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Global Market Report - 24 September

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

The Australian share market is expected to open slightly lower after a mixed session on Wall Street overnight.

The SPI200 futures contract was down 6 points, or 0.09 per cent, at 6,724.0 at 8am Sydney time, suggesting an early dip for the benchmark S&P/ASX200 on Tuesday.

The Australian share market has moved higher for the eighth time in nine sessions, while most markets around the region were lower.

The benchmark S&P/ASX200 index closed Monday up 18.9 points, or 0.28 per cent, to 6,749.7 points, while the broader All Ordinaries was up 22.1 points, or 0.32 per cent, to 6,861 points.

On Wall Street, the Dow Jones Industrial Average finished up 0.06 per cent, the S&P 500 was down 0.01 and the tech-heavy Nasdaq Composite was down 0.06 per cent.

The Aussie dollar is buying 67.79 US cents from 67.73 US cents on Monday.

Asia

China stocks started the week on a soft note on Monday, as uncertainties around Sino-US trade talks dampened risk appetite.

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Hong Kong stocks ended lower on Monday, posting their sixth straight session of losses, as US-China trade uncertainties and concerns over political protests weighed on risk appetite.

The Hang Seng index fell 0.8 per cent to 26,222.40, while the China Enterprises Index dropped 0.9 per cent to 10,287.92.

The blue-chip CSI300 index fell 1.1 per cent, to 3,890.66, while the Shanghai Composite Index lost 1.1 per cent to 2,977.08.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.14 per cent.

Europe

Euro zone stock markets clocked their worst day in one month on Monday after dismal business activity readings from across the currency bloc deepened fears of a looming recession and suggested more stimulus was required.

After logging five straight weeks of gains, euro zone stocks slipped 1 per cent as surveys showed growth in services and manufacturing in the region stalled in September. As a result, bets on rate cuts accelerated in euro zone money markets.

Germany's DAX index fell 1 per cent to post its biggest one-day fall since Aug 23 as the latest purchasing managers numbers showed its manufacturing sector sinking deeper into recession.

European Central Bank chief Mario Draghi said the data justified the bank’s indefinite stimulus promised earlier this month and reiterated his call on governments to step up their efforts as monetary policy can only prop up domestic confidence.

Banks were the worst hit, with the eurozone banking index slumping 2.8. This included a 7.5 per cent slump in Commerzbank after Moody’s said the German bank’s restructuring plan is negative for its credit rating.

The broader pan-European index that includes stocks outside the euro zone slipped 0.8 per cent, breaking three sessions of gains.

Persistent concerns over US-China trade tensions were also a reason for investors to jettison stocks and move to the safety of bonds. Market participants are still unconvinced that a trade deal between the two countries is likely anytime soon.

US and Chinese officials described the deputy-level trade talks last week as being “constructive” and “productive”, but this came after a Chinese agriculture delegation cancelled a visit to US farms in Montana on Friday.

Trade-reliant sectors such as mining, auto and parts .SXAP and technology were among the biggest decliners, losing at least 1.7 per cent each.

Shares of TUI jumped 7.2 to top the STOXX 600 and EasyJet followed on expectations their businesses will benefit from the collapse of British rival Thomas Cook.

These moves, along with a drop in the pound GBP=, helped limit losses on London's FTSE 100 to 0.3 per cent.

North America

US stocks have barely budged, with slight gains in shares of Apple offset by mixed economic data that added to caution over the prolonged US-China trade war.

Apple rose 0.5 per cent after US trade regulators approved 10 of 15 requests for tariff exemptions by the iPhone-maker. Micron Technology, which supplies components to Apple, advanced 0.9 per cent.

US employment in the services sector shrank for the first time in 9½ years in September, IHS Markit's Purchasing Manager's Index showed. The data also showed manufacturing activity rose in September, topping expectations.

Earlier in the day, a survey showed a manufacturing recession deepening in Germany, Europe's biggest economy.

Investors also have been cautious about progress in Sino-US trade talks after a Chinese agriculture delegation cancelled a visit to Montana.

The Dow Jones Industrial Average on Monday rose 14.92 points, or 0.06 per cent, to 26,949.99; the S&P 500 lost 0.29 points, or 0.01 per cent, to 2,991.78; and the Nasdaq Composite dropped 5.21 points, or 0.06 per cent, to 8,112.46.

American Express shares gained 1.2 per cent after it announced a share repurchase plan and a dividend increase.

Boeing edged lower after a Reuters report that European antitrust regulators were set to investigate the plane-maker's $US4.75 billion ($7.02 billion) bid for the commercial aircraft arm of Brazil-based Embraer.

Additionally, the chief of the US Federal Aviation Administration was to detail progress on the Boeing 737 MAX aircraft inquiry to international air regulators.

Social network Facebook fell 1.6 per cent and was among the biggest drags on the S&P 500 along with Amazon.com, down 0.5 per cent.

is senior editor for Morningstar Australia

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