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Global Market Report - 24 January

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

Australian shares are set for a subdued open as Wall Street struggles for direction, with Chinese trade tensions and global growth concerns offsetting positive US earnings reports.

The SPI200 futures contract was down 8 points, or 0.14 per cent, to 5784.0 at 8am Sydney time on Thursday, hinting at a flat morning for the benchmark ASX/200.

Yesterday, the ASX has clawed back some of its earlier losses to close lower with the financial and energy sectors weighing the heaviest. The benchmark S&P/ASX200 index was down 15.1 points, or 0.26 per cent, to 5,843.7 at 4.30pm on Wednesday, while the broader All Ordinaries was down 15.6 points, or 0.26 per cent, lower at 5,908.7.

The Aussie dollar is higher, buying 71.42 US cents from 71.38 US cents on Wednesday.

On Wall Street, the S&P 500 was flat and the Nasdaq edged lower, but the Dow Jones Industrial Average rose as positive quarterly results from International Business Machines, Procter & Gamble Co, United Technologies helped pull the index higher.

The Dow was up 171.14 points, or 0.70 per cent, to 24,575.62, the S&P 500 gained 5.80 points, or 0.22 per cent, to 2638.70 and the Nasdaq Composite gained 5.41 points, or 0.08 per cent, to 7025.77.

The Australian Bureau of Statistics is set to release December's employment figures at 11.30am. The jobless rate is expected to improve slightly or remain the same when official figures for December are released on Thursday.

In November, there was an unexpected jump in the unemployment rate to 5.1 per cent from five per cent, due to a lift in the participation rate.

ASIA

Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 0.05 per cent and the Hang Seng rose 0.01 per cent. The Nikkei 225 lost 0.14 per cent.

The broader Topix underperformed and ended 0.6 per cent lower at 1547.03. Declining issues outweighed advancing ones 1586 to 469.

The Bank of Japan left has held rates steady but trimmed the inflation outlook.

EUROPE

European shares were sluggish on Wednesday as a batch of poor corporate updates added to worries about a global growth slowdown and China-US trade negotiations.

The FTSE 100 is down 0.85 per cent while Germany's DAX is off 0.17 per cent and France's CAC 40 is lower by 0.15 per cent.

The Stoxx Europe 600 Index fell 0.1 per cent.

Top faller on the STOXX 600 on Wednesday was Metro Bank, which fell nearly 39 per cent to an all-time low.

The British lender announced a sharp rise in exposure to higher-risk mortgages and said profits would be hit by slowing growth, raising fears of a shareholder cash call.

A profit warning by Ingenico sent the French payment group down more than 13 per cent to six-year lows.

NORTH AMERICA

The MSCI global stock index ended Wednesday’s choppy trading session with a small gain as worries over US politics, global economic growth and trade tensions were countered by a boost from quarterly earnings reports.

However, the US dollar and oil prices declined.

US Treasury yields climbed but analysts expect the $15.6 trillion market to be confined within a tight trading range due to a dearth of fresh economic data amid the longest-ever US government shutdown.

The US dollar edged lower against a basket of currencies as uncertainty over trade and the global economy clouded the greenback’s near-term outlook and restricted it to tight trading ranges against other major currencies.

After falling more than 1 per cent in the previous day’s session, Wall Street indexes zig-zagged.

Strong quarterly reports from Procter & Gamble, Comcast Corp and International Business Machines helped the Dow show the biggest gains of the day.

But US political uncertainty weighed heavily on investors. White House economic adviser Kevin Hassett said in a CNN interview the US could see zero growth in the first three months if the partial government shutdown is extended for the whole quarter.

US President Donald Trump and US House of Representatives Speaker Nancy Pelosi argued publicly over whether Trump can deliver the annual State of the Union address in the House chamber during the shutdown.

The Dow Jones Industrial Average rose 171.14 points, or 0.7 per cent, to 24,575.62, the S&P 500 gained 5.8 points, or 0.22 per cent, to 2,638.7 and the Nasdaq Composite added 5.41 points, or 0.08 per cent, to 7,025.77.

MSCI's gauge of stocks across the globe rose 0.1 per cent, after the pan-European STOXX 600 index lost 0.06 per cent.

Investors also kept a close eye on China on hopes more economic stimulus measures would ease worries over slow progress in trade talks between Washington and Beijing.

Trump told reporters on Wednesday that the US was doing well in trade talks and that China "very much wants to make a deal".

The day before his advisers had said he would not soften his position that Beijing must make real structural reforms, including how it handles intellectual property, to reach a trade deal.

is content editor for Morningstar Australia

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