index, with Danske Bank, caught up in a massive money laundering scandal, falling nearly 10 per cent as it lowered its 2019 outlook after a disappointing first quarter.

Banco Santander, the eurozone’s biggest bank by market value, slipped after first-quarter net profit dropped.

Standard Chartered, however, advanced after it announced plans for up to $1 billion of share buybacks, the bank’s first in at least 20 years.

Data from China, a big consumer of metals, weighed on basic resources stocks, which were the biggest percentage losers. Glencore’s move to cut its copper output forecast also weighed on the sector.

On the other hand, oil majors were the biggest boost to the region as crude prices rose.

Apple supplier AMS soared 21.2 per cent, and posted its biggest one-day jump since October 2017 after it beat forecasts for first-quarter profit and gave an upbeat outlook for the second quarter.

AMS reported results before Apple’s quarterly report due late on Tuesday.

Also helping the chip sentiment was an upbeat forecast from Samsung Electronics for the second half of the year. 

North America

US stocks have ended lower and the S&P 500 has snapped a three-day streak of record high closes with Federal Reserve chairman Jerome Powell appearing to dampen hopes of an interest rate cut later this year.

In its policy announcement, the Fed held rates steady on Wednesday as expected and struck a cautious tone on inflation.

But Powell, speaking following the Fed statement, said a decline in inflation this year could be due to transitory factors.

That seemed to throw cold water on views by some in the market that the Fed might make a pre-emptive bid to head off lower inflation or a recession by cutting rates.

As Powell spoke, traders of US short-term interest rate futures began trimming bets the Fed will cut rates before the end of the year.

Stocks had been higher for much of the session and the S&P 500 hit an intraday record early, driven by a jump in shares of Apple.

The company late on Tuesday reported quarterly results that beat Wall Street estimates despite a record drop in iPhone revenue.

It also announced plans for a new $US75 billion ($107 billion) share buyback and raised its cash dividend by 5 per cent. Apple's stock ended up 4.9 per cent.

The Dow Jones Industrial Average fell 162.77 points, or 0.61 per cent, to 26,430.14, the S&P 500 lost 22.1 points, or 0.75 per cent, to 2,923.73 and the Nasdaq Composite dropped 45.75 points, or 0.57 per cent, to 8,049.64.

Selling was broad-based as nearly every S&P 500 sector ended the day lower.

 

is content editor for Morningstar Australia

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