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Global Market Report - 25 March

Lex Hall  |  25 Mar 2019Text size  Decrease  Increase  |  
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Australian shares are expected to slide at the open following a late-week slump across US and European markets.

The SPI200 futures contract was down 50 points, or 0.81 per cent, at 6,183.0 at 8am Sydney, suggesting an early dip for the benchmark S&P/ASX200 on Monday.

On Friday, the ASX finished the week with a rally led by the big banks and market heavyweight CSL.

The benchmark S&P/ASX200 index closed up 28 points, or 0.45 per cent, to 6,195.2 points, while the broader All Ordinaries was up 27.4 points, or 0.44 per cent, at 6,280.9.

London's FTSE, Germany's DAX and the three US indices all dropped at least 1.5 per cent on Friday following weaker-than-expected European manufacturing data.

On Wall Street, the tech-heavy Nasdaq fell 2.5 per cent to 7,642 points, while the key Dow Jones Industrial Average dipped 1.8 per cent to 25,502.

The Aussie dollar is buying 70.82 US cents from 71.08 US cents on Friday.


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China stocks ended almost flat on Friday ahead of a new round of US-China trade talks next week, but posted weekly gains of about 2.5 per cent on expectations of more policy measures to spur growth in the world’s second-largest economy.

The blue-chip CSI300 index fell 0.1 per cent, to 3,833.80, while the Shanghai Composite Index was flat, at 3,104.15 points. For the week, CSI300 rose 2.4 per cent, while SSEC gained 2.7 per cent.

Hong Kong stocks recouped losses to end largely unchanged on Friday, boosted by a late-session rally in index-heavyweight Tencent Holdings.

The Hang Seng index rose 0.1 percent to 29,113.36, while the China Enterprises Index lost 0.2 percent to 11,517.48 points.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.15 per cent, while Japan’s Nikkei index closed up 0.09 per cent.

The Shanghai Stock Exchange took a major step toward launching its hotly-anticipated Nasdaq-style technology board, announcing on Friday that it had accepted listing applications from nine companies, in sectors from chip making to new energy technology.

The announcement on the exchange’s website means share trading will start on the Science and Technology Innovation board as soon as June, since the exchange will take three months to review applications.

Among the nine applicants are Ningbo Ronbay New Energy Technology Co, Wuhan Keqian Biology Co, Ankon Technology (Wuhan) Co and chip maker HeJian Technology (Suzhou) Co.


European stock markets deepened losses on Friday, closing near session lows, as fears of a slowdown in global growth after weak manufacturing data from across Europe were exacerbated by dismal data from the United States.

After downbeat manufacturing activity from Germany reignited fears of a recession in the region’s biggest economy, the inversion of the US yield curve after similar US data stoked fears that the world’s largest economy may also be slipping into recession.

The pan-European STOXX 600 index, which had opened higher on relief at the extension of Britain’s Brexit deadline, slipped for a third day to close down 1.2 per cent to take weekly losses to 1.3 per cent - its steepest this year.

The London and Paris bourses sank more than 2 per cent, while Frankfurt and Madrid fared only slightly better with roughly 1.5 per cent declines.

The euro zone-wide flash PMI also showed businesses performed much worse than expected this month, while French business activity slowed unexpectedly.

The classic gauge of fear – known as implied volatility, which tracks demand for options in European stocks – hit more than 9-week highs and posted its biggest weekly rise in a year, the first concrete sign of activity in a while.

Almost all sectors within the STOXX 600 were in the red with banks, auto and chemicals sectors down more than two percent each, along with industrial goods and services stocks.

The bank sector posted its biggest daily drop since early February.


Wall Street stocks have sold off sharply, with all three major US stock indexes posting their biggest one-day percentage declines since 3 January, as weak factory data from the US and Europe led to an inversion of US Treasury yields, fuelling fears of a global economic downturn.

Capping five tumultuous days of trading, the S&P 500, the Dow and the Nasdaq were all down for the week.

A weaker-than-expected reading of US factory activity in March, along with similarly dour reports from Europe and Japan, helped send US Treasury yields into an inversion, with the spread between yields of three-month Treasury bills exceeding those of 10-year notes for the first time since 2007.

An indication of near-term risk, and seen by many as a potential harbinger of recession, the inverted Treasury yield curve seemed to confirm investor fears of a global slowdown in economic growth.

Earlier in the week, the US Federal Reserve concluded its two-day monetary policy meeting with a statement that forecast no additional interest rate hikes in 2019 on signs of economic softness, a dovish shift that took the markets by surprise.

Interest rate-sensitive financial firms fell 2.8 per cent, capping their worst week since the late-December sell-off.

The Dow Jones Industrial Average fell 460.19 points, or 1.77 per cent, to 25,502.32, the S&P 500 lost 54.17 points, or 1.90 per cent, to 2,800.71 and the Nasdaq Composite dropped 196.29 points, or 2.5 per cent, to 7,642.67.

Of the 11 major sectors in the S&P 500, all but utilities ended the session in the red.

is senior editor for Morningstar Australia

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