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Global Market Report - 28 February

Lex Hall  |  28 Feb 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open slightly higher despite a negative lead from Wall Street overnight.

The SPI200 futures contract was up 12 points, or 0.20 per cent, at 6,143.0 at 8am Sydney time, suggesting a positive start for the benchmark S&P/ASX200 on Thursday. Australian shares finished higher yesterday on gains by the big miners and banks while investors took stock of several new earnings reports.

The benchmark S&P/ASX200 index finished up 21.9 points, or 0.36 per cent, at 6,150.3 points at 4.15pm on Wednesday, while the broader All Ordinaries was up 24.6 points, or 0.4 per cent, at 6,233.6.

On Wall Street, the Dow Jones Industrial Average was down 0.28 per cent, the S&P 500 was down 0.05 per cent and the Nasdaq Composite was up 0.07 per cent.

The Aussie dollar is buying 71.40 US cents from 71.87 US cents on Wednesday.

Overnight Rio Tinto reported a 2 per cent rise in underlying profit to $US8.8 billion, beating expectations for a profit of $US8.5 billion. Revenue edged higher to $US40.5 billion during a year in which the company sold five major assets.

ASIA

Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite rose 0.42 per cent. The Hang Seng lost 0.05 per cent.

Japan’s Nikkei gained 0.50 per cent as investors bought into defensive stocks such as pharmaceutical and real estate firms, and took some money off the table from machinery shares that had rallied on progress in US-China trade talks.

EUROPE

European markets finished lower today with shares in London leading the region. The FTSE 100 is down 0.61 per cent while Germany's DAX is off 0.46 per cent and France's CAC 40 is lower by 0.26 per cent.

European shares were lower in early deals on Wednesday, snapping a three-day winning streak as a warning from Beiersdorf hammered consumer staples stocks and Air France-KLM sank on news the Dutch government would raise its stake in the airline.

The export-heavy FTSE 100 lagged the broader market as sterling lingered near five-month highs against the dollar amid fresh hopes that a no-deal Brexit could be avoided.

There was little macro news to drive the markets, investors awaiting fresh news on China-US trade talks, although sentiment was rattled by growing tensions between India and Pakistan.

The overall mood was gloomy. Healthcare was the only sector in positive territory in early deals, with travel, leisure, chemicals and retail notching up the biggest losses.

Among individual moves, shares in Air France KLM were on track for their worst day in more than a decade after the Dutch government said it would take a 14 per cent stake in the airline, highlighting tensions between the Netherlands and its French partners in the company.

Investors also punished Beiersdorf, which plunged to two-year lows, after the Nivea skin cream maker warned its operating margins would fall this year, with the company’s new CEO declaring the consumer goods industry is “turmoil”.

Unilever, Henkel and Reckitt Benckiser were all dragged lower with it.

British retailer Marks & Spencer plunged 9 per cent after announcing it will finance its $1 billion food delivery tie-up with Ocado by issuing shares and cutting its dividend. In contrast, Ocado bounced to the top of the FTSE 100, as the companies outlined details of the deal.

NORTH AMERICA

The S&P 500 closed down slightly on Wednesday but well above its session low after testimonies to US congress from trade and central bank officials as well as President Donald Trump’s former lawyer brought few major surprises.

US trade representative Robert Lighthizer told a congressional hearing the US and China still had hard work ahead to settle their trade dispute in his first public comments since Trump announced a delay to Chinese import tariffs on Sunday.

Federal Reserve chair Jerome Powell told congress the central bank would stop shrinking its $4 trillion balance sheet this year, ending a process investors say is at cross-purposes with its current pause on interest rate hikes.

The S&P had drifted gradually higher after hitting a session low around 10.30am and swerved in and out of positive territory in afternoon trading.

Also on Wednesday, Trump’s former lawyer Michael Cohen called the president a “conman” but said he had no direct evidence Trump colluded with Moscow to bolster his White House campaign ahead of the 2016 election.

The Dow Jones Industrial Average fell 72.82 points, or 0.28 per cent, to 25,985.16, the S&P 500 lost 1.52 points, or 0.05 per cent, to 2,792.38 and the Nasdaq Composite added 5.21 points, or 0.07 per cent, to 7,554.51.

Optimism on trade and Fed policy had boosted equities from December lows in recent weeks, with the S&P 500 index roughly 5 per cent below its record closing high hit in late September.

Of the 11 major S&P sectors, seven closed lower with the healthcare index 0.5 per cent decline weighing the most. Health insurer and pharmacy benefit manager shares slipped after a Senate hearing and the introduction of a bill aimed at moving all Americans into a government health insurance program on Tuesday.

A 15 percent drop in Mylan NV shares was another drag after the generic drugmaker missed quarterly profit estimates and forecast weak 2019 earnings.

Best Buy Co Inc rose 14 per cent after the consumer electronics retailer beat analysts’ estimates for quarterly same-store sales, while announcing a dividend hike and a share buyback plan.

is content editor for Morningstar Australia

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