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Global Market Report - 21 June

Glenn Freeman  |  21 Jun 2019Text size  Decrease  Increase  |  
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The Australian share market is expected to open flat, while Wall Street finished higher overnight as the S&P 500 hit a new record.

The SPI200 futures contract was down 4 points, or 0.06 per cent, at 6,617 at 7am Sydney time, suggesting a small dip for the benchmark S&P/ASX200 on Friday.

In the US, Wall Street's Dow Jones Industrial Average closed up 0.94 per cent, the S&P 500 posted a new record gain of 0.95 per cent, and the tech-heavy Nasdaq Composite climbed 0.80 per cent.

Yesterday, Australia's S&P/ASX200 and All Ordinary indices each climbed 0.6 per cent, adding 39.3 points and 39.4 points to end the day at 6687.4 and 6767.9, respectively.

This upward momentum was spurred by the US Federal Reserve's strong indication of lowering rates soon, along with similarly dovish signals from the RBA governor Philip Lowe.

The Aussie dollar is buying 69.23 US cents from 69.05 US cents on Thursday.


China stocks continued to rally higher on Thursday, as investors hoped for continuing signs of resuming trade talks between US and China, and sentiment lifted on strengthening indications of policy easing from the Fed.

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The Shanghai Composite Index closed 2.4 per cent higher at 2,987.12 points, while the blue-chip CSI300 was up 3 per cent at 3,828.52 points – each at their highest level since 30 April.

Hong Kong stocks were buoyed for the same reasons, the Hang Seng index up 1.2 per cent at 28,550.43. The China Enterprises Index gained 1.5 per cent to 10,922.39 points.

Around the region, The MSCI Asia ex-Japan stock index was firmer by 1.22 per cent, while Japan’s Nikkei index closed 0.6 per cent higher.

Japan's major index closed on a six-week high on Thursday, largely in response to indications of a Fed rate cut. The Nikkei ended the session at 21,462.86 points.

The Bank of Japan kept monetary policy steady on Thursday, as expected, preferring to save its dwindling ammunition.


European shares also hit six-week highs yesterday, amid dovish signals from the Bank of England and the Fed along with increasingly positive signs of a resumption in US-China trade talks.

The pan-European STOXX 600 index finished 0.4 per cent higher, with most country indices of the region also up as investors globally priced in the above indications.

Though the Bank of England is threatening to raise rather than lower rates, its June meeting has headed off market fears of a hike any time soon.

London’s FTSE 100 rose sharply after the BoE statement, and hit session highs increasing as much as 0.7 per cent, before closing up 0.3 per cent.

Italy’s FTSE MIB index was Europe's stand-out performer, rallying 0.7 per cent, with analysts pointing to signs the European Commission could hold off on moves to discipline the country over rising debt.

Germany’s DAX hit its highest level in almost nine months, helped by software company SAP advancing 1.5 per cent after arch-rival Oracle forecast current-quarter profit above estimates.

The German benchmark's highest gainer was food delivery company Delivery Hero, which jumped 9.7 per cent after boosting its full-year revenue outlook.

North America

In the US, Wall Street was up slightly as the S&P 500 closed at a record high, with each of the benchmark's 11 sector indices logging gains for the session on Thursday.

The Dow Jones Industrial Average climbed 0.94 per cent to end at 26,753.17 points, while the S&P 500 gained 0.95 per cent to 2954.18.

The Nasdaq Composite added 0.8 per cent to finish at 8051.34.

The largest positive influence was the Fed's decision to leave rates unchanged at the end of its two-day policy meeting on Wednesday, while pledging to "act as appropriate" to sustain economic health.

Wall Street's main indexes have gained in recent weeks on expectations of a rate cut and hopes of a revival of trade talks between the US and China at the Group of 20 meeting next week in Japan.

The benchmark S&P 500 index, which has risen about 7 per cent so far in June, closed above its previous record high close on 3 May.

A more-than-expected dovish Fed led to US Treasury bond yields tumbling, with the benchmark 10-year yields dropping below 2 per cent for the first time in more than two-and-a-half years.

The energy index jumped 2.21 per cent, the most among the 11 major S&P sectors, as oil prices surged over five per cent on renewed tensions in the Middle East after Iran shot down a US military drone.

Apple rose 0.8 per cent and briefly hit $US200 a share for the first time since early May.

Shares of Slack Technologies, the fast-growing workplace messaging platform, soared almost 50 per cent in their public trading debut, valuing the company at more than $US25 billion.

The technology sector rose 1.43 per cent, with Oracle leading the charge. Its shares jumped 8.2 per cent after the business software maker forecast current-quarter profit above estimates. Its gain fuelled the S&P 500 more than any other stock.

Cruise operator Carnival slid 7.6 per cent, the most among S&P companies, after cutting its profit forecast for the year on the Trump administration's sudden ban on cruises to Cuba and weakening demand in Europe over political uncertainty.

Rivals Royal Caribbean Cruises and Norwegian Cruise Line dropped over two per cent each.

Buoying sentiment was data that showed the number of Americans filing applications for unemployment benefits fell more than expected last week, pointing to underlying labour market strength despite a sharp slowdown in job growth in May.

is senior editor for Morningstar Australia

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