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Global Market Report - 7 March

Lex Hall  |  07 Mar 2019Text size  Decrease  Increase  |  
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Australian shares are set to open flat after a negative lead from Wall Street overnight in which healthcare and energy shares dragged the S&P to its biggest one-day fall in a month.

The SPI200 futures contract was up just 2 points, or 0.03 per cent, at 6,249.0 at 8am Sydney time, suggesting a slow start for the benchmark S&P/ASX200 on Thursday.

Shares shot up yesterday as investors bet that weaker than expected economic figures would prompt the RBA to cut interest rates this year.

The benchmark S&P/ASX200 index closed up 46.3 points, or 0.75 per cent, to 6,245.6 points at 4.15pm on Wednesday, while the broader All Ordinaries was up 45.4 points, or 0.72 per cent, at 6,326.8.

On Wall Street, the Dow Jones Industrial Average was down 0.52 per cent, the S&P 500 was down 0.65 per cent and the Nasdaq Composite was down 0.93 per cent.

Shares in mining companies BHP, Rio Tinto and South32 are trading ex-dividend on Thursday.

The ABS is expected to release retail sales data for January at 11.30am.

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NAB has announced interim chief executive Philip Chronican as its next chairman following the resignation of Ken Henry in the fallout from the banking royal commission.

The Aussie dollar is buying 70.29 US cents from 70.33 US cents on Wednesday.


Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 1.57 per cent and the Hang Seng rose 0.26 per cent.

The Nikkei 225 lost 0.60 per cent.

Chinese stocks have staged a robust rebound this year, unexpectedly recouping much of 2018’s sharp losses, buoyed by hopes Beijing will roll out more support measures for the slowing economy and signs of progress in US-China trade talks.

Adding fuel to the rally is a pick up in the momentum in the A-share market’s internationalisation process, which drew foreign money into China even as authorities vowed to further open up its financial markets and deepen reforms.

The benchmark Shanghai composite index SSEC gained 17.9 per cent in the first two months of 2019, versus an 8.2 per cent rise in MSCI’s broadest index of Asia-Pacific shares in the same period.

Growth in the world’s second largest economy cooled to a 28-year low in 2018, and authorities have announced a flurry of measures in recent months to reduce the risk of a sharper slowdown.

China will cut billions of dollars more in taxes and fees, increase infrastructure investment, and step up lending to small firms, Premier Li Keqiang said on Tuesday.


European shares stalled on Wednesday as weak results from the troubled auto sector weighed and investor confidence in a rally that has boosted stocks this year showed signs of fraying.

Exuberance in Chinese shares over hopes for fresh stimulus failed to spill over into European trading where the STOXX 600 dipped from five-month highs, ending just below parity.

Auto stocks fell after German bearings maker Schaeffler warned of an “extremely challenging” business environment in 2019 and said it would restructure, sending its shares down 6.2 per cent.

The sector index fell 0.9 per cent as German carmakers Daimler, BMW, and Volkswagen tumbled, dragging the DAX down 0.3 per cent.

Traders said the stocks were also hurt by an article in Handelsblatt saying the European Commission is preparing fines on German carmakers in an ongoing antitrust investigation.
Carmaker shares, facing a potent cocktail of slowing global growth and rising trade tariffs, have been under pressure for months.

French car suppliers Faurecia and Valeo also fell 1.9 to 2.7 per cent while small-cap Swiss autos supplier Autoneum fell 17.2 per cent after reporting a drop in profitability.

Dialog Semiconductor jumped 2.2 per cent after the Anglo-German chip designer said revenue would suffer a single-digit percentage drop this year as it reduces its exposure to Apple. This forecast topped a consensus view among analysts for a 9 per cent fall.

Eurozone banks rose 0.2 per cent on fresh talk that the ECB would go ahead with a new round of ultra-cheap bank loans which could either be announced or hinted at during the central bank’s meeting on Thursday.

Italian banks, which used the biggest share of the previous round of cheap central bank loans, outperformed to gain 0.9 per cent.


Wall Street’s main indexes fell for a third session on Wednesday, with the S&P 500 posting its biggest one-day decline in a month, as healthcare and energy shares slumped and investors sought reasons to buy after the market’s strong rally to start the year.

With corporate earnings season ending, investors are looking for next catalysts to drive the market, including a potential trade agreement between the US and China and economic data, including Friday’s employment report.

Optimism over a trade deal and over the Federal Reserve becoming less aggressive on raising interest rates have helped fuel a 10.6 percent rise for the S&P 500 this year, although the rally has stalled in recent days.

The Dow Jones Industrial Average fell 133.17 points, or 0.52 per cent, to 25,673.46, the S&P 500 lost 18.2 points, or 0.65 per cent, to 2,771.45 and the Nasdaq Composite dropped 70.44 points, or 0.93 per cent, to 7,505.92.

The small-cap Russell 2000 dropped 2 per cent, its biggest one-day percentage decline of the year. The closely followed Dow Jones Transport Average fell 0.5 per cent, its ninth consecutive session of declines, which is its longest losing streak since February 2009.

Investors say the 2,800 level on the S&P 500 has provided technical resistance to the benchmark index moving higher, although the index has breached its 200-day moving average, another key level.

The S&P 500 healthcare sector lost 1.5 per cent, with Pfizer down 2.4 per cent and Amgen off 3 per cent.

Tuesday’s surprise resignation of Food and Drug Administration commissioner Scott Gottlieb raised uncertainty about biotech and pharmaceutical stocks in a sector that already has been shaken by the potential for drug-pricing and other healthcare legislation.

The energy sector dropped 1.3 per cent as US crude prices dipped and Exxon Mobil shares fell 1.1 per cent after the oil company said it plans to boost spending for several years to restore flagging oil and gas production.

In other corporate news, General Electric shares fell 7.9 per cent, extending losses from a day earlier when the conglomerate’s chief executive warned of negative industrial cash flow this year.

is senior editor for Morningstar Australia

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