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Global Market Report - 30 April

Lex Hall  |  30 Apr 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open flat despite Wall Street posting an intraday record overnight, bolstering the view that the bull market has further to run.

The SPI200 futures contract was down 1 point, or 0.02 per cent, at 6,341.0 at 8am Sydney time, suggesting a little-changed start for the benchmark S&P/ASX200 on Tuesday.

The Australian share market yesterday had its worst day in three weeks with the financial and energy sectors weighing heavily as analysts await economic clues from the US and China.

The benchmark S&P/ASX200 index finished 26.1 points, or 0.41 per cent, lower to 6359.5 points on Monday, while the broader All Ordinaries slipped 23.6 points, or 0.36 per cent, to 6,449.6 amid thin volumes.

On Wall Street, the Dow Jones Industrial Average was up 0.04 per cent, the S&P 500 was up 0.11 per cent and the tech-heavy Nasdaq Composite was up 0.19 per cent.

The Aussie dollar is buying 70.56 US cents from 70.55 US cents on Monday.

Asia

China’s blue-chip stocks on Monday retreated from steep losses in the previous week, as foreign investors looked for bargains after upbeat industrial profit data showed signs of recovery in the world’s second-largest economy.

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The blue-chip CSI300 index rose 0.3 per cent, to 3,900.33 points, while the Shanghai Composite Index closed down 0.7 per cent to 3,062.50 points.

Hong Kong stocks ended higher on Monday, tracking gains in other Asian markets, after strong US first-quarter economic growth and data showing profits at Chinese industrial firms grew for the first time in four months.

The Hang Seng index rose 1.0 per cent, to 29,892.81 while the China Enterprises Index gained 1.1 per cent, to 11,638.18.

Around the region, MSCI’s Asia ex-Japan stock index rose 0.54 per cent.

Europe

European shares closed marginally higher on Monday led by gains for Banco Santander, as investors chose to focus on the positives of a weekend win for Prime Minister Pedro Sanchez’s ruling socialists in Spain’s third election in four years.

The pan-European STOXX 600 index closed 0.08 per cent stronger, with most regional indices ending in positive territory.

Spain’s IBEX, down nearly 1 per cent earlier in the session, finished up 0.12 per cent as losses for utilities were outweighed by the rally in the shares of the country’s major lenders.

Sanchez’s pro-European PSOE won Sunday’s election, but was short of a parliamentary majority, meaning it will need the help of regional parties, or the centre-right, to form a coalition government.

Jitters around the result of the poll, added to weak eurozone economic sentiment data, had pushed markets lower in morning trade in Europe.

But the gains for Santander, leading banks across Europe higher, along with a dip in Spanish bond market yields, pointed to a more positive take on the events from investors.

Europe’s banking sector index rose almost 1 percent, with HSBC, Intesa Sanpaolo and BNP Paribas all among the top ten boosts to the broader STOXX 600 index.

French drugmaker Sanofi also rose 1.7 per cent after positive US and European regulator decisions on cholesterol and diabetes drugs co-developed by the company.

Airbus gained 0.95 per cent as Middle East carrier Flydubai’s chairman said the airline could order Airbus A320neos as replacements for Boeing 737 MAX jets.

A fall in German drugmaker Bayer, as well as oil majors tracking a decline in crude prices, kept gains in check.

Bayer shares, which were trading ex-dividend, fell as a majority of shareholders rejected the management’s actions on Friday, fuelling market talk the company could become a takeover target.

About 30 billion euros have been wiped off Bayer’s market value since August, when a US jury found it liable because Monsanto, which the company finished taking over last year, had not warned of alleged cancer risks linked to its weedkiller Roundup.

Market participants will watch out for a meeting of the US Federal Reserve and Chinese factory data this week for further clues on policy direction in the world’s largest economies.

North America

The S&P 500 set an intraday record high on Monday, bolstering the view that the decade-long bull market has further to run, after consumer spending rose in March and inflation data was benign.

The benchmark index topped its intraday record of 2,940.91 hit on 21 September, rising to a session high of 2,949.52. The S&P 500 is now up more than 17 per cent for the year to date. The index along with the Nasdaq posted another record close as well on Monday.

Hopes of a resolution of the US-China trade war, upbeat earnings and a dovish Federal Reserve have powered the rally in stocks this year, and even though the Monday’s gains were small, strategists said recent new highs encourage further buying.

A Commerce Department report showed US consumer spending increased by the most in more than 9-½ years in March, but a key inflation measure posted its smallest annual gain in 14 months.

Tame inflation supports the Fed’s recent decision to suspend further interest rate rises this year.

As trade talks enter their last leg, US negotiators head to China on Tuesday to try to hammer out details to end the protracted tariff spat between the two countries.

US Treasury Secretary Steven Mnuchin, in a television interview that aired on Monday, said he hopes that the latest talks between the US and China may seal a trade deal.

The Dow Jones Industrial Average rose 11.06 points, or 0.04 per cent, to 26,554.39, the S&P 500 gained 3.15 points, or 0.11 per cent, to 2943.03 and the Nasdaq Composite added 15.46 points, or 0.19 per cent, to 8161.85.

The Fed starts a two-day meeting on Tuesday, at the end of which a decision on interest rates will be announced.

Another busy week of earnings is expected. After the bell, shares of Google parent Alphabet were down 7.2 per cent after it reported revenue below Wall Street targets. Alphabet shares ended the regular session up 1.5 per cent at $1,296.20.

Apple is due to report on Tuesday.

Analysts now expect earnings of S&P 500 companies to have fallen just 0.2 per cent in the first quarter, a sharp improvement from a 2 per cent fall estimated at the beginning of the month, according to IBES data from Refinitiv data.

Ingersoll-Rand shares jumped 6.5 per cent after the Wall Street Journal reported Gardner Denver Holdings is nearing a deal to acquire a unit of the air conditioner maker.

 

is senior editor for Morningstar Australia

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