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Global Market Report - 24 December

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

The Australian share market is expected to open flat despite record closing gains on Wall Street overnight.

The SPI200 futures contract was down 2.0 points, or 0.03 per cent, at 6,713.0 at 7am Sydney time, suggesting a steady start for the benchmark S&P/ASX200 on Tuesday.

The Australian share market yesterday slipped to its lowest in seven days as the heavyweight mining sector dives on softer iron ore prices.

The benchmark S&P/ASX200 index finished on Monday 31.2 points, or 0.46 per cent, lower at 6,785.1 points, while the broader All Ordinaries dropped 29.7 points, or 0.43 per cent, to 6,894.7 points.

The ASX will finish at 2.10pm on Tuesday, being closed on Christmas Day and Boxing Day, and reopen on Friday.

On Wall Street, the Dow Jones Industrial Average was up 0.34 per cent, the S&P 500 was up 0.09 per cent and the tech-heavy Nasdaq Composite was up 0.23 per cent.

The pan-European STOXX 600 index closed unchanged while the FTSE 100 index in the UK ended 0.54 per cent higher.

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The Aussie dollar is buying 69.24 US cents from 69.07 US cents on Monday.

Asia

China stocks on Monday posted their worst single-day drop in six weeks, weighed down by a correction in tech shares after a state fund announced plans to cut its stakes in some of these companies, while focus remained on the Sino-US trade deal.

The blue-chip CSI300 index fell 1.3 per cent to 3,967.10, while the Shanghai Composite Index dropped 1.4 per cent to 2,962.75, both their steepest drop since 11 November.

Hong Kong stocks ended near a five-month peak in thin trade on Monday, boosted by optimism that the US and China would soon sign their phase one trade pact.

The Hang Seng index rose 0.1 per cent, to 27,906.41 in holiday-thinned trade. The China Enterprises Index gained 0.2 per cent, to 11,052.68.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.05 per cent while Japan’s Nikkei index was up 0.02 per cent.

Europe

European shares closed a sliver away from all-time highs on Monday, as a slide in eurozone banks countered optimism over the US-China trade deal and a stellar run for UK shares.

With trading volumes dwindling as investors leave on Christmas holidays, analysts warn that market action could be volatile. The pan-European STOXX 600 index saw trading volume down to 63 per cent of its thirty-day moving average on Monday.

The index closed flat after hitting a new record earlier in the session, aided by a ninth straight day of rise for Britain's FTSE 100 and defensive buying that boosted Europe's healthcare stocks and Swiss equities index.

US President Donald Trump on Saturday said Washington and Beijing would “very shortly” sign their so-called phase one trade pact.

Giving investors more reason to cheer, China’s finance ministry said on Monday it would lower tariffs next year on US products ranging from frozen pork and avocado to some types of semiconductors.

However, trade-sensitive German and French shares moved little on the news. The star performers were UK mid-cap shares, which jumped 0.8 per cent and the blue-chip index, which gained 0.5 per cent, as investors stuck to hopes that Britain will exit the European Union by 2020.

NMC, whose shares have nearly halved in value since last week after Muddy Waters criticized the healthcare group’s financials, shot up 37 per cent after launching an independent review of its books.

Shares in aerospace parts makers such as Senior Plc, Melrose Industries and Meggitt rose between 1.3 per cent and 2.8 per cent after US planemaker Boeing Co ousted chief executive Dennis Muilenburg following a production halt of its best-selling 737 MAX jetliner after two fatal crashes.

Eurozone banks dropped about 1 per cent. European Central Bank’s governing council member Klaas Knot said interest rates in the euro zone could remain historically low for years, but the ECB’s ultra-loose monetary policy risks becoming counterproductive.

A 4.9 per cent decline for Italian infrastructure group Atlantia pressured the wider country index.

On Saturday, a report said the Italian government had provisionally approved a document to make it easier to revoke concessions to operate motorways. The decree does not mention Atlantia, but a government source told Reuters that the measures could be applied to it.

Lufthansa dropped 1.3 per cent after German cabin crew union UFO said arbitration talks with the company had failed and its members could stage strikes any time from now on, barring 24, 25 and 26 December.

North America

Wall Street’s main indexes posted record closing highs on Monday after President Donald Trump said an initial US-China trade pact would be signed soon, while Boeing gave the Dow a big boost after the planemaker ousted its chief executive officer.

Boeing Co shares, which have a particularly big influence on the Dow Jones Industrial Average, gained 2.9 per cent and also lifted the S&P 500 industrials sector. CEO Dennis Muilenburg’s exit followed a prolonged crisis in which Boeing halted production of its best-selling 737 MAX jetliner following two fatal crashes.

Trump over the weekend said the US and China would “very shortly” sign their so-called phase one trade pact, which was announced earlier this month and has helped propel the US stock market to records.

The S&P 500 notched a record closing high for a third straight session on Monday and hit an intraday all-time high for an eighth straight session. The Nasdaq closed at a record high for an eighth straight session.

Additionally, China will lower tariffs on products ranging from frozen pork and avocado to some types of semiconductors next year.

The Dow Jones Industrial Average rose 96.44 points, or 0.34 per cent, to 28,551.53, the S&P 500 gained 2.79 points, or 0.09 per cent, to 3,224.01 and the Nasdaq Composite added 20.69 points, or 0.23 per cent, to 8,945.65.

Energy and industrials were the best-performing S&P 500 sectors, while utilities lagged the most.

Trading volume is expected to be sparse in a trading week shortened by the Christmas holiday. On Monday, roughly 5.9 billion shares changed hands on US exchanges, well below the 7.2 billion daily average over the last 20 sessions.

The benchmark S&P 500 has climbed more than 28 per cent so far in 2019, helped by improving investor sentiment over trade relations, interest rate cuts by the Federal Reserve and optimism the economy will avoid a severe downturn at least in the near term.

Data on Monday showed new orders for US-made capital goods barely rose in November and shipments fell, suggesting business investment will probably remain a drag on economic growth in the fourth quarter.

In other company news, Apache Corp shares soared 17.3 per cent after it and French rival Total announced a joint venture to develop a project off Suriname in a deal that gives the US oil and gas producer a cash injection.

 

is senior editor for Morningstar Australia

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