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Global Market Report - 13 December

Lex Hall  |  13 Dec 2018Text size  Decrease  Increase  |  
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Australian shares are set for a subdued open as global markets rally on easing trade tensions, with Wall Street's tech and energy companies particularly strong in overnight trade.

The SPI200 futures contract is down 13 points, or 0.23 per cent, to 5642.0, at 8am Sydney time on Thursday, hinting at a lower open for the ASX after a session buoyed by banking and energy stocks.

The Aussie has edged higher overnight, buying 72.19 US cents, up from 72.13 US cents on Wednesday.

On Wednesday, the Australian share market closed higher, buoyed by a surge in banking and energy stocks as trade tensions ease and investors cashed in on cheaper shares. The benchmark S&P/ASX200 index was up 77.6 points, or 1.39 per cent, at 5653.5 on Wednesday, while the broader All Ordinaries rose 1.35 per cent.

In Britain, Prime Minister Theresa May has won a confidence vote 200 votes to 117. The vote quells a revolt within her party but leaves her politically wounded and the route to Brexit unclear.

The major US indices reversed some of the week's earlier losses, with big techs Apple, Microsoft, Netflix and Amazon surging ahead.

The Dow Jones Industrial Average rose 265.64 points, or 1.09 per cent, to 24,635.88, the S&P 500 gained 26.66 points, or 1.01 per cent, to 2663.44 and the Nasdaq Composite added 98.96 points, or 1.41 per cent, to 7130.79.

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US Treasury yields also advanced after President Donald Trump declared trade talks with China were progressing.

Meanwhile, oil prices are flat and copper dipped, but iron ore has edged higher overnight.
Gold is up $US3 an ounce on a weaker greenback, hovering near a five-month peak.


Hong Kong stocks rose amid expectations of a slower pace of rate hikes in the US and possible policy stimulus in China. At the close, the Hang Seng index was up 1.6 per cent at 26,186.71, while the Hang Seng China Enterprises index rose 1.7 per cent.

The property sector, up 2.8 per cent, again dominated the gains, amid forecasts that real estate companies will benefit from looser policies in China and the US.

The sub-index of the Hang Seng tracking energy shares rose 0.7 per cent, the IT sector rose 1.5 per cent, while the financial sector put on 1.7 per cent.

MSCI's Asia ex-Japan stock index rose by 1.3 per cent, while Japan's Nikkei index ended the day up 2.2 per cent.


European shares also rallied on Trump's upbeat comments about a trade deal with China and optimism grew that Italy could appease the European Commission with a deal on its disputed 2019 budget.

The Stoxx 50 rose 1.7 per cent. In London, the FTSE gained 1.1 per cent amid the vote of no-confidence in May over her Brexit deal.

May has since won a confidence vote by 200 votes to 117, Graham Brady, the Conservative Party official in charge of the process, said on Wednesday. The result means May’s enemies can’t launch another attempt to oust her as party leader for at least a year.

Italian banks added 3 per cent, led by Intesa Sanpaolo, the country's top retail lender, as Prime Minister Giuseppe Conte flew to Brussels for talks on the draft budget. Cabinet undersecretary Giancarlo Giorgetti said Italy hoped it could reach a deal by agreeing to a deficit of between 2.0-2.2 per cent of GDP from 2.4 per cent.

Deutsche Bank shares jumped after a report that the German government might help make it easier to merge with competitor Commerzbank. Eurozone banks rose 2.9 per cent. Deutsche Bank gained 5.8 per cent and Commerzbank was up 5.6 per cent.

In France, the CAC put on 2.2 per cent, while Germany's DAX rose 1.4 per cent.


US stocks joined a global rally amid upbeat news on trade talks, while the Nasdaq rose more than 2 per cent, buoyed by gains in tech stocks and gains in Europe and Asia.

The S&P 500 rose 0.5 per cent after an afternoon slump that pared its gain by more than half.

The early gains came as signs emerged that trade tensions would ease, first after the arrested Huawei executive Meng Wanzhou was granted bail and then when Trump hinted he could defuse the situation as part of trade talks with China.

Microsoft was the standout, gaining 2.3 per cent while Apple added 1.4 per cent. Amazon rose 3.1 per cent and Netflix 5.3 per cent.

Equipment rental company United Rentals led gains in industrials, putting on 7.8 per cent amid an upbeat forecast for 2019 and talk of share buybacks. Bellwether Caterpillar rose 3.6 per cent and Boeing rose 2.5 per cent.

Shares in Tencent Music Entertainment Group, China's music streaming giant, jumped 10 per cent on their first day of public trade in New York.


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is senior editor for Morningstar Australia

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