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Global Market Report - 26 February

Lex Hall  |  26 Feb 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open lower despite a positive lead from Wall Street overnight.

The SPI200 futures contract was down 15 points, or 0.24 per cent, at 6130.0 at 8am Sydney time, suggesting a dip for the benchmark S&P/ASX200 on Tuesday morning. Australian shares finished higher yesterday as investors cheered optimism about a potential US-China trade deal.

The benchmark S&P/ASX200 index closed up 19 points, or 0.31 per cent, to 6186.3 points at 4.15pm on Monday, while the broader All Ordinaries was up 21.7 points, or 0.35 per cent, at 6263.6.

On Wall Street, the Dow Jones Industrial Average was up 0.23 per cent, the S&P 500 was up 0.12 per cent and the Nasdaq Composite was up 0.36 per cent.

The Aussie dollar is buying 71.71 US cents from 71.48 US cents on Monday.
Companies reporting earnings results on Tuesday include Afterpay Touch, Bingo, Caltex, Estia Health and Amaysim.

ASIA

Asian markets finished broadly higher on news of the Trump tariff extension.

Shares in China led the region, notching the biggest gain in three years. The Shanghai

Composite is up 5.60 per cent while Hong Kong's Hang Seng is up 0.50 per cent.

China's biggest insurer China Life Insurance lifted the Shanghai Composite Index by the most, with a 10 per cent jump in its stock price. Ping An Insurance rose 9 per cent.

Suppliers to Huawei Technologies led a surge in tech shares, after the telecommunications and electronics giant released its first smartphone with a foldable screen at the weekend.
Japan's Nikkei 225 is up 0.48 per cent.

EUROPE

US President Donald Trump’s decision to delay an increase in tariffs on Chinese goods drove European shares to their highest since October with carmakers, most sensitive to the threat of a global trade war, leading the rally.

The pan-European STOXX 600 closed up 0.3 per cent and Germany’s trade-sensitive DAX rose 0.4 per cent.

Italy's FTSE MIB outperformed the market, climbing 0.9 per cent as government bonds jumped after Fitch affirmed the country’s BBB credit rating.

Trump said on Sunday he would delay the March 1 deadline for a tariff increase after "productive" trade talks and that he and Chinese President Xi Jinping would meet to seal an agreement if progress continued.

Auto shares jumped 2.1 percent to their highest since early November as the tariff reprieve triggered relief for companies most at risk from slower global trade.

Car-parts makers Hella, Faurecia and Valeo were the top performers, up 3.2 to 4.3 per cent.

Disappointing results drove some significant declines. Shares in Bank of Ireland dropped 3.1 per cent after it cut its outlook for 2019 and reported a weaker fourth-quarter net interest margin.

NORTH AMERICA

Wall Street’s three major indexes ended higher on Monday but well below the session’s highs after President Donald Trump said he would delay a planned hike in tariffs on Chinese imports.

Postponement of the tariff deadline was seen as the clearest sign yet the two countries were closing in on an agreement to end their prolonged trade spat, which has slowed global growth and disrupted markets.

But gains were capped after weeks of advances for the S&P 500, the Dow Jones Industrial Average and the Nasdaq, partly due to trade optimism and dovish signals from the Federal Reserve.

The S&P 500 index ended 4.9 per cent below its late September record closing high after narrowing the gap to 4.3 percent earlier in the session.
Investors were also looking ahead to an appearance by Fed chairman Jerome Powell before a US Senate committee on Tuesday.

The Dow Jones Industrial Average rose 60.14 points, or 0.23 per cent, to 26,091.95, the S&P 500 gained 3.44 points, or 0.12 per cent, to 2,796.11 and the Nasdaq Composite added 26.92 points, or 0.36 per cent, to 7,554.46.

Investors were also wary of weakening estimates for current quarter earnings, with Wall Street on Monday expecting a 0.9 percent decline in S&P first-quarter earnings per share compared with expectations for 5.3 percent growth on 1 January, according to IBES data from Refinitiv.

Of the S&P's 11 major sectors, 7 ended the day with gains.

After advancing as much as 1.4 per cent, the financials index lost ground late in the day to close up 0.4 per cent.

The S&P technology index rose 0.5 per cent. The Philadelphia semiconductor index climbed 0.8 per cent as chip companies have a big exposure to China.

The industrials sector rose 0.4 per cent, getting its biggest boost from General Electric Co, which gained 10.8 percent after announcing a sale of its biopharma business to Danaher Corp for $21.4 billion. Danaher shares rose 8.2 percent.

A flurry of M&A activity also helped the risk-on sentiment.

The Nasdaq Biotechnology Index rose 2 per cent, its biggest boost coming from shares in Spark Therapeutics Inc, which soared 120 percent after Swiss drugmaker Roche Holding AG agreed to buy it for $4.3 billion.

The biggest laggards were the S&P’s defensive sectors - consumer staples, utilities and real estate. The consumer discretionary sector also ended down 0.3 per cent, with the biggest drag from Home Depot, down 1.3 per cent, on concerns about a soft housing market ahead of its quarterly results.

is content editor for Morningstar Australia

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