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Global Market Report - 31 January

Lex Hall  |  31 Jan 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open higher as the big miners ride surging iron ore prices that have increased more than 10 per cent since Monday.

The Aussie dollar has soared overnight, buying 72.68 US cents up from 71.95 US cents on Wednesday.

The SPI200 futures contract was up 25 points, or 0.43 per cent, at 5,827.0 at 7am Sydney time, hinting the benchmark ASX/200 will climb in early trade. Yesterday, the ASX closed higher after a fluctuating trading session with the resources sector putting in a strong performance.

The benchmark S&P/ASX200 index was up 12.5 points, or 0.21 per cent, to 5886.7 at 4.30pm on Wednesday, while the broader All Ordinaries was up 11.6 points, or 0.2 per cent, lower at 5951.1.

The local resources sector has climbed nearly four per cent this week as metals prices rally.

On Wall Street, equities surged after the Federal Reserve said it would be patient in lifting borrowing costs further this year, reassuring investors worried about a slowing economy.

The Dow Jones Industrial Average was up 1.77 per cent at 25,014.86 points, while the S&P 500 had gained 1.50 per cent to 2,679.50 and the Nasdaq Composite added 2.2 per cent to 7183.08.

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The Australian Bureau Statistics is set to release trade data at 11.30am.

ASIA

Asian markets finished mixed. The Hang Seng gained 0.40 per cent, while the Shanghai Composite led the Nikkei 225 lower. They fell 0.72 per cent and 0.52 per cent respectively.

The blue-chip CSI300 index ended 0.8 per cent lower, amid worries about China's slowing economic growth

Shares of Alibaba were up about 4 per cent in early trading on Wednesday in the US, following the company’s latest earnings report, which boasted a 41 per cent rise in revenue.

EUROPE

European markets finished mixed as of the most recent closing prices. The FTSE 100 gained 1.58 per cent and the CAC 40 rose 0.95 per cent. The DAX lost 0.33 per cent.

Europe's STOXX 600 traded sideways before closing up 0.25 percent and was on track for its best monthly performance since October 2015.

Britain’s FTSE 100 jumped 1.6 per cent thanks to a weaker pound boosting London-listed multinational exporters.

German payments company Wirecard was the worst performer on the pan-European index, falling 13.3 percent as it denied a report in the Financial Times that alleged financial wrongdoing.

France's LVMH shares jumped 6.7 percent after upbeat results from the luxury conglomerate, which said it was "cautiously" confident as fourth-quarter sales held up despite fears of a China slowdown.

NORTH AMERICA

US stocks have surged after the Federal Reserve said it would be patient in lifting borrowing costs further this year, reassuring investors worried about a slowing economy.

Along with better-than-feared quarterly results from Apple, the Fed's comments helped Wall Street reverse two down days triggered by profit warnings from US bellwethers that signalled a bigger impact from a slowdown in China.

The US central bank held interest rates steady, as widely expected.

While the Fed said continued US economic and job growth were still "the most likely outcomes," it removed language from its December policy statement that risks to the outlook were "roughly balanced" and struck language that projected "some further" rate hikes would be appropriate in 2019.

It also said it could alter the pace of its balance sheet reduction "in light of economic and financial developments". The Fed's balance sheet surged following the 2008 financial crisis, and many investors believe its effort to shrink it may stifle economic growth.

Investors in recent months have become more concerned about the global economy. US corporate results have shown companies including Apple, Intel Corp and Caterpillar Inc are feeling pain from the slowing expansion of China's economy, which has been hurt by a trade conflict with the US.

Apple shares jumped 6.83 per cent after the company reported a sharp growth in services business, easing concerns after the iPhone maker earlier this month cut current-quarter sales forecast.

Boeing Co gained 6.25 per cent after the world's largest plane-maker forecast full-year profit and cash flow above analysts' estimates amid a boom in air travel and speedier 737 production.

Following the Fed's rate announcement, all three main US stock indexes extended gains from earlier in the session and the S&P 500 closed at its highest since December 6.

The Dow Jones Industrial Average was up 1.77 per cent at 25,014.86 points, while the S&P 500 had gained 1.50 per cent to 2,679.50 and the Nasdaq Composite added 2.2 per cent to 7183.08.

Investors were also tracking the latest round of talks between Washington and Beijing that began on Wednesday, the highest-level meeting since US President Donald Trump and Chinese President Xi Jinping agreed to a 90-day truce to their trade war in December.

The Philadelphia Semiconductor index surged 2.87 per cent, while the S&P technology index jumped 3.03 per cent.

Microsoft Corp and Facebook, set to report after the closing bell, rose 3 per cent or more.
Of the 168 S&P 500 companies that have reported results so far, 73.2 per cent have topped profit estimates, according to Refinitiv data.

is senior editor for Morningstar Australia

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