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Global Market Report - 3 May

Lex Hall  |  03 May 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open higher despite a negative lead from Wall Street as energy stocks slipped along with oil prices.

At 8am Sydney time the SPI200 futures contract was up 9 points, or 0.14 per cent, at 6,330.0, suggesting a slightly positive start for the benchmark S&P/ASX200 on Friday.

The Australian share market finished lower yesterday, with the major banks losing much of their previous day’s gains after NAB cut its dividend.

The benchmark S&P/ASX200 finished down 37.5 points, or 0.59 per cent, to 6338.4, while the broader All Ordinaries was down 36.5 points, or 0.56 per cent or 6430.

On Wall Street overnight, the Dow Jones Industrial Average was down 0.46 per cent, the S&P 500 was down 0.21 per cent and the tech-heavy Nasdaq Composite was down 0.16 per cent.

The Aussie dollar is buying US69.98 cents from US70.19 cents yesterday.

Asia

Hong Kong stocks gained on Thursday as investors welcomed signs that negotiations to resolve the US-China trade row were moving to higher levels.

Hong Kong’s main Hang Seng index is up 245.07 points, or 0.83 per cent, at 29,994.18, while China’s H-shares index edged up 0.01 per cent to 11,543.41.

Chinese and Japanese markets remain closed for separate holidays. China markets were closed for Labour Day holiday and will resume trading on Monday, 6 May.

Europe

European shares had their worst session in more than six weeks on Thursday after the US Federal Reserve dampened rate cut bets, while gains by Volkswagen and Bayer helped cap losses.

The pan-European STOXX 600 index fell 0.7 per cent with most major country indices well in the red on returning from the May Day holiday.

Germany’s DAX, which outperformed through most of the day, closed flat as software firm SAP weighed. Madrid’s IBEX fell 1.6 per cent.

US Fed chairman Jerome Powell disappointed the doves on Wednesday, signaling little appetite to adjust interest rates anytime soon.

SAP fell 1.3 per cent and weighed the most on STOXX 600. Security researchers said up to 50,000 companies running SAP software are at greater risk of being hacked.

The basic resources sector dropped 1.6 per cent after copper prices fell to their lowest in more than two months.

Andritz was among the biggest decliners on STOXX 600 after the Austrian engineer cut its full-year profit forecast, partly in response to weak car industry demand that hit its metals business.

Consumer stocks slipped on online-only fashion retailer Zalando’s 3.3 per cent fall after it announced plans to charge delivery fees for small orders in more markets.

Helping temper those losses, German drugmaker Bayer was the biggest boost to the pan-region index after the US Environmental Protection Agency said that glyphosate, the key ingredient in Bayer’s Roundup weed killer, is not a carcinogen.

This contradicts decisions by US juries that found it caused cancer in people and led to thousands of lawsuits against Bayer.

Carmaker Volkswagen jumped 3.7 per cent as shrugged off a 1 billion euro legal charge and met first-quarter operating profit forecasts.

But other auto stocks such as planemaker Airbus and its supplier Safran slipped. Euro zone factory activity contracted for a third month in April, data showed, hurt by weak global demand.

Shares in Swiss toilet and plumbing supplies maker Geberit vaulted to the top of STOXX after first-quarter earnings beat expectations.

North America

US stocks eased further from recent record highs on Thursday as energy shares dropped along with oil prices and investors continued to digest comments by Federal Reserve chairman Jerome Powell.

The energy index was down the most among the major S&P sectors, falling 1.71 per cent and extending its recent slide. US oil prices slid more than 2 per cent on fears of oversupply.

Powell’s comments on Wednesday that a decline in inflation this year could be due to transitory factors dampened some investors’ hopes that the US central bank could move later this year to cut interest rates, market watchers said.

Traders lowered their bets on a rate cut this year following Powell’s comments, and stocks fell, but many investors said the Fed’s stance makes sense.

The S&P 500’s recent run to record highs also may be giving investors reasons to pause.

The index has rallied more than 16 per cent this year and is entering a period of the year traditionally known as being difficult for equities over the next six months.

On the day, the Dow Jones Industrial Average fell 122.35 points, or 0.46 per cent, to 26,307.79, the S&P 500 lost 6.21 points, or 0.21 per cent, to 2,917.52, and the Nasdaq Composite dropped 12.87 points, or 0.16 per cent, to 8,036.77.

With the first-quarter earnings season winding down, investors are looking for fresh catalysts such as US-China trade developments and economic data.

Markets also are waiting for a reading of the Labor Department’s non-farm payrolls data on Friday that is expected to show fewer job additions last month compared with March.

More than 350 of the S&P 500 companies have reported their results so far on the first quarter. Analysts now expect earnings to have risen 0.7 per cent, compared with the 2 per cent fall estimated at the beginning of April, according to IBES data from Refinitiv data.

Among gainers, Qualcomm rose 0.9 per cent after analysts said the chipmaker was well positioned in the 5G networks space even as it forecast disappointing current-quarter sales.

The Philadelphia Semiconductor index gained 1.1 per cent.

Among decliners, Dow , the commodity chemicals division spun off from DowDuPont, tumbled 6.1 per cent after reporting a fall in core earnings.

Kellogg Co dropped about 3.4 per cent after the cereal and snacks maker said it would replace its chief financial officer and reported a decline in first-quarter earnings.

But shares of vegan burger maker Beyond Meat ended up 163 per cent in their market debut Thursday.

is content editor for Morningstar Australia

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