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Global Market Report - 3 October

Lex Hall  |  03 Oct 2019Text size  Decrease  Increase  |  
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The Australian share market is expected to open sharply lower after a second day of big falls on Wall Street jobs and manufacturing data shows the trade war is hurting the economy.

At 7am Sydney time the SPI200 futures contract was down 120 points, or 1.81 per cent, at 6,493.0, suggesting a firmly negative start for the benchmark S&P/ASX200 on Thursday.

A major sell-off in global shares battered the Australian share market yesterday, wiping out $35 billion in value, following fears the once-mighty US economy is slowing.

The benchmark S&P/ASX200 index finished Wednesday down 102.9 points, or 1.53 per cent, to 6,639.9 points, while the broader All Ordinaries tumbled 99.7 points, or 1.45 per cent, to 6,753.3 points.

On Wall Street overnight, the Dow Jones Industrial Average finished down 1.86 per cent, the S&P 500 was down 1.79 and the tech-heavy Nasdaq Composite was down 1.56 per cent.

The pan-European STOXX 600 index fell 2.5 per cent, recording its steepest slide since December, amid investor concerns about weak global growth.

The Aussie dollar is buying US67.07 cents from US67.02 cents on Wednesday.


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Chinese markets on Tuesday began a week-long break to mark 70 years since the founding of the People’s Republic of China.

In Hong Kong, the Hang Seng Index closed 0.2 per cent lower at 26,042.7, weighed down by heavyweights such as Tencent, CLP Holdings and MTR.

Retailers, financial service providers and utilities were among the biggest losers, while Macau casinos and mainland Chinese telecoms service providers were among the biggest gainers.

Hong Kong property developers, meanwhile, managed to close above water, the South China Morning Post reported.

In Japan, the Nikkei average share price index ended down 0.49 per cent at 21,778.61.


European stock markets dived almost 3 per cent to log their worst day since last December on Wednesday as the threat of a transatlantic trade war and dismal economic data added to fears about a faltering global economy.

Losses in London were the most dramatic, with the FTSE 100 seeing its worst session in 3-1/2 years after Prime Minister Boris Johnson unveiled a final Brexit proposal that dimmed the chances of Britain leaving the European Union with a deal.

In Europe, Airbus dropped 2 per cent and the benchmark STOXX 600 index gave up almost all of the past month’s gains after the World Trade Organization approved US moves to slap import tariffs on $7.5 billion worth of European goods.

Global equity markets are already reeling from a prolonged tit-for-tat battle between Washington and Beijing over trade, which has showed up this week in sharp falls in manufacturing sector indicators on both sides of the Atlantic.

The losses drove the pan-European index below its 100-day moving average, seen as a strong technical support level that could spur further losses.

All of Europe's major markets tumbled more than 2 per cent, with Italian shares losing 2.9 per cent in their worst session since December, while French stocks gave up a full 3 per cent.

Frankfurt shares fell 2.8 per cent to their lowest level in a month and have now fallen more than 4 per cent in just two days.

Latest Refinitiv data showed European companies could be set for their worst quarterly earnings period in three years as revenue drops for the first time since early 2018.

All eyes are now on the release of service sector data from the euro zone on Thursday.

Among the worst performers was French waste and water group Suez which dropped 7 per cent after its new chief executive unveiled a four-year plan to boost earnings but failed to provide clarity on dividends and planned asset sales.

Flutter Entertainment was one of the few gainers on the tumultuous day, up 7 per cent after the company agreed to merge in an all-share deal with Stars Group Inc, owner of Poker Stars.

Among sectors, oil stocks were the biggest drag on the pan-regional index as prices of Brent crude sank 2.5 per cent.

North America

Wall Street’s main indexes suffered their sharpest one-day declines in nearly six weeks on Wednesday after employment and manufacturing data suggested that the US-China trade war is taking an increasing toll on the US economy.

Adding to trade concerns, the United States won approval on Wednesday to levy import tariffs on $7.5 billion worth of European goods over illegal EU subsidies handed to Airbus, threatening to trigger a tit-for-tat transatlantic trade war.

All 11 major S&P sector indexes fell, with energy and financials each down more than 2 per cent.

The ADP National Employment Report showed private payrolls growth in August was not as strong as previously estimated, and said “businesses have turned more cautious in their hiring,” with small enterprises becoming “especially hesitant.”

That added to fears sparked on Tuesday when a report showed US factory activity contracted to its lowest level in more than a decade.

The recent weak data has shaken investor faith in the strength of the domestic economy, which had shown relative resilience in the face of slowing global growth. Confidence in the US economy has helped support Wall Street this year.

The focus is now on the US Labor Department’s more comprehensive jobs report on Friday for further clues on the health of the US economy.

The S&P 500 and the Dow slipped below their 100-day moving averages for the first time in about a month. Many investors believe that falling below such moving averages means the indexes are likely to fall further.

The S&P 500 is now about 5 per cent below its all-time high hit in July after coming within striking distance of the mark two weeks ago. Over the past 12 months, the S&P 500 is down about 1 per cent.

The Dow Jones Industrial Average dropped 1.86 per cent to end at 26,078.62 points, while the S&P 500 lost 1.79 per cent to 2,887.61.

The Nasdaq Composite fell 1.56 per cent to 7,785.25.

Volume on US exchanges was 8.0 billion shares, compared with the 7.3 billion average for the full session over the last 20 trading days.

The Cboe Volatility Index, or VIX, an options-based gauge of investor anxiety, rose 1.9 points to 20.47, its highest in about a month.

Activision Blizzard dropped 1.2 per cent after Bernstein downgraded the videogame maker’s shares to “market perform.”

Ford Motor Co shares fell 3.3 per cent after the carmaker reported a fall of about 5 per cent in US auto sales for the third quarter. General Motors Co slumped 4.0 per cent after its quarterly sales came in slightly short of US car shopping website Edmunds’ forecast.

Among bright spots, homebuilder Lennar Corp rose 3.8 per cent after the company reported a better-than-expected profit as cheaper mortgage rates led to higher demand for its homes.

Johnson & Johnson gained 1.5 per cent after the drugmaker said it will pay $20 million to settle claims by two Ohio counties, allowing it to avoid an upcoming federal trial seeking to hold the industry responsible for the nation’s opioid epidemic.

is senior editor for Morningstar Australia

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