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Global Market Report - 6 February

Lex Hall  |  06 Feb 2019Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to edge higher at the open after a positive lead from Wall Street overnight.

The SPI200 futures contract was up 21 points, or 0.35 per cent, at 5,960.0 at 7am Sydney time, suggesting a positive start for the benchmark S&P/ASX200 on Wednesday. Yesterday, the ASX had its biggest day in 26 months as investors breathed a sigh of relief the financial services royal commission hadn't recommended harsher penalties for the big banks.

The benchmark S&P/ASX200 index closed up 114.7 points, or 1.95 per cent, to 6,005.9 at 4.15pm on Tuesday, while the broader All Ordinaries was up 105.1 points, or 1.76 per cent, at 6,068.1.

The Aussie dollar was buying 72.29 US cents from 72.61 US cents on Tuesday.
On Wall Street the Dow Jones Industrial Average was up 0.68 per cent, the S&P 500 was up 0.47 per cent and the Nasdaq Composite was up 0.74 per cent.

In half-year earnings news, Commonwealth Bank says the slowdown in the housing market is a "rational outcome" as it posted a lower-than-expected interim cash profit of $4.77 billion.

Investors will also be keeping an eye on a speech by RBA Governor Philip Lowe to the National Press Club in Sydney after midday for clues to the central bank's future decisions.

And following that at 1pm, Donald Trump will deliver an eagerly anticipated State of the Union address, with investors awaiting indications of progress in US-China trade talks and watching for signs of tensions with Democrats following a 35-day partial federal government shutdown.

ASIA

Asian markets closed on Tuesday: China, Hong Kong, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan, Pakistan.

Otherwise, Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 1.30 per cent and the Hang Seng rose 0.21 per cent.

In Japan, the Nikkei 225 lost 0.19 per cent. Index heavyweight Fast Retailing fell 2.8 per cent after the Uniqlo clothing chain operator said domestic same-store sales fell 1 per cent in January from the previous year.

EUROPE

European shares hit nine-week highs on Tuesday, as a recovery in banks, gains in oil stocks on stronger crude prices and a solid update from BP helped offset some disappointing updates including from Apple supplier AMS.

The FTSE 100 is up 2.04 per cent while Germany's DAX is up 1.71 per cent and France's CAC 40 is up 1.66 per cent.

The pan-European STOXX 600 index rose 1.3 per cent to its highest since 3 December, while eurozone stocks added 1.5 per cent.

The commodity-heavy FTSE 100 rose 2 per cent as a falling pound gave an accounting boost to blue chips with strong revenues outside Britain.

BP shares rose 5.1 per cent, their best day since September 2016. The oil index helped lift the market with a 1.7 per cent rise.

NORTH AMERICA

US stocks have closed higher as largely upbeat corporate results fuelled investor optimism ahead of the highly awaited State of the Union address by President Donald Trump.

The Dow Jones Industrial Average rose 172.15 points, or 0.68 per cent, to 25,411.52, the S&P 500 gained 12.83 points, or 0.47 per cent, to 2,737.70 and the Nasdaq Composite added 54.55 points, or 0.74 per cent, to 7,402.08.

Technology and consumer discretionary shares, which have driven Wall Street's advance in the current bull market, led the day's gains.

Shares of Estee Lauder were up after the cosmetics maker's quarterly results, driven by strong growth in China, topped estimates. Estee Lauder shares had the largest percentage gain among the S&P 500 and boosted the index.

Luxury fashion company Ralph Lauren Corp also reported better-than-expected sales and earnings, sending the company's shares higher.

Alphabet, which on Monday reported results that beat estimates, was a notable exception. The Google parent company's shares, after falling earlier in the session because of concerns about sharply higher spending, were little changed in afternoon trading.

Following a turbulent end to 2018, US stocks have had a stellar run this year with the S&P 500 and the Dow each up about 9 per cent and the Nasdaq rising 11 per cent.

In addition to corporate earnings, Wall Street's rally this year has been helped by a recent dovish stance from the Federal Reserve and hopes of a trade deal between the United States and China.

In his State of the Union speech, scheduled for 9pm in Washington (1pm Sydney time today), Trump is expected to challenge Democrats to approve funding for his long-sought border wall.

The address could offer clues about the likelihood of compromise between Trump and his Democratic opponents, who now control the US House of Representatives.

Among other stocks, Boeing Co shares rose 3.2 per cent after the aerospace company said it made a significant investment in supersonic business jet developer Aerion.

Shares of Archer Daniels Midland Co fell 6.7 per cent after the grains trader's fourth-quarter profit missed expectations because of the US-China trade dispute.

is content editor for Morningstar Australia

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