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Global Market Report - 6 December

Glenn Freeman  |  06 Dec 2019Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to edge up at the start of trade after a slightly positive lead from Wall Street.

The SPI200 futures contract was up 8.0 points, or 0.12 per cent, at 6,687.0 at 0800 AEDT, suggesting a small rise for the benchmark S&P/ASX200 on Friday.

S&P/ASX 200 index yesterday ended its two-day sell-off in closing higher. The S&{/ASX 200 Index climbed 76.5 points, or 1.16 per cent, to 6,683 to claw back some of the 256 points lost in the previous two sessions.

Australia's banks contributed to the gains, largely due to a positive outcome no capital requirements by the Reserve Bank of New Zealand. The big four banks hold a 90 per cent market share of New Zealand's lending.

ANZ led gains for the big financials, up 2.1 per cent to $24.70, followed by National Australia Bank, which gained2.05 per cent to close at $25.41. Westpac and Commonwealth Bank also rose, up 1.21 per cent and 1.04 per cent to $24.33 and $78.62.

On Wall Street overnight, the Dow Jones Industrial Average was up 0.16 per cent, the S&P 500 was up 0.13 per cent and the tech-heavy Nasdaq Composite was up 0.08 per cent.
Remarks from US President Trump on US-China trade negotiations stirred uncertainty.

Contradictory comments Trump made while in London for NATO talks said negotiations with China were going "very well", while he suggested a deal may not be struck until after the 2020 US Presidential elections.

The Aussie dollar is buying 68.33 US cents, down from 68.40 US cents on Thursday.
Ahead today: Construction activity data for November; Eurozone industrial production figures for October; US non-farm payrolls.

Asia

Chinese shares rose on Thursday, lifted by renewed hopes that China and the United States may be closer to a “phase one” trade deal to end the 17-month-long bitter tariff war – but conflicting messages from Trump continue to sow confusion.

At the close, the Shanghai Composite index was up 0.74 per cent at 2,899.47. It has gained 1.48 per cent since hitting more than three-month lows on Tuesday.

The blue-chip CSI300 index was up 0.77 per cent, with its financial sector sub-index higher by 0.74 per cent, the consumer staples sector up 0.24 per cent, the real estate index down 0.11 per cent and the healthcare sub-index up 0.96 per cent.

"My base case scenario is the two sides [China and US] reach some deal. The pressure for a deal is immense simply because of the economic slowdown in both countries," Shane Oliver, head of investment strategy and chief economist at AMP Capital Investors, said yesterday.

"However, we see increased volatility because policy uncertainty has become a constant."

The smaller Shenzhen index ended up 1.15 per cent and the start-up board ChiNext Composite index gained 2.154 per cent.

Signs of hope on US-China trade saw Hong Kong stocks rise on Thursday, despite the tempering effect of Trump's remarks.

The Hang Seng index closed up 0.6 per cent at 26,217.04 points, while the Hang Seng China Enterprises index gained 0.7 per cent.

The sub-index of the Hang Seng tracking energy shares gained 0.7 per cent, the IT sector climbed 0.8 per cent, the financial sector ended 0.3 per cent higher and the property sector was up 0.8 per cent.

In Japan, the Nikkei share average bounced back on Thursday, with steelmakers leading the gains.

The Nikkei 225 index rose 0.71 per cent to 23,300.09, back above the 25-day moving average of 23,275, a key technical level.

The broader Topix gained 0.48 per cent to 1,711.41, just shy of the 13-1/2-month high of 1,719.57 hit late last month.

South Korea's Seoul stock market’s main KOSPI ended down 8.15 points, or 0.39 per cent, at 2,060.74, marking its third straight session of declines.\

Across the region, MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.5 per cent.

Europe

European shares to follow with a slightly firmer open, with the pan-regional Euro Stoxx 50 futures and London's FTSE futures rising 0.1 per cent in early trade.

The pan-European STOXX 600 index closed down 0.13 per cent, while the STOXX 50E benchmark was up 0.2 per cent on Thursday.

The blue-chip FTSE 100 index was down 0.1 per cent, while the more domestically focused mid-cap index, the FTSE 250, was flat.

The best performer among blue chips was Burberry. Like much of the European luxury sector, Burberry was boosted by a report that French group Kering had expressed interest in a potential takeover of Italy's Moncler.

Burberry was up 3.5 per cent while European peers Moncler, LVMH, Kering and Hugo Boss also gained, with Moncler's 9.2 per cent jump leading the pack.

North America

US President Trump again reiterated on Thursday that talks with China were "going well" and he said something could happen regarding tariffs on 15 December, "but we're not discussing that."

Trump also said the United States may take action on trade with countries that are not contributing enough to the North Atlantic Treaty Organisation. US tariffs on about $156 billion of Chinese imports that are set to begin on 15 December, and Trump suggesting he would slap tariffs on French imports, have created uncertainty.

On Wall Street, the Dow Jones Industrial Average rose 26.74 points, or 0.1 per cent, to 27,676.52.

The S&P 500 gained 4.48 points, or 0.14 per cent, to 3,117.24 and the Nasdaq Composite added 2.88 points, or 0.03 per cent, to 8,569.55.

US economic reports countered data earlier this week that showed manufacturing activity contracted for a fourth straight month in November, a slowdown in growth in the services sector and a drop in construction spending in October.

Tech stocks led all three major US stock averages marginally into the black following upbeat statements from President Trump and Treasury Secretary Steven Mnuchin that the US-China trade negotiations are “on track” and “going well.”

Volatility returned to markets in recent days, amid conflicting reports on whether the world’s two largest economies would be able to arrive at an agreement before mid- December.
Materials stocks were the biggest winners, while energy suffered the largest percentage drop.

Economic data showed a shrinking trade deficit, a drop in jobless claims and a rebound in factory orders, suggesting a still-robust, if slowing, US economy.
Investors now look to Friday’s employment report from the US Labor Department, which is expected to show nonfarm payrolls increased by 180,000 in November.

is senior editor for Morningstar Australia

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