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Global Market Report - 27 February

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

Australian shares are expected to open higher following the previous day's broad falls.

The SPI200 futures contract was up 14 points, or 0.23 per cent, at 6,119.0 at 8am Sydney time, suggesting a positive start for the benchmark S&P/ASX200 on Wednesday. Shares fell across the board yesterday, led lower by the tech sector that had been the main gainer a day earlier.

The benchmark S&P/ASX200 index closed down 57.9 points, or 0.94 per cent, at 6,128.4 points at 4.15pm on Tuesday, while the broader All Ordinaries closed down 54.6 points, or 0.87 per cent, at 6209.

Following a choppy trading session on Wall Street overnight, the Dow Jones Industrial Average was up 0.13 per cent, the S&P 500 was up 0.08 per cent and the Nasdaq Composite was up 0.07 per cent.

The Aussie dollar is buying 71.89 US cents from 71.57 US cents on Tuesday.

Companies reporting earnings results on Wednesday include Bellamy's, Bubs Australia, Michael Hill and Rio Tinto, Ainsworth, Genesis and Vocus.

ASIA

Asian markets finished lower today with shares in China leading the region. The Shanghai Composite is down 0.67 per cent while Hong Kong's Hang Seng is off 0.65 per cent and Japan's Nikkei 225 is lower by 0.37 per cent, having touched its highest levels since mid-December earlier in the day before a decline in Asian stocks and selling pressure ahead of the fiscal year-end in March forced a retreat.

Exporter shares such as automakers rose following the recent weakening by the yen against the dollar. Mazda Motor Corp climbed 0.3 per cent, Honda Motor Co added 0.1 per cent and Nissan Motor Co rose 0.5 per cent.

Petroleum and natural gas developer Inpex Corp fell 3.8 per cent and refiners Showa Shell Sekiyu KK and Cosmo Energy Holdings Co were down 2 per cent and 2.3 per cent, respectively, following a steep drop in crude prices.

Defensive shares such a utilities and healthcare performed well, with Tokyo Electric Power Co rising 1.1 per cent and drugmaker Daiichi Sankyo Co gaining 2.7 per cent.

EUROPE

European shares were firmly in the red on Tuesday as the optimism about US-China trade talks that swept stocks to fresh October highs cooled. The DAX gained 0.31 per cent and the CAC 40 rose 0.13 per cent. London’s FTSE 100 lost 0.33 per cent.

Sterling rallied to one-month highs after reports that Prime Minister Theresa May is considering delaying the March 29 deadline for Britain’s exit from the European Union. An announcement could come as soon as Tuesday.

With the majority of its companies’ income coming from abroad, the FTSE 100 is often pressured by a stronger pound.

Tech, auto and miners, some of the most exposed to the US-China conflict and the biggest gainers on Monday, were among the biggest fallers as enthusiasm over trade talks cooled.

Even though US President Donald Trump said he would delay a tariff hike on $200 billion of Chinese imports in the clearest sign yet that both sides were making progress, he also said a deal had not yet been sealed and there was still a lack of detail on what emerged from the Washington talks.

NORTH AMERICA

Wall Street’s three major indexes fell slightly after a choppy session on Tuesday as investors eyed mixed US economic data and corporate news and waited for clarity on issues such as the US-China trade talks.

Weaker-than-expected housing data contrasted with a rosy consumer confidence report, while Home Depot Inc was among the biggest drags on the benchmark S&P 500 index after the home improvement retailer blamed bad weather for missed Wall Street forecasts.

Federal Reserve chairman Jerome Powell told a US Senate Banking Committee that the central bank would remain “patient” in deciding on further interest rate hikes and that rising risks and recent soft data should not prevent solid growth for the economy this year.

The indexes have already been bolstered in recent weeks by trade optimism and dovish signals from the Fed, with the S&P 500’s session high just 4.7 per cent away from its record closing high in September.

He cited issues such as a need for specifics on US-China trade relations after President Donald Trump said on Sunday he would delay an increase in US tariffs on Chinese goods after “productive” trade talks.

The Dow Jones Industrial Average fell 33.97 points, or 0.13 per cent, to 26,057.98, the S&P 500 lost 2.21 points, or 0.08 per cent, to 2,793.9 and the Nasdaq Composite dropped 5.16 points, or 0.07 per cent, to 7,549.30.

Seven of the 11 major S&P sectors ended lower with industrials providing the biggest drag with a 0.3 per cent drop. The benchmark’s biggest boost was the technology index, which closed up 0.2 per cent.

The healthcare index declined 0.3 percent after a U.S. congressional hearing on the prices of medicines wrapped up in Washington. Declines in shares of health insurers Cigna Corp and UnitedHealth Group, both of which operate major pharmacy benefit managers, were big drags on the sector.

The S&P's biggest losing stock was JPMorgan Chase & Co, which closed down 0.8 per cent after it warned of rising costs for deposits, a key part of its business, and slowing global economic growth.

Caterpillar Inc fell 2.4 per cent and also depressed the benchmark after brokerage UBS downgraded the stock to “sell” from a “buy” rating.

US homebuilding tumbled to a more than two-year low in December as construction of both single and multifamily housing declined, the latest sign that the economy had lost momentum in the fourth quarter.

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