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Global Market Report - 20 March

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

Australian shares are expected to open flat after trade concerns limited gains on Wall Street overnight.

The SPI200 futures contract was up 10 points, or 0.16 per cent, at 6,198.0 at 8am Sydney time, suggesting a slightly positive start for the benchmark S&P/ASX200 on Wednesday.

The ASX closed marginally down yesterday after a spike in the price of iron ore that boosted mining companies couldn't make up for losses elsewhere.

The benchmark S&P/ASX200 index closed down 5.7 points, or 0.09 per cent, to 6184.8 points, while the broader All Ordinaries was down 7 points, or 0.11 per cent, at 6276.6.

The Dow Jones Industrial Average fell 0.1 per cent, the S&P 500 lost 0.01 per cent, and the Nasdaq Composite added 0.12 per cent.

Media reports suggested that Chinese negotiators were pushing back against US demands in trade talks.

The Aussie dollar is buying 70.92 US cents from 71.03 US cents on Tuesday.

Home prices across Australia’s capital cities fell by 2.4 per cent in the three months to December, trimming the total value of the country's dwellings to $6.7 trillion.

Out today: RBA assistant governor Michelle Bullock speaks, WBC leading index for February.

ASIA

China’s main stock indexes ended lower on Tuesday, pulling back from near 6½-month highs in the previous session, on profit taking, but losses were limited by hopes for continued government support for the economy and a dovish US Fed.

The Shanghai Composite index fell 0.18 percent to 3,090.98. The blue-chip CSI300 index was down 0.46 per cent, with its financial sector sub-index lower by 0.54 per cent.

In Hong Kong, the Hang Seng index was up 0.2 per cent at 29,466.28 points, while the Hang Seng China Enterprises index rose 0.1 percent

China’s housing ministry said it would slash the time needed to obtain approvals for housing projects, in line with China’s intent to speed up infrastructure spending this year and have a construction boom as part of its efforts to lift domestic demand and economic growth, which has slowed.

Around the region, MSCI’s Asia ex-Japan stock index eased 0.02 per cent, while Japan’s Nikkei index closed down 0.08 per cent.

EUROPE

European shares were on course for a fifth day of gains on Tuesday, powered by a strong rally in automakers after Peugeot suggested Fiat Chrysler was among the options for a merger, and as Bank of America Merrill Lynch talked up stocks in the sector.

The STOXX 600 autos & suppliers sector index jumped 2.4 per cent to post their biggest one-day gain in more than three months, helping the benchmark STOXX 600 climb 0.6 per cent and scale a near six-month peak.

The rally was also spurred by investor anticipation of a more accommodative Federal Reserve, as well as some likely short covering as fund managers named bearish bets in European equities as the “most crowded” trade for the first time.

The auto index was boosted by a 5 per cent jump in Fiat Chrysler after the president of Peugeot family holding company suggested that it was among the options for a merger, and Bank of America Merrill Lynch recommending contrarian investors buy select carmakers.

Daimler, Volkswagen and Porsche were among BAML’s top picks, helping German stocks stage a rebound from Monday’s fall to a five-month high and lead gains in the region.

The merger talk took the respective country index’s higher. Shares of Fiat Chrysler were among the top three gainers on the benchmark STOXX index.

Retail and basic resources stocks were also particularly strong, while bank stocks handed back early losses to trade up 0.15 per cent.

Scandal-hit Danske Bank fell more than 5.6 per cent in the aftermath of a vote by shareholders against a proposal to break up the bank.

Brexit news pointed to a delay in efforts by British Prime Minister Theresa May to get her divorce deal through parliament.

The speaker of parliament on Monday ruled May could not put her deal to a new vote unless it was re-submitted in a fundamentally different form. May is due at an EU summit in Brussels on Thursday at which she will ask for a delay to Britain’s planned departure from the bloc on 29 March.

NORTH AMERICA

The benchmark S&P 500 index has ended little changed as investor optimism regarding the Federal Reserve's expected affirmation of its dovish policy stance was offset by reports of fault lines emerging in ongoing US-China trade negotiations.

Financial stocks weighed on all three major US stock indexes on Tuesday, which gave up early gains following a Bloomberg report that China is pushing back against American demands in trade talks.

The blue-chip Dow snapped a four-day winning streak, while the Nasdaq limped back into positive territory just before the closing bell.

As the Fed convened its two-day policy meeting, investors expected little change in its measured approach to interest rate hikes.

Its summary of economic projections - or "dot plot" - due for release on Wednesday, will be closely scrutinised for clues regarding the extent of the central bank's patience.

But some analysts question whether the dot plot deserves this level of scrutiny.

"The dot plot is consistently higher than where rates turned out to be, so the credibility hasn't been that good," Hellwig said. "But it gives insight was to what the members of the FOMC are thinking."

A report from the US Commerce Department showed a smaller-than-expected increase in factory orders, the latest in a string of underwhelming economic data that has supported the Fed's more accommodative stance.

The Dow Jones Industrial Average fell 26.72 points, or 0.1 per cent, to 25,887.38, the S&P 500 lost 0.37 points, or 0.01 per cent, to 2,832.57 and the Nasdaq Composite added 9.47 points, or 0.12 per cent, to 7,723.95.

Of the 11 major sectors of the S&P 500, eight closed in the red, with utilities and financials registering the biggest percentage drops.

Ford Motor Co shares rose 1.5 per cent after the automaker announced it would boost US production of its high-profit SUVs.

Online food delivery platform Grubhub fell 8.4 per cent after Keybanc warned of diminished customer spending and user retention.

Nvidia Corp ended the session up 4 per cent on news that the company has partnered with Softbank Group Corp and LG Uplus Corp to deploy cloud gaming servers in Japan and South Korea later this year.

The chipmaker provided the biggest boost to the Philadelphia SE Semiconductor Index, which has jumped by nearly 22 per cent so far this year.

The S&P 500 posted 41 new 52-week highs and no new lows; the Nasdaq Composite recorded 68 new highs and 36 new lows.

is content editor for Morningstar Australia

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