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Global Market Report - 24 June

Glenn Freeman  |  24 Jun 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is tipped to start the trading week lower, thanks to weak lead-ins from the US and Europe, as the Dow Jones slipped 34 points on Friday.

The SPI200 futures contract was down 17 points, or 0.26 per cent, at 6,571 at 7am Sydney time, suggesting an early dip for the benchmark S&P/ASX200 on Monday.

Wall Street finished lower on Friday, with the Dow Jones Industrial Average down 0.13 per cent, the S&P 500 down 0.13 per cent and the tech-heavy Nasdaq Composite down 0.24 per cent.

But investors remain hopeful upcoming trade talks between Washington and Beijing will turn things around. Both the Fed and the ECB have hinted strongly at monetary easing ahead, and Presidents Trump and Xi have confirmed they will meet on the sidelines of the June G20 meeting in Japan.

The S&P/ASX 200 Index rose 96.8 points, or 1.5 per cent, to 6650.8 last week, while the broader All Ordinaries added 100.7 points, or 1.5 per cent, to close the week at 6734.3.

Ahead today: RBA governor Philip Lowe will participate in a panel at the ANU Crawford Australian Leadership Forum in Canberra, and NZ credit card spending figures for May are released.

Asia

China stocks ended firmer on Friday, marking its largest weekly gains since early April, as Beijing and Washington prepared for fresh trade talks and regulators promised start-ups easier access to funding.

The Shanghai Composite Index was up 0.5 per cent at 3,001.98 points, closing above 3,000 points for the first time since 30 April. The index gained 4.2 per cent over the week, its largest weekly advance since the week ended 5 April.

The blue-chip CSI300 index added 0.1 per cent on Friday and accumulated gains of 4.9 per cent week-on-week, also posting its largest weekly gains since the week ended 5 April.

In Hong Kong, stocks edged down on Friday tracking broader Asia, but marked the biggest weekly gain since November 2018 on hopes of lower rates across key central banks globally, after the US Federal Reserve hinted about a cut in July.

The benchmark Hang Seng index was down 0.3 per cent at 28,473.71. For the week, it ended up 5 per cent, it’s biggest jump since the week ended 2 November.

MSCI’s Asia ex-Japan stock index was weaker by 0.3 per cent, while Japan’s Nikkei index closed down almost 1 per cent.

The Nikkei share average fell 1 per cent to 21,258.64. The index rose 0.7 per cent for the week and posted a third week of gains thanks to hopes that the US central bank will cut interest rates as early as next month.

Europe

European shares declined on Friday, led down by healthcare and media companies. The pause follows a third week of gains dominated by signs that the world’s big central banks are on the verge of another round of action to support growth.

The pan-European STOXX 600 ended 0.4 per cent lower on Friday, with healthcare down 1.4 per cent.

In the UK, the pound fell on growing expectations that hard Brexit proponent Boris Johnson will become prime minister, keeping the FTSE 100 afloat, and pushing up stocks in international companies who source much of their revenue abroad.

Italy’s FTSE MIB index was the outstanding performer of the big European markets, rallying 0.7 per cent, with analysts pointing to signs the European Commission could hold off on moves to discipline the country over rising debt.

The telecom sector was an outperformer, up 0.4 per cent after Telecom Italia signed an agreement that opened the door to talks on integrating its fibre optic network with that of smaller rival Open Fiber, including a possible merger.

Germany’s DAX hit its highest level in almost nine months, helped by software company SAP advancing 1.5 per cent after arch-rival Oracle forecast current-quarter profit above estimates.

North America

The S&P 500 briefly hit a record high of 2,964.15, but then stepped back as the rising tensions between the US and Iran kept investors on edge.

On Friday, the Dow Jones Industrial Average dipped 0.13 per cent to end at 26,719.13 points, while the S&P 500 lost 0.13 per cent to 2950.46. The Nasdaq Composite dropped 0.24 per cent to 8031.71.

Pence called off a planned China speech that had been cast initially as a sequel to a blistering broadside he delivered in October, a move aimed at averting increasing tensions with Beijing, a White House official said.

US President Donald Trump's meeting with Chinese President Xi Jinping is set for the G20 summit in Japan on 28-29 June.

Market analysts expect any indication of progress from Trump following the meeting would be positive for Wall Street.

Stocks logged a third straight week of gains after posting their worst monthly performance this year in May on fears the prolonged trade war would hit global economic growth.

Trump said on Friday he aborted a military strike on Iran in response to Tehran's downing of a US drone, but the possibility of a US retaliation pushed crude prices higher and helped lift the energy sector by 0.82 per cent.

The tech-heavy Nasdaq was weighed down by a 2.2 per cent fall in PayPal after the digital payments company said its chief operating officer Bill Ready would step down.

For the week, the S&P 500 climbed 2.2 per cent, the Dow added 2.41 per cent and the Nasdaq rose 3.02 per cent.

is senior editor for Morningstar Australia

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