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Global Market Report - 24 October

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

The Australian share market is expected to open higher after a slightly positive lead from Wall Street.

At 7am Sydney time, the SPI200 futures contract was up 33.0 points, or 0.50 per cent, at 6,679.0, suggesting an early bounce for the benchmark S&P/ASX200.

The Australian share market finished flat yesterday following a sluggish day amid more uncertainty over Brexit negotiations.

The benchmark S&P/ASX200 index finished Wednesday up 0.9 points, or 0.01 per cent, to 6,673.1 points, while the broader All Ordinaries was down 0.4 points, or 0.01 per cent, to 6,778.2 points.

On Wall Street overnight, the Dow Jones Industrial Average was up 0.09 per cent, theS&P 500 was up 0.17 per cent and the tech-heavy Nasdaq Composite was up 0.07 per cent.

The Aussie dollar is buying US68.54 cents from US68.46 cents on Wednesday.

Asia

Chinese shares dipped on Wednesday with property developers weighing on broad A-share indexes, as investors’ hopes for policy stimulus to overcome a cooling economy faded.

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At the end of the morning session, the CSI300 index was down 0.4 per cent at 3,881.18 points, while the Shanghai Composite index lost 0.3 per cent to 2,945.36.

China’s blue-chip CSI300 index was down 0.38 per cent, with its financial sector sub-index lower by 0.52 per cent. The consumer staples sector fell 0.29 per cent, the real estate index down 1.61 per cent and the healthcare sub-index down 1.04 per cent.

Hong Kong shares fell despite an announcement by the city’s government that it would provide HK$2 billion to support the local economy, with a particular focus on its transport, tourism and retail sectors.

The Hang Seng index was down 0.94 per cent at 26,535.17.

Japan’s key benchmark stock index edged up to a one year-high, supported by gains for the pharmay sector thanks to drugmaker Eisai rallying hard, though weak chip-related stocks capped the gains after disappointing results from Texas Instruments.

The benchmark Nikkei average added 0.3 per cent to 22,625.38, its highest finish since October last year, while the broader Topix advanced 0.6 per cent to a 10½ month closing peak at 1,638.14.

Europe

European shares struggled to make headway on Wednesday as investor concerns about a further delay to Britain’s departure from the EU offset gains for London’s exporter-heavy FTSE 100 from a weaker pound and some decent corporate earnings.

The pan-European STOXX 600 index closed just 0.1 per cent higher, with technology stocks among the biggest drags after a sales warning from US chipmaker Texas Instruments hit its European peers.

Shares in Infineon, Dialog and STMicroelectronics fell between 0.4 per cent and 2.8 per cent after the sector proxy forecast a 10-17 per cent drop in current-quarter revenue.

Mining stocks jumped 1 per cent, lifted by a smaller-than-expected drop in quarterly profit at aluminum producer Norsk Hydro.

The Peugeot and Citroen manufacturer PSA Group gained 3.2 per cent after reporting a rise in third-quarter revenue on strong demand for its pricier SUV models.

As well as Peugeot, Gallagher highlighted positive earnings updates from Louis Vuitton owner LVMH and semiconductor equipment maker ASML last week as encouraging signs.

London’s blue-chip FTSE 100 gained 0.7 per cent as exporters on the index got a boost from a weaker pound after Prime Minister Boris Johnson’s Brexit deal hit a new snag. FTSE midcap stocks closed flat.

Britain’s parliament rejected Johnson’s tight timetable to legislate on the agreement before a Oct. 31 deadline, leaving EU leaders to consider whether to grant Britain a further three-month Brexit extension.

European stock markets have been rattled in the past few months by geopolitical concerns, a prolonged US-China trade war and a manufacturing recession in Germany, the bloc’s biggest economy.

After a solid 12 per cent gain in the first quarter, the STOXX 600 index lost steam, adding 1.5 per cent in Q2 and 2 per cent in Q3. It is up 0.3 per cent since the start of October.

Analysts expect a drop of as much as 5.3 per cent in third-quarter corporate profits, worse than the 3.7 per cent fall expected a week ago, according to IBES data from Refinitiv.

Heineken shares lost 3.1 per cent after the world’s second largest brewer said operating profit this year would be at the lower end of its previous forecast.

Shares in Swedbank fell 4.5 per cent after it reported a bigger-than-expected drop in quarterly earnings, while shares in Germany’s Carl Zeiss Meditec tumbled 8.8 per cent after its full-year EBIT margin fell short of its latest guidance.

Among the stronger performers, Danish jewellery maker Pandora jumped 16 per cent, with traders pointing to an upgrade to “hold” by brokerage Carnegie.

Swiss engineering firm ABB gained 3.5 per cent after its third-quarter profit fell by less than expected, even as it warned that conditions were weakening in the United States and China, its two biggest markets.

North America

US stocks edged higher on Wednesday as investors shrugged off lackluster quarterly reports from industrial bellwethers Boeing Co and Caterpillar Inc, though a lower-than-expected revenue outlook from Texas Instruments Inc sent chipmakers’ shares lower.

Shares of Boeing and Caterpillar rose more than 1 per cent despite significant earnings misses from both companies. Boeing reported a 53 per cent drop in quarterly profit but reaffirmed the timeline for its grounded 737 MAX’s return to service. Caterpillar’s Asian sales tumbled, but the company said tariffs stemming from the US-China trade war would have a smaller impact on its business than previously forecast.

With no new developments in trade relations, focus turned to earnings and other announcements from individual companies. Boeing and Caterpillar’s shares were resilient, several analysts said, because the companies’ slide in earnings was expected given the challenges they have faced throughout the year.

Texas Instruments shares, however, tumbled 7.5 per cent after the chipmaker projected fourth-quarter revenue below Wall Street estimates. The results sent shares of other semiconductor companies, including Intel Corp and Broadcom Inc, lower as well. The Philadelphia SE Semiconductor Index dropped 1.9 per cent.

The Dow Jones Industrial Average rose 45.85 points, or 0.17 per cent, to 26,833.95, the S&P 500 gained 8.53 points, or 0.28 per cent, to 3,004.52 and the Nasdaq Composite added 15.50 points, or 0.19 per cent, to 8,119.79.`

Advances in Apple Inc and Facebook Inc shares helped buoy the major indexes.

Apple shares rose 1.3 per cent after Morgan Stanley said the iPhone maker’s soon-to-be-launched video streaming service, Apple TV+, could boost its services revenue.

Facebook shares advanced 2.1 per cent after chief executive Mark Zuckerberg sought to reassure US lawmakers about the company’s planned digital currency, Libra.

Nike Inc shares fell 3.4 per cent after the sportswear company announced late on Tuesday that Mark Parker, its long-time CEO, would step down next year. Nike tapped John Donahoe, chief executive of ServiceNow, as Parker’s successor. ServiceNow shares fell 3.6 per cent.

Shares of medical device maker Boston Scientific Corp and laboratory equipment maker Thermo Fisher Scientific Inc jumped after both companies reported strong results. Boston Scientific shares ended 5.0 per cent higher and Thermo Fisher shares closed up 5.7 per cent.

Eli Lilly and Co shares, however, fell 2.2 per cent after the drugmaker missed third-quarter revenue estimates.

 

is senior editor for Morningstar Australia

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