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Global Market Report - 4 February

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

Australian shares are expected to edge higher at the start of trade following a mixed session on Wall Street on Friday.

The SPI200 futures contract was up 20 points, or 0.34 per cent, at 5821.0 at 7am Sydney, pointing to a slow start for the benchmark ASX/200 on Monday. On Friday, the ASX closed flat after a subdued final day of trading with early gains in the mining sector keeping stock prices afloat. The benchmark S&P/ASX200 index was down 1.9 points, or 0.03 per cent, at 5862.8 points at 4.30pm on Friday while the broader All Ordinaries was down 2 points, or 0.03 per cent, at 5935.3.

The Aussie dollar was higher, buying 72.48 US cents up from 72.39 US cents on Friday.
Wall Street results were mixed on Friday, with the Dow Jones Industrial Average up 0.26 per cent, the S&P 500 up 0.09 per cent and the tech-heavy Nasdaq Composite falling 0.25 per cent.

Investors are looking to the release of the financial services royal commission report after the close of trade on Monday afternoon.

The Australian Reserve Bank will hold a board meeting this week but isn't expected to make any interest changes with investors also watching out for US President Donald Trump's State of the Union address.

ASIA

Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 1.30 per cent and the Nikkei 225 rose 0.07 per cent. The Hang Seng lost 0.04 per cent.

The US-China trade talks this week had a "good vibe" with much work remaining, White House economic adviser Larry Kudlow said on Friday as China followed through on a pledge to increase soybean purchases with orders of at least 1 million tonnes.

EUROPE

European shares ended higher on Friday, as upbeat US jobs data in January and fresh optimism about the US-China trade spat offset weak bank earnings, gloomy eurozone macro data and a rout in Germany's Wirecard after a report of fraud spooked investors.

The FTSE 100 is up 0.74 per cent while France's CAC 40 is up 0.53 per cent and Germany’s DAX is up 0.07 per cent.

The STOXX 600 index was up 0.3 per cent with most European bourses slightly in positive territory. The index extended its new year rally into a fifth straight week.

Trade-sensitive assets, European car makers, rose 1 per cent to a three-month high.

Corporate earnings across Europe provided some hope even as analysts said the fourth-quarter results so far this season have exposed a significant reduction in growth.

NORTH AMERICA

Wall Street ended mixed on Friday, as optimism from a surge in January US job growth was offset by a weaker-than-expected outlook from Amazon.com that battered retail stocks.

The online retail heavyweight slumped 5.38 per cent after its quarterly sales forecast fell short of Wall Street estimates, overshadowing its record sales and profit during the holiday season.

Those results put the Nasdaq in negative territory, while retailers Walmart, Macy's and Kohl's Corp each dropped more than 2 per cent. The S&P consumer discretionary index fell 1.77 per cent.

A US Labour Department report showed non-farm payrolls jumped by 304,000 jobs last month, the largest gain since February 2018 and beating economists' expectations for an increase of 165,000.

That report, along with better-than-expected ISM manufacturing activity numbers for January, pointed to underlying strength in the economy despite an uncertain outlook that has left the Federal Reserve wary about more US interest rate hikes this year.

Even as the US economy remains on a stable footing, investors are concerned that a slowdown overseas could hurt profit growth, with high-profile companies such as Apple warning of slower demand in China.

Data showed China's manufacturing sector shrank in January for the second straight month, heightening risks for global growth amid a trade war with US.

The Dow Jones Industrial Average climbed 0.26 per cent to end the week at 25,063.89 points, while the S&P 500 edged 0.09 per cent higher to 2,706.53.
The Nasdaq Composite dropped 0.25 per cent to 7,263.87.

The S&P 500 rose 1.6 per cent for the week and the benchmark index is up 8 per cent so far in 2019, but it still remains 8 per cent below its record high close on 20 September, 2018.

The Dow added 1.3 per cent for the week and the Nasdaq gained 1.4 per cent.

During Friday's session, Exxon Mobil and Chevron jumped more than 3 per cent apiece after the oil majors reported better-than-expected quarterly profits, boosting the Dow Jones Industrials.

is content editor for Morningstar Australia

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