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Global Market Report - 24 April

Lex Hall  |  24 Apr 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is poised to open higher, building on the previous day’s strong gains after the S&P 500 and the Nasdaq hit record closing highs overnight.

The SPI200 futures contract was up 14 points, or 0.22 per cent, at 6323 at 7.10am Sydney time on Wednesday, suggesting a positive open for the benchmark S&P/ASX200.

The ASX200 surged through the 6300-point barrier on Tuesday in the first trading session since the four-day Easter break, hitting its highest mark in more than seven months thanks to a buoyant energy sector.

The S&P/ASX 200 Index rose 59.6 points, or 1 per cent, to 6319.4 while the broader All Ordinaries advanced 61.2 points, or 1 per cent, to 6411.1.

The energy sector looks set for another strong performance on Wednesday after oil prices increased further still overnight.

The Australian dollar was worth US71.02c, down from US71.19c on Tuesday.

Out today: Australian Consumer Price Index data for the first quarter. The annual core inflation rate – the preferred measure for the RBA – is expected to slip to 1.6 per cent from 1.8 per cent.

Asia

Chinese shares ended a volatile session lower on Monday, extending sharp declines from the previous session, as investors worried that Beijing could slow the pace of policy easing following a stronger-than-expected economic performance.

At the close, the Shanghai Composite index was down 0.51 per cent at 3,198.59. The index flirted with gains throughout the day, rising as much as 0.5 per cent in early afternoon trade.

The blue-chip CSI300 index was down 0.16 per cent after earlier gaining as much as 0.9 per cent.

Shares in Hong Kong ended unchanged on Monday after a long holiday weekend, while H-shares lagged as a promise of policy fine-tuning from a top-level meeting chaired by President Xi Jinping added to investor worries over a slower pace of easing in China.

At the close of trade, the Hang Seng index was down just 0.02 points at 29,963.24
Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.04 per cent, while Japan’s Nikkei index closed up 0.19 per cent.

Europe

European shares ended higher on Thursday as short covering kicked in ahead of a long Easter weekend and strong quarterly results including those from Unilever and Nestle tempered data showing euro zone businesses unexpectedly slowed this month.

The pan-European STOXX 600 index rose for a seventh straight session, its best winning streak since early February with Germany’s DAX closing at six-month highs, while London’s FTSE 100 fell, dragged by healthcare stocks.

Growth worries gripped equity markets in the early hours after surveys showed businesses across the euro zone stumbled into the second quarter as demand remained weak despite more modest price rises.

The data came on the heels of the German government lowering its forecast for 2019 economic growth on Wednesday, which was overshadowed by better-than-expected economic data out of China.

Markets however turned to end higher as a weaker euro and short covering ahead of Easter holidays benefited stocks.

A survey of fund managers by Bank of America Merrill Lynch (BAML) found earlier this week that short positioning on European equities was the “most crowded trade” for the second straight month in April.

Earnings boosts from key industrial and consumer companies in the region also lifted STOXX, with Schneider Electric providing the biggest impetus after the French company beat first-quarter sales forecasts.

Amsterdam-listed shares in Unilever hit their highest levels yet after the consumer goods group reported stronger than expected quarterly underlying sales growth, helped by increased prices and volume.

Nestle also boosted consumer stocks on higher-than-expected sales growth in Q1. But Kering dropped 3.6 per cent on signs of a slowdown at the French fashion company’s Gucci brand.

Sandvik led gains on the STOXX after reporting a better than forecast quarterly order intake and said demand remained strong across all its business areas, sending an upbeat signal for the Nordic industrial sector.

The grim PMI data had a negative impact on the euro and the German 10-year bund yields, which fell further. The banking index barely moved after five strong sessions.

Healthcare stocks were the biggest drag with Novo Nordisk, AstraZeneca and GlaxoSmithKline all sliding following a sell-off in US healthcare stocks over regulatory worries on Wednesday.

The US is among the biggest markets for European drugmakers.

British American Tobacco shed 1.4 per cent and Imperial Brands gave up 0.8 per cent after US Senate Majority leader Mitch McConnell said he planned to introduce legislation to raise the minimum age for buying tobacco products.

North America

The S&P 500 index and the Nasdaq registered record closing highs after a broad-based rally on Tuesday, as a clutch of better-than-expected earnings reports eased concerns about a slowdown.

In Tuesday’s trading, the benchmark index finally erased all the steep losses it saw in late 2018 by ending the day above the previous record reached on 20 September. It closed just 0.3 per cent below its intra-day record of 2,940.91 hit on 21 September

.The S&P has risen 17 percent so far this year, with help from a dovish Federal Reserve and hopes of a US-China trade resolution as well as the upbeat start to the first-quarter earnings season.

The Dow Jones Industrial Average rose 145.34 points, or 0.55 per cent, to 26,656.39, the S&P 500 gained 25.71 points, or 0.88 per cent, to 2,933.68 and the Nasdaq Composite added 105.56 points, or 1.32 per cent, to 8,120.82.

Profits of S&P 500 companies are still expected to decline 1.3 per cent in the first quarter, in what analysts say could be the first earnings contraction since 2016. However, forecasts have largely improved since the start of April.

Amazon.com Inc, set to report results later this week, gained 2.2 per cent, providing the biggest boost to the S&P 500 and the Nasdaq.

Ten of the 11 major S&P sectors were higher, with a rebound in healthcare, which gained 1.6 per cent, providing the biggest boost. The healthcare sector has been slammed with 6.7 per cent drop in the last two weeks on US policy concerns.

The consumer staples sector was the only S&P sector that ended the day lower as investors favoured riskier bets. The energy and utilities sectors were the next weakest performers on the day.

Twitter Inc shares soared 15.6 per cent after the social media company posted better-than-expected quarterly revenue and a surprise increase in monthly active users.

Hasbro Inc rose 14.2 per cent after the toymaker reported a surprise quarterly profit.

Coca-Cola rose 1.7 per cent after its quarterly sales beat estimates, helped in part by strong demand for Coke Zero.

Lockheed Martin jumped 5.7 per cent after it reported upbeat quarterly results and lifted its full-year profit forecast on strong demand for its missiles and fighter jets.

United Technologies rose 2.3 per cent after it raised its full-year profit forecast.

Procter & Gamble Co fell 2.6 per cent and was the biggest drag on the market after reporting a decline in its third-quarter operating margin.

 

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