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Global Market Report - 30 January

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

Australian shares are tipped for an early bounce despite Wall Street enduring a mixed session, with local economists also awaiting the release of fourth-quarter Consumer Price Index data.

The SPI200 futures contract was up 23 points, or 0.4 per cent, at 5840.0 at 8am Sydney time, hinting the benchmark ASX/200 will claw back some of Tuesday's losses at the open.
Yesterday, the ASX continued to slip under pressure from the heavyweight financial sector, while subdued business confidence has hit the local dollar.

A strong mining sector offset some of the market's losses but the benchmark S&P/ASX200 index had by midday on Tuesday extended its daily slide to 43.5 points, or 0.74 per cent, at 5862.1 points.

The Aussie dollar is lower, however, buying 71.51 US cents from 71.65 US cents on Tuesday.

Gold hit an eight-month high overnight while global equities were mixed ahead of further US-China trade talks, a raft of tech company results starting with Apple, and an impending US Federal Reserve decision on interest rates.

The US has imposed sanctions on state-owned Venezuelan oil company PDVSA, which has pushed oil prices higher.

Copper and iron ore are also trading higher.

On Wall Street, the Dow Jones was up 0.21 per cent at 24,579.96 points, while the S&P 500 had lost 0.15 per cent to 2,640.00, and the Nasdaq Composite dropped 0.81 per cent to 7,028.29.

The Australian Bureau of Statistics is expected to release CPI data at 11.30am. 

ASIA

Asian markets finished mixed as of the most recent closing prices. The Nikkei 225 gained 0.08 per cent, while the Hang Seng led the Shanghai Composite lower. They fell 0.16 per cent and 0.10 per cent respectively.

Hong Kong shares fell on Tuesday amid growing investor concern that US criminal charges against Chinese telecom giant Huawei would damage prospects for a Sino-US trade deal.

EUROPE

European shares closed higher ahead of a blizzard of political, economic and corporate events, with a Brexit vote and Apple results on Tuesday and a Federal Reserve decision and China-US trade talks on Wednesday.

The pan-European STOXX 600 index ended the day up 0.8 percent, while London's FTSE 100 rallied by more than 1.3 percent ahead of the vote in parliament on Brexit.

Gains were spread among most sectors and bourses but investors shunned stocks or indexes exposed to US-China trade, such as Frankfurt's DAX, which limited its gains to 0.1 per cent or automotives, which fell 0.5 per cent.

News that the US levelled criminal charges against China's Huawei before the new round of talks between Washington and Beijing added to the subdued mood.

The European technology sector, down 0.5 per cent, was also among the few losers with SAP, Europe’s most valuable technology company, down 2.7 per cent after its results.

NORTH AMERICA

Wall Street has been mixed, with technology shares dipping before Apple's quarterly report while a rebound in 3M and other industrials elevated the Dow Jones Industrial Average.

Apple declined 1.04 per cent on Tuesday as investors awaited the iPhone maker's results after the bell following its warning earlier this month about soft demand in China, whose economy has been damaged by a trade war with the US.

Interest rates were in focus as the Federal Reserve began a two-day monetary policy meeting. After raising rates gradually last year, the central bank is taking a wait-and-see approach to further tightening in the face of an overseas slowdown and market volatility.

The Fed is widely expected to leave rates unchanged on Wednesday and investors will look to Friday's January jobs report for clues about the pace of future inflation.

The S&P industrials index, which took a beating after a warning from Caterpillar on Monday, rebounded 1.74 per cent, helped by better-than-expected reports from 3M Co and defence companies.

Amazon.com, Facebook and Microsoft Corp, all part of a wave of quarterly reports later this week, fell more than two per cent each.

The S&P technology index lost 1.01 per cent.

Analysts on average expect S&P 500 companies' aggregate earnings per share to have risen 14.2 per cent in the fourth quarter. But with US corporate tax cuts now a year old, 2019 earnings are seen rising a more moderate 5.6 per cent.

As Washington and Beijing officials prepare for a high-level trade meeting this week, the Justice Department levelled charges against Chinese telecom giant Huawei, potentially casting a cloud on the talks.

The Dow Jones Industrial Average climbed 0.21 per cent to end at 24,579.96 points, while the S&P 500 lost 0.15 per cent to 2,640, dragged down by technology and communications stocks. The Nasdaq Composite dropped 0.81 per cent to 7,028.29.

Defence contractors L3 Technologies jumped 8.44 per cent and Harris Corp climbed 8.78 per cent after topping quarterly earnings estimates.

3M rose 1.94 per cent after its fourth-quarter results topped estimates, even as the Post-It notes maker trimmed its 2019 earnings outlook, saying that a slowdown at its Chinese business was hurting revenue.

Harley-Davidson dropped 5.05 per cent after the motorcycle maker reported a lower-than-expected quarterly profit, hit by declining sales in the US.

Allergan fell 8.55 per cent after the Botox maker forecast 2019 revenue below expectations.

is content editor for Morningstar Australia

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