Global Markets Report - 18 September

Australia

Australia's S&P/ASX 200 looks set to slide at the open amid a weak lead from US equities.

ASX futures were down 0.6% or 41 points as of 8:30am on Monday, suggesting a lower open.

US stocks fell nearly across the board on Friday. The Dow Jones Industrial Average logged a 289-point loss, closing down 0.8%. The S&P 500 and Nasdaq Composite both shed more than 1%.

The latest consumer-sentiment data didn't help; the preliminary reading of the University of Michigan's consumer sentiment index declined to 67.7 in early September. Economists polled by The Wall Street Journal had expected the index to slip to 69.2.

In commodity markets, Brent crude oil rose 0.2% to US$94.14 a barrel while gold was flat at US$1,924.03.

In local bond markets, the yield on Australian 2 Year government bonds was flat at 3.85% while the 10 Year yield was down at 4.10%. US Treasury notes were higher, with the 2 Year yield at 5.03% and the 10 Year yield at 4.33%.

The Australian dollar was flat at 64.33 US cents. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged down to 99.38.

Asia

Chinese shares ended lower despite somewhat upbeat economic data for August, signaling signs of stabilization amid long-term growth headwinds. "China's economy is still in a tug of war between persistent growth headwinds and increasing policy support," Goldman Sachs economists said in a note. Software makers and consumer brands led losses. Beijing Kingsoft Office Software dropped 3.0% and iFlytek declined 2.2%. Index heavyweight Kweichow Moutai shed 2.0%. Among gainers, chip makers and pharmaceutical companies led gains. SMIC added 1.8% and Shenzhen Mindray Bio-Medical Electronics advanced 3.0%. The benchmark Shanghai Composite Index closed 0.3% lower at 3117.74 and finished the week flat. The Shenzhen Composite Index fell 0.3% and the tech-heavy ChiNext Price Index declined 0.5%.

Hong Kong shares ended higher, boosted by Chinese data, which showed modest signs of improvement, and further policy easing from Beijing. The Hang Seng Index ended 0.75% higher at 18182.89 and finished the week up 0.1%. "Amid rising concerns of a prolonged economic slump, August's economic data show early signs of stabilization," said Raymond Yeung, Chief China economist from ANZ. Sentiment was also helped after China's central bank cut a short-term lending rate, a day after lowering banks' reserve requirement ratio. Gains were broad-based as pharmaceutical companies and mining industry led the gainers. Wuxi Biologics rose 4.8% and CSPC Pharmaceutical Group added 2.6%. Zijin Mining Group added 2.8%. Tech companies also rose with the Hang Seng Tech Index increasing 0.5%. Meituan rose 1.1% and JD.com added 0.65%.

Japanese stocks ended higher, led by gains in auto and electronics stocks, as optimism grows over US economic resilience and IPO market. Toyota Motor gained 2.7% and Panasonic Holdings climbed 4.4%. SoftBank Group advanced 2.1% after chip-design unit Arm surged in its Nasdaq debut on Thursday. The Nikkei Stock Average rose 1.1% to 33533.09. Investors are focused on US consumer sentiment and industrial-production data due later in the day. The 10-year Japanese government bond yield falls half-a-basis point to 0.700%.

Indian shares closed higher, tracking regional peers, as China's latest stimulus measures and better-than-expected August economic data boosted optimism across global markets. India's benchmark Sensex closed 0.5% higher at 67838.63, extending gains for the 11th straight session, its longest winning streak since October 2007. Telecommunications and auto stocks led gains. Bajaj Auto surged 6.25% and TVS Motor rose 2.55%. Bharti Airtel gained 2.4% and Indus Towers added 2.6%. Among the stocks on the benchmark index, Mahindra & Mahindra advanced 2.2%, while Asian Paint lost 1.3%.

Europe

European stocks rose in late trade, with the Stoxx Europe 600 index up 0.2% at 461.93. Sentiment has been boosted by solid economic data out of China, the European Central Bank signaling that interest rates have likely peaked after it raised rates on Thursday, and a strong debut from chip-maker Arm after its IPO, writes Russ Mould, investment director at AJ Bell. "That is exactly what investors want to hear, namely the end of the rate hiking cycle and excitement around growth stocks once again," he says. Germany's DAX rose 0.6% and France's CAC 40 was up 1.0%.

The FTSE 100 closed up 0.5% Friday as investor sentiment was boosted by China's economic data, the European Central Bank implying interest rates likely peaked after raising them Thursday, and hopes the U.K. house market slowdown would soon materialize. "The premier index has enjoyed a steady and increasingly successful week as the global economic picture has begun to display some benign signs", Interactive Investor analyst Richard J. Hunter says in a note. Endeavour Mining was the session's biggest riser, up 4.9%, followed by Airtel Africa and DCC, up 2.6% and 2.3% respectively. BT, Segro and Land Securities Group were the day's biggest fallers, down 1.5%, 1.4% and 1.3% respectively.

North America

US stocks fell nearly across the board on Friday. The Dow Jones Industrial Average logged a 289-point loss, closing down 0.8%. The S&P 500 and Nasdaq Composite both shed more than 1%. The latest consumer-sentiment data didn't help; the preliminary reading of the University of Michigan's consumer sentiment index declined to 67.7 in early September. Economists polled by The Wall Street Journal had expected the index to slip to 69.2.

Chip stocks really took it on the chin, following a report from Reuters that manufacturing powerhouse TSMC was asking equipment vendors to hold off on deliveries on worries about weak demand. The three largest US chip equipment companies--Applied Materials, Lam Research and KLA--fell around 4% to 5% for the day, and were three of the seven largest decliners on the S&P 500.

General Motors and Chrysler-owner Stellantis were among the day's most notable exceptions. Stocks of the two automakers made gains by the closing bell, despite the onset of a strike by the United Auto Workers union that shuttered one plant for each company. Ford shares made gains early in the day, but slipped slightly into the red by the close. Heard on the Street's Stephen Wilmot noted that investors had already been pricing in some significant damage.

Disney shares also defied the market's gravity, rising 1.3% on a batch of reports about the potential sale of the company's ABC network. Media mogul Byron Allen has reportedly bid $10 billion for the property, though Disney maintains that it hasn't made any decision to sell any of the linear networks that were once the cornerstone of its cable-TV business.