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Global Market Report - 5 March

Lex Hall  |  05 Mar 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open lower after a negative lead from Wall Street overnight.

The SPI200 futures contract was down 43 points, or 0.64 per cent, at 6,170 at 8am Sydney time, suggesting a drop for the benchmark S&P/ASX200 on Tuesday.

Yesterday, Australian shares closed higher, although a broad rally at the open had lost its momentum a bit by the afternoon.

The benchmark S&P/ASX200 index finished up 24.7 points, or 0.4 per cent, to 6,217.4 points at 4.15pm on Monday, while the broader All Ordinaries was up 24.7 points, or 0.46 per cent, at 6,320.4.

On Wall Street, the Dow Jones Industrial Average was down 0.79 per cent, the S&P 500 was down 0.39 per cent and the Nasdaq Composite was down 0.23 per cent.

The Australian Bureau of Statistics will release the country's fourth-quarter balance of payments data at 11.30am on Tuesday and the Reserve Bank of Australia announces its decision on interest rates at 2.30pm.

The Aussie dollar is buying 70.91 US cents, unchanged from Monday.

ASIA

Asian markets finished broadly higher today with shares in China leading the region.

Chinese shares reached their highest level since June amid positive talk on a US-China trade deal and a day before China’s annual political summit.

The Shanghai Composite is up 1.12 per cent, or 33.57 points, to 3,027.58, breaking the 3000 barrier it last breached in June as the trade war started to bite.

Hong Kong's Hang Seng is up 0.51 per cent - its highest level in eight months.
Japan's Nikkei 225 is up 1.02 per cent.

EUROPE

European shares hit five-month highs on Monday with cyclical stocks outperforming defensives, helped by hopes over a deal to end the US-Sino trade war.

The CAC 40 gained 0.41 per cent and the FTSE 100 rose 0.39 per cent. The DAX lost 0.08 per cent.

The pan-regional STOXX 600 index rose as much as 0.6 per cent during the session to its highest level since 5 October before paring some gains and ending up 0.2 per cent on the day.

US President Donald Trump and Chinese President Xi Jinping could reach a formal trade deal at a summit around March 27 given progress in talks between the two countries, the Wall Street Journal reported on Sunday.

The STOXX 600 is up more than 11 per cent so far this year and a Reuters poll last week has shown investors expect the index to end the year near its current levels.

Further weighing toward the end of the session was weaker-than-expected construction data from the US that pushed Wall Street into negative territory.

Among top movers in Europe on Monday were shares in IAG , which hit a two-month low after the owner of British Airways and Iberia issued a clarification to say its 2019 free cash flow would be lower than last year.

Its shares fell 4.8 per cent, leading fallers on the STOXX.

Shares in Nordea, the Nordic region’s largest bank, fell 3.5 per cent on allegations of moneylaundering aired on Monday by Finnish broadcaster Yle.

NORTH AMERICA

US stock indexes closed lower while the dollar edged higher on Monday, as investors appeared to need some convincing the US and China would reach a trade agreement and weaker-than-expected construction data did not help their mood.

Oil futures settled higher after OPEC ally Russia said it would ramp up supply cuts and oil traders also cited US-China deal hopes though equity declines dampened gains.

US President Donald Trump and Chinese President Xi Jinping might seal a trade deal around 27 March, given progress in trade talks, the Wall Street Journal reported on Sunday.

Washington and Beijing have imposed tit-for-tat tariffs on billions of dollars’ worth of goods, roiling financial markets, disrupting manufacturing supply chains and shrinking US farm exports.

The countries appear close to a deal that would roll back US tariffs on at least $200 billion worth of Chinese goods.

But while the reports had pushed up shares in Europe and Asia, Wall Street’s major indexes could not maintain a rally. While some investors were waiting for more concrete details of a trade deal, others said it made sense to take some profits after a strong start to the year.

US Commerce Department data helped to sour the mood as it showed construction spending fell unexpectedly in December as investment in private and public projects dropped.

The Dow Jones Industrial Average fell 205.79 points, or 0.79 percent, to 25,820.53, the S&P 500 lost 10.78 points, or 0.38 percent, to 2,792.91 and the Nasdaq Composite dropped 17.79 points, or 0.23 percent, to 7,577.57.

The pan-European STOXX 600 index rose 0.23 per cent and MSCI’s gauge of stocks across the globe shed 0.19 per cent.

The dollar rose against a basket of major currencies on traders’ bets China and the US would end their trade battle. The greenback gained for a fourth straight day, helped by the rise in US bond yields with benchmark 10-year yields hitting one-month peaks last week.

is content editor for Morningstar Australia

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