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Global Market Report - 1 November

Lex Hall  |  01 Nov 2018Text size  Decrease  Increase  |  
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Australia

The Australian share market is set to take a lead from Wall Street and lift at the open, after investors snapped up subdued tech and internet stocks overnight, while strong US company results further boosted spirits.

At 8am Sydney time, the SPI200 futures contract was up 26 points, or 0.45 per cent, to 5824.0, pointing to an opening jump for the ASX after heavyweight banking, mining and energy stocks pulled the local bourse higher during yesterday’s choppy trade.

Wall Street stocks rose solidly for the second straight session, easing the losses from a bruising month following good employment data and mostly solid earnings.

The Dow Jones Industrial Average closed up 1 per cent at 25,115.76. The broad-based S&P 500 gained 1.1 per cent to 2711.73,while the tech-heavy Nasdaq Composite Index won 2.0 per cent to close at 7305.90.

The Australian dollar has cooled slightly, and is buying US70.80 cents, from US70.89c yesterday.

Out today: AiG performance of manufacturing October, CoreLogic dwelling prices October, Export prices third quarter, Import prices third quarter, Trade balance September.

ASIA

Growth in China's manufacturing sector was weaker than expected in October, falling for the second straight month in further evidence the world's largest economy is slowing.
Hong Kong shares rallied to end a grim month. The Hang Seng Index fell 10 per cent on the month, its biggest loss since the tumultuous January of 2016.

The October decline takes the benchmark's losing streak to six months, its longest downward run in 36 years. Even the Shanghai Composite Index, the world's worst equity gauge this year, did better in October, falling only 7.8 per cent.

The moves in Tencent Holdings have a big impact on the index because of the internet company's size, even after shedding more than $US250 billion in value since late January.
Despite mustering a 5.9 per cent rally Wednesday, Tencent is still down a whopping 17 per cent on the month, its worst since November 2011.

Sector peers AAC Technologies Holdings and Sunny Optical Technology have tumbled more than 24 per cent, the worst performers on the Hang Seng Index, which eked out a 1.6 per cent gain Wednesday.

In Tokyo, the Nikkei share average rose 2.2 per cent to 21,920.46, the highest closing level since October 24.

EUROPE

European shares rallied on Wednesday as a tumultuous October drew to a close and strong results from L'Oreal, Sanofi and banks Standard Chartered and Santander soothed investors' nerves.

The pan-European STOXX 600 closed up 1.7 per cent with France's CAC 40 jumping 2.3 per cent.

Despite its gains, the STOXX 600 posted its worst month since January 2016 after global equity markets reeled from sudden sell-offs and a pick-up in volatility this month.

The euro zone stocks index had its worst monthly performance since August 2015.

NORTH AMERICA

US stocks have rebounded for a second day as investors snapped up beaten-down technology and internet favourites and strong company results lifted spirits, even as the S&P 500 closed out its worst month in seven years.

The S&P 500 fell 6.9 per cent in October, while the Nasdaq shed 9.2 per cent, its biggest monthly loss since November 2008. The Dow lost 5.1 per cent in the month.

Fears of rising borrowing costs, global trade disputes and a possible slowdown in US corporate profits spooked equity investors this month, with technology and internet names that had powered the market's rally taking the biggest hit.

On Wednesday, shares of Facebook Inc gained 3.8 per cent after the social media giant said margins would stop shrinking after 2019 as costs from scandals ease.

The S&P communication services index, which also houses Alphabet and Netflix, rose 2.1 per cent. The S&P technology index ended up 2.4 per cent on the day.

Shares of Amazon.com Inc and Apple Inc, which is due to report results after the bell on Thursday, climbed as well, by 4.4 per cent and 2.6 per cent respectively.

General Motors Co shares jumped 9.1 per cent to notch their biggest one-day gain since late May, after the No. 1 US automaker posted robust quarterly results and forecast strong full-year earnings.

The Cboe Volatility Index, the most widely followed gauge of expected near-term gyrations for the S&P 500, had its lowest close since October 23.

US Treasuries also declined for the month, only the 12th time since the start of the current equity bull market that both stocks and bonds produced losses in the same month, according to preliminary data.

Mostly stronger-than-expected results have pushed up third-quarter profit growth estimates for S&P 500 companies to 26.3 per cent, according to I/B/E/S data from Refinitiv data.

Defensive sectors were the only decliners. The S&P consumer staples index fell 0.9 per cent.
Shares of Kellogg fell 8.9 per cent after cutting its full-year profit forecast due to higher advertising and distribution costs.

The financial sector rose 1.4 per cent and the S&P 500 regional banks index gained 1.9 per cent, on the Federal Reserve's proposal to ease regulations for US banks with less than $US700 billion in assets.

 

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Morningstar with AAP, Reuters

Lex Hall is content editor, Morningstar Australia

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

is content editor for Morningstar Australia

© 2020 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782. The article is current as at date of publication.

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