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Global Market Report - 27 December

Lex Hall  |  27 Dec 2019Text size  Decrease  Increase  |  
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Australia

Australian stocks are set to open slightly lower after the Christmas break despite record gains in the US, spurred by retail sales and trade optimism.

The SPI200 futures contract was down 5.0 points, or 0.07 per cent, at 6,710.0 at 7am Sydney time, suggesting a weaker start for the benchmark S&P/ASX200 on Friday.

The Australian share market finished flat after a holiday-shortened Christmas Eve session where health care and energy stocks were the best performers.

The benchmark S&P/ASX200 index finished on Tuesday 9.1 points, or 0.13 per cent, higher at 6,794.2 points in thin trade, while the broader All Ordinaries rose 11.6 points, or 0.17 per cent, to 6,906.4 points.

The result snapped a run of three straight sessions in the red.

On Wall Street, the Nasdaq crossed the 9000-point mark for the first time on Thursday as all three major Wall Street indexes posted record closing highs, boosted by optimism over US-China trade relations and gains in shares of Amazon.com after a report signalled robust online holiday sales.

The Dow Jones Industrial Average rose 0.37 per cent, the S&P 500 gained 0.51 per cent, and the Nasdaq Composite added 0.78 per cent.

The Australian dollar is up 0.3 per cent, and buying 69.41 US cents.

Asia

China shares closed higher on Thursday after Beijing laid out plans to bolster its economy, which included investments in infrastructure and easing of residency curbs.

The blue-chip CSI300 index rose 0.9 per cent to 4,025.99, while the Shanghai Composite Index closed up 0.9 per cent at 3,007.35.

In Hong Kong, The Hang Seng lost 0.15 per cent.

Around the region, Japan’s Nikkei index was up 0.60 per cent.

Europe

European stocks ground out fresh record gains on Tuesday in thin trading ahead of Christmas with investors optimistic about global growth heading into 2020 amid progress in US-China trade talks.

In an early close for markets, the pan-European STOXX 600 index added 0.12 per cent to touch an all-time high, while France’s CAC 40 and Spain’s IBEX 35 were little changed.

Domestically focused mid-cap shares in Britain outshone their European peers again with a 0.6 per cent rise to hit a new record, while the blue-chip index clung to a five-month high.

With only a week left for 2019 to close, European shares are on course to log their best gains in a decade as two of the biggest risks to global growth - a prolonged Sino-US trade war and a disorderly exit for Britain from the European Union - eased over the past few weeks.

Following the landslide 12 December election victory for Prime Minister Boris Johnson’s Conservatives, Britain now looks certain to leave the EU on 31 January with a withdrawal deal that includes a transition period lasting until the end of 2020.

However, investors are concerned about the outcome next year of post-Brexit negotiations to establish the UK’s future trade relationship with the EU, as Johnson’s hard line could eventually raise the risk of no deal.

In thin corporate news, BMW said it was being investigated by the US Securities and Exchange Commission over its sales reporting practices. But with the German stock index closed for the Christmas holidays, any impact on the automaker’s shares will only be evident on Friday.

Shares in BBVA slipped 0.6 per cent after Reuters reported the European Central Bank had asked Spain’s High Court to provide information about an investigation into a spying case involving the lender.

Italian and Swiss markets were also shut on Tuesday. Most European stock markets remained closed on 25 and 26 December.

North America

Traders returned from the Christmas break to digest comments from Beijing that it was in close contact with Washington about an initial trade agreement, shortly after US President Donald Trump talked up a signing ceremony for the recently struck phase 1 trade deal.

Cooling US-China trade tensions have fuelled the latest leg of Wall Street’s record-setting rally. With just days to go until the year-end, the benchmark S&P 500 is up 29 per cent so far in 2019, which would be its biggest annual percentage gain since 2013.

The Nasdaq posted a record closing high for a 10th straight session, its longest such streak since 1997.

Shares of Amazon jumped 4.4 per cent after a Mastercard report showed that US shoppers spent more online during the holiday shopping season than in 2018, with e-commerce sales hitting a record high.

The Dow Jones Industrial Average rose 105.94 points, or 0.37 per cent, to 28,621.39, the S&P 500 gained 16.53 points, or 0.51 per cent, to 3,239.91 and the Nasdaq Composite added 69.51 points, or 0.78 per cent, to 9,022.39.

Consumer discretionary was the biggest gainer among the S&P 500 sectors, spurred by Amazon. Healthcare was the lone sector in the red.

A 0.9 per cent decline in shares of Boeing Co, which has been dealing with fallout from the grounding of its 737 MAX jet, weighed particularly on the Dow.

The Federal Reserve’s interest rate cuts as well as better-than-feared economic data and corporate profits have helped lift stocks this year along with trade-relations optimism.

A Labor Department report on Thursday showed the number of Americans filing applications for unemployment benefits fell last week in a sign of ongoing labour market strength.

About 4.5 billion shares changed hands in US exchanges, well below the 6.8 billion daily average over the last 20 sessions.

Trading volumes are expected to remain thin during the holiday-shortened week.

 

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