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Global Market Report - 11 December

Lex Hall  |  11 Dec 2018Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise at the open following a late, tech-driven recovery on Wall Street as Brexit chaos rages in the UK.

The SPI200 futures contract is up 20 points, or 0.36 per cent, to 5572.0, at 8am Sydney time on Tuesday, hinting that the ASX will edge higher in early trade.

The Aussie has edged lower overnight as the greenback firms against the pound, buying 71.86 US cents, down from 72.17 US cents on Monday.

On Monday, the ASX slumped to a two-year low, weighed down by the major banks as hopes for a trade resolution between the US and China continue to dissipate.

The benchmark S&P/ASX200 index was down 129 points, or 2.27 per cent, at 5552.5 on Monday, while the broader All Ordinaries fell 2.26 per cent.

A trade-anxious Wall Street took an early dive but clawed its way back into the black, while investors jettisoned European stocks following British Prime Minister Theresa May's move to postpone a vote on her Brexit deal.

In late overseas trade, the Dow Jones Industrial Average was up 9.73 points, or 0.04 per cent, at 24,398.68, the S&P 500 gained 3.66 points, or 0.14 per cent, to 2636.74 and the Nasdaq Composite added 54.73 points, or 0.79 per cent, to 7023.98.

Oil has fallen on demand fears while metal prices have also edged lower on weak China data.

Gold is also off its recent peak on a stronger US dollar.

Australia's biggest banks reaped more than $1 billion from hiking interest-only mortgages rates in response to new regulations introduced take some heat out of the housing market, the competition watchdog has discovered.

The Australian Competition and Consumer Commission has also criticised the big four banks and Macquarie Bank for making it hard for home loan customers to work out the best mortgage deal, stifling competition in the process.

Meanwhile, the Reserve Bank is scheduled to release minutes from its most recent policy meeting, potentially giving clues to its intentions on interest rates.

ASIA

Asia's benchmark MSCI Asia Pacific Index erased November's 2.7 per cent rise and is heading to its lowest level since end-October.

China's stocks dropped with the offshore yuan weakening for a fourth day.
Japan's Topix fell 1.9 per cent; the Nikkei 225 was down 2.1 per cent and the Shanghai Composite was down 0.8 per cent.

Hong Kong fell for a fourth straight session, weighed down by disappointing trade and inflation data from China. The Hang Seng Index fell 1.2 per cent.

India's rupee weakened as exit polls showed Prime Minister Narendra Modi's party was set for tight electoral contests in key states and as the central bank governor, Urjit Patel, resigned.

EUROPE

Sterling has tumbled to its weakest since April last year after the delay in the Brexit vote, panicking investors about deepening political uncertainty in Britain.

The pound fell 1.6 per cent against the US dollar to as low as $US1.2507, most of the loss coming after May confirmed she was delaying the vote.

Against the euro, the pound fell 1.5 per cent to as weak as 90.875 pence, its lowest since August, before recovering some ground in late European trading.

Britain's exporter-heavy FTSE 100 index, which usually rises when sterling falls, succumbed to widespread selling pressure and fell 0.8 per cent as investors fretted about the consequences of the political chaos for UK companies.

The more domestic FTSE 250 index tumbled 2 per cent.

Perceived safe-haven British government bonds rallied, with 10-year British government bond yields falling 7.5 basis points to 1.19 per cent, the lowest since mid-August.

Elsewhere, in Europe, the Stoxx 50 closed down 1.6 per cent. France's CAC closed down 1.5 per cent ahead of President Emmanuel Macron’s 13-minute evening address in which he announced wage rises for the poorest workers and tax cuts for pensioners in further concessions meant to defuse weeks of often violent protests that have challenged his authority.

Germany's DAX closed down by 1.5 per cent.

NORTH AMERICA

Gains among technology companies helped the blue-chip Dow Jones Industrial Average index recoup much of an earlier 500-point loss that would have pulled it into correction territory.

The S&P 500 added 0.2 per cent, while the Nasdaq Composite rose 0.7 per cent.
Apple, Microsoft and IBM posted modest gains, helping to steady the index, which has fallen more than 1500 points over the past four sessions because of US-China trade tensions.

Major indexes wobbled most of the day as trade tensions weighed on investors, particularly in light of US Trade Representative Robert Lighthizer's pledge on Sunday to impose further tariffs and sanctions against China if the two countries fail to reach a deal by the end of the 90-day truce.

A plunge in oil prices and May’s decision to delay a vote on Brexit compounded investors' global anxieties and dragged the Dow industrials down as much as 508 points at one point.

In afternoon trade the Dow industrials slid 39 points, or 0.2 per cent, to 24,341 in recent trading. A close below 24,145.55 would put all three major US stock indexes simultaneously in correction territory - typically defined as a fall of at least 10 per cent from a recent high - for the first time since March 2016.

 

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