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Global Market Report - 30 July

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

The Australian share market is expected to open higher despite a mixed session on Wall Street overnight as US investors brace for rate cut.

The SPI200 futures contract was up 33 points, or 0.49 per cent, at 6,792.0 at 8am Sydney time, suggesting an early bounce for the benchmark S&P/ASX200 on Tuesday.

The Australian share market posted solid gains yesterday, with the benchmark S&P/ASX200 index ending the day less than three points from its best closing price ever.

The ASX200 finished up 32.4 points, or 0.48 per cent, to 6825.8 points on Monday, just under its record closing high of 6,288.6 of November 1, 2007 and 25.7 points from its intraday all-time high set the same day.

On Wall Street, the Dow Jones Industrial Average finished up 0.11 per cent, the S&P 500 was down 0.16 per cent and the tech-heavy Nasdaq Composite was down 0.44 per cent.

The Australian Bureau of Statistics will publish data on building approvals for June at 11.30am on Tuesday.

The Aussie dollar is buying 69.01 US cents from 69.08 US cents on Monday.

Asia

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China stocks slipped in thin trading on Monday as investors held low expectations that US and Chinese negotiators meeting in Shanghai will bring a swift end to a damaging tariff war and soft data has fuelled concerns over an economic slowdown.

The blue-chip CSI300 index fell 0.1 per cent, to 3,854.27 points, while the Shanghai Composite Index also shed 0.1 per cent to 2,941.01 points.

In Hong Kong, the Hang Seng index was down 1 per cent at 28,106.41 points, while the China Enterprises Index lost 0.7 per cent to 10,780.59 points.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.53 per cent, while Japan’s Nikkei index closed down 0.19 per cent.

Europe

European shares recovered from early losses on Monday, fuelled by a surge in the London Stock Exchange Group on its potential deal to buy financial data firm Refinitiv, while investors waited anxiously for an expected US interest rate cut.

Shares of LSE surged 14.6 per cent to an all-time high after the exchange operator said it was in talks to buy Refinitiv Holdings from US buyout fund Blackstone Group for $27 billion, including debt.

That helped London's FTSE rise 1 per cent and outperform major European peers, with other deal talks and weakness in the British pound also supporting the blue-chip index.

Britain’s Just Eat soared 25.3 per cent on news that it was in talks to be bought by rival online food delivery firm Takeaway.com in a potential 8.2-billion-pound ($10.1 billion) all-share deal.

The pan-European stocks benchmark index was up 0.2 per cent by 0818 GMT at the start of a week that is expected to be dominated by meetings at major central banks.

The US Federal Reserve is widely expected to lower rates this Wednesday for the first time in a decade, but investors will look for clues on its future rate plans. Last week, European Central Bank chief Mario Draghi disappointed investors with less-dovish-than-expected remarks.

Stocks have rallied since a steep fall in May on hopes that major central banks would ease monetary policy to stave off any further slowing in global growth as trade war risks persist.

Meanwhile, the Bank of England on Thursday is expected to swim against the tide of looser policy sweeping major central banks and keep alive the prospect of future rate hikes.

US and Chinese trade negotiators will meet in Shanghai this week for their first in-person talks since a G20 truce last month, but expectations are low for a breakthrough.

Trade sensitive auto stocks fell 0.8 per cent, the most among the major sectors.

Healthcare stocks were mixed with Sanofi rising 2.8 per cent after boosting its 2019 outlook, while Novartis dropped 1.3 per cent as a trial for a new use of its Entresto heart drug failed.

Heineken slumped 5.3 per cent after the world’s second largest brewer missed estimates for first-half profit.

North America

US stocks stepped back from last week's record highs as investors took a breather ahead of an expected interest rate cut by the Federal Reserve and looked for signs of progress from US-China trade negotiations underway in Shanghai.

Amazon.com and Facebook weighed heaviest on the S&P 500 and the Nasdaq, which both closed lower. The blue-chip Dow closed in the black, led by 3M, Johnson & Johnson and Apple.

Market participants girded themselves for an eventful week, with the FOMC meeting, US-China trade talks and nearly a third of the companies in the S&P 500 due to post second-quarter results.

The Fed, watchful of languid inflation and signs of economic softness arising from tariff disputes, is expected to lower interest rates for the first time in a decade at the conclusion of its two-day monetary policy meeting starting on Tuesday.

US negotiators are meeting their Chinese counterparts in Shanghai this week to try to find a path toward resolving the long-running, market-rattling trade dispute between the world's two largest economies.

The Dow Jones Industrial Average rose 28.9 points, or 0.11 per cent, to 27,221.35, the S&P 500 lost 4.89 points, or 0.16 per cent, to 3,020.97 and the Nasdaq Composite dropped 36.88 points, or 0.44 per cent, to 8,293.33.

Seven of the 11 major sectors in the S&P 500 closed in the red, with financials and consumer discretionary seeing largest percentage losses.

Nearly half of all S&P 500 companies have now posted second-quarter earnings, 76.1 per cent of which have beaten bottom line analyst estimates.

Mylan NV's shares jumped 12.6 per cent after the generic drugmaker confirmed reports that it was combining with Pfizer Upjohn unit that sells its off-patent branded medicines, a move that brings blockbuster treatments Viagra, EpiPen and Lipitor under one umbrella.

Pfizer shares slid 3.8 per cent following news of the deal, and after the company lowered its full-year profit and revenue forecasts in an earlier-than-expected release of its quarterly results.

Ride-hailing company Lyft closed 2.3 per cent lower following a CNBC report that chief operating officer Jon McNeill is leaving.

Lyft rival Uber Technologies also lost ground, dropping 1.4 per cent after news that the company was laying off about one-fifth of its sales and marketing team, globally.

Starbucks fell below Friday's record high, dropping 1.1 per cent after J.P. Morgan downgraded the coffee chain's stock to “neutral”, saying its valuation has become "beyond stretched."

is senior editor for Morningstar Australia

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