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Global Market Report - 20 December

Lex Hall  |  20 Dec 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open lower despite new records on Wall Street overnight, prompted news a trade deal will be signed in January.

The SPI200 futures contract was down 29.0 points, or 0.43 per cent, at 6,743.0 at 7am Sydney time, suggesting a fall for the benchmark S&P/ASX200 on Friday.

The Australian share market closed lower yesterday after positive November jobs data pared the chances of a February interest rate cut and took the gloss off local equities.

The benchmark S&P/ASX200 index finished Thursday 18.3 points, or 0.27 per cent, lower at 6,833.1 points, while the broader All Ordinaries slipped 14.4 points, or 0.21 per cent, to 6,942.6 points.

Wall Street’s major indexes resumed their rally with fresh records on Thursday as US Treasury Secretary Steven Mnuchin said an initial US-China trade deal would be signed in early January.

On Wall Street, the Dow Jones Industrial Average was up 0.49 per cent, the S&P 500 was up 0.45 per cent and the tech-heavy Nasdaq Composite was up 0.67 per cent.

The Swedish central bank became the first in the world to escape negative interest rates overnight as the Riksbank raised benchmark borrowing costs from minus 0.25 per cent to zero.

The Aussie dollar is buying 68.86 US cents from 68.79 US cents on Thursday.

Asia

China’s benchmark equity market gauge ended flat on Thursday as investors awaited further details on the ‘phase one’ trade deal between Washington and Beijing.

The Shanghai Composite index finished unchanged at 3,017.07. The index has risen more than 5 per cent this month as investors await further details on an interim trade agreement between the US and China.

China’s finance ministry published a new list of six US products that will be exempted from tariffs starting 26 December.

Hong Kong shares fell on Thursday as investors booked profits from the recent rally, and as investors wait for fresh data on the state of global growth.

The Hang Seng index closed down 83.72 points or 0.3 per cent at 27,800.49. The benchmark has gained over 5.5 per cent this month.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.36 per cent while Japan’s Nikkei index was down 0.29 per cent.

Europe

European shares edged higher on Thursday, with a pre-holiday lull making for a quiet trading session aside from a handful of corporate updates.

The pan-European STOXX 600 rose 0.2 per cent by 0821 GMT, with media, healthcare and utilities sectors leading gains.

All eyes will turn to the Bank of England’s monetary policy decision, due at 1200 GMT, one of the last big central bank meetings this year.

While the BoE policymakers are not expected to move the needle on rates, Swedish central bank is seen coming out with a 25 basis point rate hike, making it the first in Europe to pull borrowing costs from sub-zero territory.

Investors have largely shrugged off a vote by the US House of Representatives to impeach President Donald Trump as a Republican-controlled Senate is widely expected not to vote to remove Trump from office.

Swiss specialty chemicals Clariant rose 2.9 per cent after saying it was selling a unit to US-based PolyOne Corp for $1.6 billion.

European chipmakers Infineon Technologies and STMicroelectronics rose about 0.3 per cent after US rival Micron Technology said it expected a recovery in 2020 after a “cyclical bottom” in the second quarter.

North America

Wall Street’s major indexes resumed their rally with fresh records on Thursday as US Treasury Secretary Steven Mnuchin said an initial US-China trade deal would be signed in early January.

The benchmark S&P 500 hit a sixth straight record high, its longest streak since January 2018. The Dow Jones Industrial Average and the Nasdaq also touched new highs.

Mnuchin’s comments bolstered the optimism that has carried US stocks higher since a trade agreement was announced last week. In an interview with CNBC on Thursday, Mnuchin said the agreement had already been put down on paper and translated, and it would not be subject to renegotiation.

Further boosting optimism around the strength of the US economy and labor market, data on Thursday showed the number of Americans filing applications for unemployment benefits dropping from more than a two-year high last week.

The market shrugged off US President Donald Trump’s impeachment, as the Republican-controlled Senate is widely expected not to remove him from office.

The Dow Jones Industrial Average rose 137.68 points, or 0.49 per cent, to 28,376.96, the S&P 500 gained 14.23 points, or 0.45 per cent, to 3,205.37 and the Nasdaq Composite added 59.49 points, or 0.67 per cent, to 8,887.22.

Conagra Brands Inc shares jumped 17.2 per cent after the Slim Jim maker beat quarterly sales and profit estimates.

Conagra’s results also lifted other packaged food makers and helped the S&P 500 consumer staples index advance 0.7 per cent.

Micron Technology Inc shares gained 3.3 per cent after the chipmaker signalled a recovery in its business in 2020 and said it had received licenses to supply some products to Huawei.

Cisco Systems Inc shares rose 2.7 per cent after Barclays upgraded its rating on the networking equipment company’s stock.

 

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