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Global Market Report - 27 May

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

The Australian share market is expected to open flat amid optimistic comments on trade from Donald Trump.

The SPI200 futures contract was down 2 points, or 0.03 per cent, at 6,462.0 at 8am Sydney time, suggesting a tepid start for the benchmark S&P/ASX200 on Monday.

The Australian share market has finished lower after the price of oil plunged, sending energy stocks into a tailspin.

The benchmark S&P/ASX200 index finished down 35.8 points, or 0.55 per cent, to 6,456 points on Friday, while the broader All Ordinaries was down 38.7 points, or 0.59 per cent, to 6,545.6.

On Wall Street on Friday, the Dow Jones Industrial Average was up 0.37 per cent, the S&P 500 was up 0.14 per cent and the tech-heavy Nasdaq Composite was up 0.11 per cent.

US markets will be closed on Monday for the Memorial Day holiday.

The Aussie dollar is buying 69.32 US cents from 68.92 US cents on Friday.

Asia

China and Hong Kong stocks firmed on Friday morning on bargain hunting following steep losses in the previous session, though gains were capped as investors tread cautiously amid fears over deeper US-China trade war.

The CSI300 index rose 0.1 per cent to 3,587.62 at the end of the morning session, while the Shanghai Composite Index was unchanged at 2,851.40.

The Hang Seng index added 0.2 per cent to 27,323.09, while the Hong Kong China Enterprises Index gained 0.3 per cent, to 10,433.93.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.14 per cent, while Japan’s Nikkei index was down 0.45 per cent.

Europe

European shares rose on Friday after Trump predicted a swift end to a damaging trade war with China.

The market appeared unfazed by British Prime Minister Theresa May’s resignation as Conservative party leader after failing in a final attempt to win parliamentary support for her divorce deal with the European Union.

The pan-European STOXX 600 ended up 0.56 per cent but posted a weekly loss and remained on track for its first monthly decline since a steep sell-off at the end of last year.

Trump said late on Thursday that US complaints against Huawei Technologies could be resolved within the broader trade framework, though no high-level bilateral talks have been scheduled yet.

Deutsche Bank Research analysts said Trump’s comments on Huawei showed the issues were linked “and that he remains amenable to a broad deal”.

The STOXX 600 rose on broad-based gains led by the utility sector, gaining 1.3 per cent percent for its best day in more than two months.

Mining stocks and insurers followed, while China-focused semiconductors stocks pushed the European tech sector 0.36 per cent higher.

Milan’s MIB led the way among country indexes with its 1.2 per cent rise, recovering from Thursday’s more than 2 per cent slide. Germany’s trade-sensitive DAX was up 0.5 per cent.

London’s FTSE 100 held gains after May’s widely expected announcement.

May’s said she would resign by 7 June after failing to deliver Brexit, setting up a Conservative party contest that will install a new British prime minister who could pursue a cleaner break with the European Union.

France’s Casino shares topped STOXX 600, up 7.5 per cent after the retailer said its parent company Rallye’s filing for protection from creditors had no impact on the execution of its strategy.

Healthcare stocks Novartis and Roche were the biggest gainers. Brokerage Jefferies maintained its positive stance on EU large-cap pharma and named Roche its top pick.

North America

Wall Street's major stock indexes have edged higher after falling in the previous session, as hopeful comments from Trump regarding trade relations with China assuaged concerns among some investors.

Trump said late on Thursday that he saw a resolution to the trade war with China "happening fast". He added that Chinese telecom equipment company Huawei Technologies, which the White House has blacklisted, could also be included in a trade deal.

Still, he called Huawei "very dangerous".

No high-level talks between the US and China have been scheduled since the last round of negotiations in Washington two weeks ago.

Yet Trump's comments were enough to give a slight lift to US stocks in muted activity ahead of a long weekend.

Friday marked the lowest volume of the year for a full trading session. US markets will be closed on Monday for the Memorial Day holiday.

Stocks rose broadly, with nine of the S&P 500's major sectors moving higher, though declines in shares of Apple and Alphabet capped gains on the major indexes.

Even so, the S&P 500 ended the week more than 1 per cent lower to notch the third straight week of losses for the benchmark index, which has been weighed down by fears that the US-China trade war would result in a global economic slowdown.

Adding to concerns about a slowing broader economy, data showed that new orders for US-made capital goods fell more than expected in April.

The Dow Jones Industrial Average rose 95.22 points, or 0.37 per cent, to 25,585.69; the S&P 500 gained 3.82 points, or 0.14 per cent, to 2,826.06; and the Nasdaq Composite added 8.73 points, or 0.11 per cent, to 7,637.01.

For the week, the Dow declined 0.68 per cent, the S&P 500 fell 1.16 per cent and the Nasdaq dropped 2.29 per cent. The Dow slid for the fifth straight week, its longest such losing streak in eight years, while the S&P 500 and Nasdaq each registered their first three-week declines of the year.

The small-cap Russell 2000 gained 0.9 per cent, outpacing the major indexes, though it fell 1.4 per cent for the week. In a contrast from their performance last (northern) spring, small-cap stocks have dropped largely in line with their large-cap counterparts as US-China trade tensions have ratcheted up.

Financials led percentage gains among the S&P 500's major sectors, adding 0.8 per cent as US Treasury yields rose for the first time in three days.

Foot Locker shares plunged 16.0 per cent, the most among S&P 500 companies, after the footwear retailer missed quarterly profit and same-store sales estimates.

Total System Services shares jumped 13.9 per cent on reports that fellow payment technology services company Global Payments is nearing a deal to acquire the company. Global Payments shares rose 3.7 per cent.

Autodesk shares fell 4.9 per cent after the software-maker reported quarterly revenue and earnings that were below expectations.

is content editor for Morningstar Australia

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