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Global Market Report - 23 October

Lex Hall  |  23 Oct 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to open unchanged after a negative lead from overseas, including further delays over Brexit.

The SPI200 futures contract was down 2.0 points, or 0.03 per cent, at 6,645.0 at 8am Sydney time, suggesting a flat start for the benchmark S&P/ASX200 on Wednesday.

The Australian share market closed higher yesterday on positive signs for easing US-China trade tensions and a deal on Brexit.

The benchmark S&P/ASX200 index closed on Tuesday up 19.7 points, or 0.3 per cent, to 6,672.2 points, while the broader All Ordinaries was up 20.9 points, or 0.31 per cent, to 6,778.6 points.

Wall Street slipped into the close overnight amid lingering Brexit uncertainty as a majority of UK MPs backed Prime Minister Boris Johnson's 115-page Withdrawal Agreement Bill but the government failed to get enough support for its extremely tight timetable for approving the legislation.

The Dow Jones Industrial Average finished 0.15 per cent lower, the S&P 500 was down 0.36 per cent and the tech-heavy Nasdaq Composite was down 0.72 per cent.

The Aussie dollar is buying 68.55 US cents from 68.59 US cents on Tuesday.

Asia

China stocks recouped earlier losses to end higher on Tuesday, bolstered by tech firms as investors cheered their solid earnings as Beijing seeks to support the sector amid a bruising trade war.

The blue-chip CSI300 index rose 0.4 per cent, to 3,895.88, while the Shanghai Composite Index added 0.5 per cent to 2,954.38.

In Hong Kong, the Hang Seng index added 0.2 per cent to 26,765.75, while the Hong Kong China Enterprises Index lost 0.2 per cent to 10,521.66.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.51 per cent, while Japan’s Nikkei index closed up 0.25 per cent.

Europe

Mixed earnings reports kept a lid on European stocks, with London’s midcap index suffering from doubts over whether British lawmakers will back the government’s Brexit bill on Tuesday.

The pan-European STOXX 600 finished up just 0.1 per cent, with a weaker pound helping London's exporter-laden FTSE 100 outperform with a 0.7 per cent gain. Others including Germany's DAX and France's CAC 40 were marginally higher.

The FTSE 100 was also lifted by a 24 per cent jump in food delivery firm Just Eat after Dutch internet conglomerate Prosus made an unsolicited $6.3 billion cash bid.

But British household goods maker Reckitt Benckiser hit its lowest level in more than seven months after cutting its full-year sales forecast for a second time this year.

French specialty minerals company Imerys dropped 13 per cent after cutting its 2019 outlook, while Norway’s Aker BP slipped 0.9 per cent as it slashed its full-year oil output target.

Last week, the world’s biggest yogurt maker Danone had cut its 2019 sales growth target, while carmaker Renault and truckmaker Volvo issued dour profit forecasts amid a broad-based slump in auto sales.

Britain's midcap index and Irish stocks, gauges of Brexit sentiment, fell 0.6 per cent and 1.1 per cent, respectively, although they both hovered near one-year highs after British Prime Minister Boris Johnson clinched a last-minute deal with the European Union last week.

Johnson told the parliament on Tuesday that if it delayed his Brexit legislation he would abandon his attempt to ratify the deal and push for an election instead.

Banking stocks were flat on the day, after Swiss bank UBS reported a 16 per cent slide in third-quarter net profit and cut high-paying investment banking staff after a disappointing performance at the division.

Carmakers gained 0.8 per cent, led by gains in Continental after the German engineering group booked 2.5 billion euros ($2.8 billion) in impairments, citing slower automobile production growth, and said it will spin off its powertrain division rather than float it.

North America

US stocks have ended lower, giving up early gains after British politicians rejected the government's proposed timetable for passing legislation to ratify its deal to exit the European Union.

The defeat in parliament made it unlikely that Britain would finalise its exit by Prime Minister Boris Johnson's 31 October target.

Johnson said it was up to the EU to decide whether it wanted to delay Brexit and for how long.

Though the Brexit complications have had limited impact on US markets, they have contributed to investors' uncertainties about global financial and economic conditions, strategists said.

Earlier on Tuesday, the S&P 500 and the Dow Jones Industrial Average had risen modestly as upbeat forecasts from Procter & Gamble Co and United Technologies Corp offset lower-than-expected results from McDonald's Corp and Travellers Cos Inc.

Procter & Gamble shares gained 2.6 per cent and United Technologies advanced 2.2 per cent, while McDonald's shares fell 5.0 per cent and Travellers shares declined 8.3 per cent.

With Tuesday's losses the S&P 500 fell below 3000, but remained within 1 per cent of its record closing high in July.

The Dow Jones Industrial Average fell 39.54 points, or 0.15 per cent, to 26,788.1, the S&P 500 lost 10.73 points, or 0.36 per cent, to 2,995.99 and the Nasdaq Composite dropped 58.69 points, or 0.72 per cent, to 8,104.30.

Facebook fell 3.9 per cent, weighing heavily on the Nasdaq, as the social networking company faced an expanding probe into allegations that it put consumer data at risk and pushed up advertising rates.

Hasbro Inc shares dived 16.8 per cent as the toy maker's profits, which have been pinched by US tariffs on Chinese imports, came in well below Wall Street estimates.

In aftermarket trading, Texas Instruments Inc shares fell sharply and were last down 9 per cent.

Boeing Inc shares rose 1.8 per cent after United Technologies' chief financial officer said the company believed Boeing would make 737 MAX planes at its current rate for the rest of the year. The shares pared gains slightly, however, after Boeing announced the departure of the company's executive in charge of commercial planes.

Biogen Inc shares surged 26.1 per cent after the drugmaker's surprise announcement that it would seek US approval for its previously abandoned Alzheimer's treatment.

Harley-Davidson Inc shares jumped 8.0 per cent after the motorcycle maker beat profit expectations and reaffirmed its full-year shipment forecast.

 

is content editor for Morningstar Australia

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