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Global Market Report - 6 March

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

The SPI200 futures contract was up 18 points, or 0.29 per cent, at 6,198.0 at 8am Sydney time, suggesting a positive start for the benchmark S&P/ASX200 on Wednesday. Shares yesterday closed lower for the first time in a week.

The benchmark S&P/ASX200 index closed down 18.1 points, or 0.29 per cent, to 6,199.3 points at 4.15pm on Tuesday, while the broader All Ordinaries was down 21.1 points, or 0.33 per cent, at 6,281.4.

On Wall Street, the Dow Jones Industrial Average was up 0.05 per cent, the S&P 500 was down 0.11 per cent and the Nasdaq Composite was up 0.02 per cent.

The Aussie dollar is buying 70.86 US cents from 70.78 US cents on Tuesday.

The RBA yesterday left the cash rate at 1.5 per cent - for 31st month in a row and governor Philip Lowe will today comment on the decision at an address in Sydney.

The Australian economy is widely predicted to have grown by less than the Reserve Bank expected last year. The consensus forecast from economists for Wednesday's data is for GDP to have grown by about 0.4 per cent in the fourth quarter, and 2.6 per cent over the full year.

Westpac and UBS both predict 0.2 and 2.4 per cent respectively.

ASIA

Asian markets finished mixed as investors grappled with the Chinese government’s growth forecast. China set its lowest GDP growth rate in 30 years, of 6 per cent to 6.5 per cent for 2019, down from last year’s target of “about 6.5 per cent”, while also announcing fresh tax cuts to boost the economy.

The Shanghai Composite gained 0.88 per cent, while shares in Hong Kong were unchanged with the Hang Seng at 28,961.60.

Japan's Nikkei 225 was off 0.44 per cent.

EUROPE

European stocks edged higher at the close of a choppy and directionless session where indexes hovered around the flotation mark in the lack of news about US-China trade talk.

The pan-European STOXX 600 closed up 0.2 per cent after trading in the red for part of the day, extending a three-day rally into four straight days of gains.

Equities also briefly perked up after euro-zone data showed business activity accelerated more than expected last month, helping offset downbeat news from China.

Chinese Premier Li Keqiang cut the government’s 2019 growth target to 6.0-6.5 per cent, as expected, and promised more stimulus, including cuts in taxes, increases in infrastructure investment, and lending to small firms.

Still, autos and suppliers were the worst performers, losing 0.5 per cent.

It was also a bad day for European banks which lost 0.4 per cent with shares in Austria’s Raiffeisen Bank International falling more than 12 per cent.

NORTH AMERICA

Wall Street's main indices have dipped in a choppy session as a drop in General Electric shares countered positive retailer earnings and investors eyed a key resistance level for the benchmark S&P 500 after the market's strong run.

Concerns over US-China trade relations also hovered, as US Secretary of State Mike Pompeo said President Donald Trump would reject a trade deal that was not perfect, but the US would still keep working on an agreement.

Optimism over the trade talks and over the US Federal Reserve being less aggressive in raising interest rates has helped boost the S&P 500 by 11 per cent this year.

The Dow Jones Industrial Average fell 13.02 points, or 0.05 per cent, to 25,806.63, the S&P 500 lost 3.16 points, or 0.11 per cent, to 2,789.65 and the Nasdaq Composite dropped 1.21 points, or 0.02 per cent, to 7,576.36.

Investors are watching to see if the S&P 500 can breach 2,800, a level which the index has traded near for several sessions.

Communication services led gains among the 11 S&P 500 sectors, while industrials fell the most.

The consumer discretionary sector rose 0.2 per cent, led by a 7.3 per cent gain in Kohl's and 4.6 per cent gain for Target following those retailers' respective earnings reports.

Both forecast 2019 profit above Wall Street estimates.

In other corporate news, General Electric shares dropped 4.7 per cent as the conglomerate surprised investors by forecasting a net cash outflow from its industrial businesses this year.
GE shares were among the biggest drags on the S&P 500.

Willis Towers Watson shares rose 5.2 per cent as Aon said it was in early talks to buy the rival insurance brokerage. Aon shares fell 7.8 per cent and weighed on the S&P 500.

is content editor for Morningstar Australia

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