Global Markets Report - 17 November

Australia

Australian shares are set to open lower, after US investors digested a batch of weaker economic data.

ASX futures were down 0.01% or 1 point as of 8:30am on Friday, suggesting a lower open.

U.S. stocks were under pressure Thursday, but off the session lows, in the final hour of trade as investors digested a batch of weaker economic data suggesting the effects of the Federal Reserve's rate hikes have been kicking in.

The Dow Jones Industrial Average was down 126 points, or 0.4%, near 34,82, while the S&P 500 and Nasdaq Composite Index both were down less than 0.1%.

In commodity markets, Brent crude oil fell 4.5% to US$77.52 a barrel while gold rose 1.1% to US$1,981.00.

In local bond markets, the yield on Australian 2 Year government bonds was unchanged at 4.22% while the 10 Year yield was down at 4.55%. US Treasury notes fell, with the 2 Year yield at 4.85% and the 10 Year yield at 4.44%.

The Australian dollar hit 64.63 US cents down from the previous close of 65.07. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, was unchanged at 99.10.

Asia

Chinese shares closed lower as investor sentiment was likely weighed by China's still sluggish home prices data for October despite a slew of stimulus measures and China's state planner pledge to attract more foreign investment and boost consumption. Semiconductor and pharmaceutical shares led the losses. Semiconductor Manufacturing International Corp. declined 1.7% and NAURA Technology Group was down 2.3%. Jiangsu Hengrui Medicine lost 1.1% and Wuxi AppTec shed 2.6%. Foxconn Industrial Internet was 2.9% lower. The benchmark Shanghai Composite Index declined 0.7% at 3050.93, the Shenzhen Composite Index was 1.0% lower and the tech-heavy ChiNext Price Index was off by 1.85%.

Hong Kong shares drift lower in early trading, with the benchmark index pulling back below the 18000 level after jumping yesterday on news of softer inflation in the U.S. and supportive policy from China's central bank. Today markets are digesting outcomes from the Biden-Xi meeting, including the resumption of direct military-to-military talks, and data showing a fall in new home prices in China. JD.com and Tencent, trading after posting quarterly earnings beats, are up 3.3% and down 1.9%, respectively, while Kuaishou adds 3.2%, Xiaomi slips 3.2% and SMIC sheds 2.4%. The Hang Seng Index is 1.3% lower at 17839.19 and the local tech index slips 1.5% to 4065.23. On tap after market close are earnings from Alibaba, Lenovo and NetEase.

Japan's Nikkei Stock Average edged 0.3% lower to close at 33424.41, dragged by consumer-related stocks. Positive market sentiment has retreated amid losses in U.S. stock-index futures, Matt Simpson, market analyst at City Index and Forex.com, says in an email. The worst performers on the benchmark index included medical website operator M3, slipping 5.15%, and food manufacturers Kikkoman and Nissin Foods, down 3.6% and 3.1%, respectively. The broader Topix market index closed 0.2% lower at 2368.62. The 10-year JGB yield fell a half basis point to 0.790%.

India's benchmark Sensex rose 0.5% to close at 65982.48, erasing earlier losses, on optimism that the Fed's rate-increase cycle may be over. Recent U.S. economic data backs the idea that the Fed could achieve a so-called 'soft landing' following aggressive tightening and that it might stop raising rates, says Ipek Ozkardeskaya, senior analyst at Swissquote Bank, in an email. The best performers on the benchmark index included Tata Consultancy Services, which rose 2.9%, and HCL Technologies, which added 2.8%. Meanwhile, Axis Bank fell 1.5% and Power Grid Corp. of India shed 1.45%.

Europe

European stocks struggled for momentum on Thursday, as investors turned their attention away from central banks and focused on some mixed corporate news. Shares of Burberry and HelloFresh were among the biggest fallers after both companies issued trading warnings. The STOXX Europe 600 Index dropped 0.7% to 451.27, the CAC 40 down 0.6% to 7,168.40, while the DAX rose 0.2% to 15,786.61.

The FTSE 100 index closed Thursday down 1% to 7410 points, dragged by oil-exposed stocks and miners while Burberry's poor update also dampened sentiment, IG chief market analyst Chris Beauchamp said in a note. The luxury retailer was the index's worst performer, with shares down 11% after it warned of a slowdown in global demand and said it might miss its annual revenue target if the trend continues. "The downturn in luxury spending is not exactly applicable to most stocks in the index, but where luxury spending goes, other spending is sure to follow, putting pressure on the index's other retail names," Beauchamp added. Retailer Ocado was the second worst performer, with shares down 6.2%, followed by DS Smith, down 4.2%.

North America

U.S. stocks were under pressure Thursday, but off the session lows, in the final hour of trade as investors digested a batch of weaker economic data suggesting the effects of the Federal Reserve's rate hikes have been kicking in.

The Dow Jones Industrial Average was down 126 points, or 0.4%, near 34,82, while the S&P 500 and Nasdaq Composite Index both were down less than 0.1%.

The strong rally for equities in November, which has taken the tech-heavy Nasdaq out of correction territory, appeared headed for a pause on Thursday. Traders were focused on incoming economic data, comments from Walmart Inc.'s (WMT) chief executive about deflation likely to set in and on Fed speakers. Cleveland Fed President Loretta Mester said that easing monetary policy was not "part of the conversation right now," in a CNBC interview on Thursday.

The 10-year Treasury yield was down to about 4.44% Thursday, off a 16-year peak of about 5% in October, signaling a drop in borrowing costs.