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Global Market Report - 21 November

Lex Hall  |  21 Nov 2019Text size  Decrease  Increase  |  
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The Australian share market is expected to open slightly lower after stocks fell on Wall Street overnight amid renewed concerns over trade.

The SPI200 futures contract was down 10 points, or 0.15 per cent, at 6,707.0 at 8am Sydney time, suggesting an early dip for the benchmark S&P/ASX200 on Thursday.

The Australian share market suffered its worst day in nearly seven weeks yesterday, with the banking and energy sectors suffering especially sharp losses.

The benchmark S&P/ASX200 index on Wednesday closed down 91.8 points, or 1.35 per cent, to 6,722.4 points, while the broader All Ordinaries was down 85.9 points, or 1.24 per cent, to 6,828.2 points.

Westpac fell 3.31 per cent amid accusations from the financial crime watchdog that the bank persistently breached money-laundering and counter-terror laws.

Westpac chief executive Brian Hartzer said he was "utterly horrified" by accusations from AUSTRAC that Westpac had no due diligence around payments potentially funding child exploitation in Southeast Asia.

Scott Morrison has urged Westpac's board to deeply reflect on Hartzer's position after an alleged money laundering scandal.

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On Wall Street, the Dow Jones Industrial Average was down 0.41 per cent, the S&P 500 was down 0.38 per cent and the tech-heavy Nasdaq Composite was down 0.51 per cent.

The Aussie dollar is buying 67.98 US cents, unchanged from Wednesday.


China stocks softened on Wednesday, amid renewed worries that trade talks between the world’s two biggest economies could hit a snag, after Beijing condemned a US Senate measure backing anti-government protesters in the Asian financial hub.

Hong Kong stocks fell on Wednesday as Beijing’s condemnation of a US Senate measure backing anti-government protesters in the Asian financial hub renewed worries about the prospects of Sino-US trade talks.

The Hang Seng index fell 0.8 per cent, to 26,889.61, while the China Enterprises Index lost 0.7 per cent, to 10,619.51.

The blue-chip CSI300 index fell 1.0 per cent, to 3,907.86, while the Shanghai Composite Index lost 0.8 per cent to 2,911.05.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.68 per cent, while Japan’s Nikkei index closed down 0.62 per cent.


European shares logged their worst day in three weeks on Wednesday on mounting worries that rising US-China tensions could take a toll on trade negotiations between the two countries.

The pan-European STOXX 600 slipped 0.4 per cent, with London's FTSE 100 leading declines among most regional indexes trading in the red.

Sectors sensitive to tariff related headlines including autos and mining stocks were down more than 0.4 per cent.

The US Senate unanimously passed a bill on Tuesday aimed at protecting human rights in Hong Kong, drawing condemnation from Beijing.

Expectations that the world’s top two economies would strike a trade deal have been instrumental in driving the STOXX 600 to a four-year peak. The benchmark index is now about 3 per cent away from its record high.

The travel and leisure sectors posted the steepest slide among sub-sectors, led by losses in UK’s SSP Group Plc shares after the airport and train food operator issued a cautious full year outlook.

Also weighing on the index were declines in shares of Germany’s Lufthansa which is likely to face a trade union strike during the busy Christmas period if it does not make wage concessions.

Home improvement retailer Kingfisher’s slumped 7 per cent and was at the bottom of the benchmark index after it reported a decline in quarterly sales.

On the bright side, Nexi shares jumped 5 per cent, helping the Milan index stay in positive territory, after Italy's biggest retail bank Intesa Sanpaolo said it was in early talks with the payments group for a potential deal.

European banks also slipped, as safety buying pushed the benchmark German bond yields near their lowest levels this month. The US yield curve continued to flatten, with the spread between two-year and 10-year note yields hitting its narrowest in three weeks.

Sectors considered as safe havens during times of economic strife, including telecoms .SXKP and utilities, ended flat to marginally lower.

North America

Wall Street’s main indexes ended Wednesday’s session lower on concerns that a “phase one” trade deal between Washington and Beijing may not be completed this year, while minutes from the Federal Reserve’s October policy meeting appeared to offer little help.

The Fed minutes offered little guidance on what would cause policymakers to change their outlook after they decided at the October meeting on the third interest rate cut of 2019 and signaled they were done with the easing.

Wall Street, which managed to end the day above its session lows, had kicked off trading in the red after a US Senate measure aimed at protecting human rights in Hong Kong amid prolonged protests appeared to escalate US-China tensions.

Then equities deepened losses, hitting a session low in the early afternoon after a Reuters report citing experts and people close to the White House as saying completion of a US-China trade deal could slide beyond 2019.

While the indexes ended above their session lows, Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina, said the market was more than due for a dip because until Wednesday, the S&P had not registered two consecutive declines in 30 trading days. This was its longest stretch without back-to-back declines since 2005, he said.

But the strategist is worried that US-China tensions over Hong Kong could be a big factor in trade deal progress.

The Dow Jones Industrial Average fell 113.74 points, or 0.41 per cent, to 27,820.28, the S&P 500 lost 11.79 points, or 0.38 per cent, to 3,108.39 and the Nasdaq Composite dropped 43.93 points, or 0.51 per cent, to 8,526.73.

Before Wednesday’s drop, rising hopes for a trade deal and a fairly strong third-quarter earnings season had helped Wall Street’s main indexes scale record highs this month.

Market declines on the day were broad-based, however, with eight of the 11 major S&P 500 sectors falling and only utilities, real estate and energy gaining.

The trade-sensitive technology sector fell 0.7 per cent, the biggest drag on the benchmark index while the Philadelphia Semiconductor index slid 1.2 per cent.

The materials index was the biggest percentage decliner of the major sectors on the day with a 1.2 per cent loss. The interest rate-sensitive financial index pulled back from its session low but still ended the day down 0.5 per cent as safety buying pushed down the benchmark US 10-year Treasury yield further.

Reports from Target Corp and Lowe’s Cos Inc were bright spots on Wednesday, with their shares jumping 14 per cent and 3.9 per cent, respectively, after the two companies raised their profit forecasts.

But apparel retailer Urban Outfitters Inc fell 15.2 per cent after missing quarterly sales estimates on weaker demand for its namesake brand.

is senior editor for Morningstar Australia

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