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Global Market Report - 4 December

Lex Hall  |  04 Dec 2019Text size  Decrease  Increase  |  
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Australia

The ASX is set to fall further following a negative lead overseas, prompted by Donald Trump’s comments that he has no deadline for a trade deal and it might have to wait another year.

The SPI200 futures contract was down 52 points, or 0.78 per cent, at 6,637 at 8am Sydney time, suggesting a fall for the benchmark S&P/ASX200 on Wednesday.

The Australian share market suffered its worst day since mid-August yesterday on renewed fears over global trade uncertainty.

The S&P/ASX200 index on Tuesday dropped 150 points, or 2.19 per cent, to 6,712.3 points, while the broader All Ordinaries fell 146.9 points, or 2.11 per cent, to 6,818.4 points.

On Wall Street, the Dow Jones Industrial Average was down 1.01 per cent, the S&P 500 was down 0.66 per cent and the tech-heavy Nasdaq Composite was down 0.55 per cent.

Trump said a trade agreement with China might have to wait until after the US presidential election in November 2020, denting hopes of a quick resolution to the dispute which has weighed on the world economy.

“I have no deadline, no. In some ways I think I think it’s better to wait until after the election with China,” Trump told reporters in London where he was due to attend a meeting of NATO leaders.

“But they want to make a deal now, and we’ll see whether or not the deal’s going to be right, it’s got to be right.”

The Aussie dollar rose 0.35 per cent and is buying 68.40 US cents.

Asia

China stocks reversed course to end higher on Tuesday, led by gains in consumer and financial shares, as investors chased firms with low valuations following recent upbeat factory data.

The blue-chip CSI300 index rose 0.4 per cent to 3,851.09, while the Shanghai Composite Index closed up 0.3 per cent at 2,884.70.

Hong Kong stocks closed slightly lower on Tuesday, as Trump’s surprise tariffs on imports from Brazil and Argentina rekindled fears of global trade tensions.

The Hang Seng index ended down 0.2 per cent at 26,391.30, while the China Enterprises Index lost 0.1 per cent to 10,355.92 points.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.43 per cent, while Japan’s Nikkei index closed down 0.64 per cent.

Europe

European shares bounced back on Tuesday from their sharpest decline in two months in the previous session, boosted by technology stocks, but gains were capped as investors grappled with prospects of fresh global trade disputes.

Trade-sensitive German shares climbed 0.8 per cent, with help from tech heavyweight SAP and chipmakers, while Italy's blue-chip index gained 1 per cent after a slew of positive corporate updates.

Paris-listed stocks rose only marginally after the US government said on Monday it may impose punitive duties of up to 100 per cent on $2.4 billion in imports from France, including champagne, handbags and cheese, after concluding that France's new digital services tax would harm US tech companies.

Shares in luxury stocks LVMH, Kering and Hermes fell about 1.5 per cent, with France and the European Union saying they were ready to fight back.

That followed the World Trade Organisation rejecting European Union claims that it no longer provides subsidies to planemaker Airbus, prompting the US to say it could increase retaliatory tariffs on a wider range of European goods.

The broader European stocks index, however, rose 0.4 per cent, recovering from their worst selloff since 2 October on Monday, following US President Donald Trump’s move to restore tariffs on metal imports from Brazil and Argentina.

A set of weak US manufacturing numbers also added to the gloom on Monday, wiping out gains for December in what could have been the STOXX 600 index’s fourth monthly gain in a row.

London's FTSE slipped 0.5 per cent, falling for the fourth straight session as miners, and oil and gas companies took a toll from Trump's latest tariff threats.

Among the bright spots, Italy’s biggest bank UniCredit rose 1.2 per cent after saying it would buy back its stock this year and shed 9 per cent of staff under a new plan to 2023 to cut costs by 1 billion euros ($1.1 billion) in Western Europe.

Shares in Italy’s utility company Enel gained 1 per cent after sources reported it had become another bidder, along with France’s Engie and Italy’s ERG to buy Renvico wind farm portfolio in Italy and France.

North America

US stocks sold off for a third consecutive session on Tuesday after comments from Donald Trump and Commerce Secretary Wilbur Ross threw cold water on hopes of a possible near-term respite from the market-bruising US-China trade war.

The blue-chip Dow had its worst day since 8 October, and all three major stock indexes backed further away from last week’s record highs that were fuelled by optimism that an interim deal between the US and China was in the works.

That optimism was dampened as Trump suggested a deal might have to wait until after the 2020 election, and separately, Ross confirmed that new tariffs on Chinese imports would take effect on 15 December as scheduled, unless substantial progress was made.

Those remarks, on the heels of France’s threatened retaliation over potential new US duties on French products, itself a retaliation against a proposed French “digital tax,” suggested that America’s hydra-headed tariff war against its major trading partners would continue to dominate markets for the foreseeable future.

Tariff-sensitive chipmakers fell, with the Philadelphia SE Semiconductor index dropping 1.5 per cent, its worst day since 23 October.

The Dow Jones Industrial Average fell 280.23 points, or 1.01 per cent, to 27,502.81, the S&P 500 lost 20.67 points, or 0.66 per cent, to 3,093.2 and the Nasdaq Composite dropped 47.34 points, or 0.55 per cent, to 8,520.64.

Nine of the 11 major sectors in the S&P 500 were in negative territory, with Apple Inc and Intel Corp weighing the most.

Energy, financial and trade-vulnerable industrial stocks suffered the largest percentage losses.

Shares of AK Steel Holding Corp rose 4.2 per cent after miner Cleveland Cliffs agreed to buy the company in an all-stock deal worth about $1.1 billion.

Audentes Therapeutics Inc’s shares soared 106.0 per cent after Japan’s Astellas Pharma Inc said it would buy the US drugmaker for about $3 billion in cash.

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