Global Market Report - 16 August
Australian shares are likely to open lower amid falls on Wall Street overnight, escalating trade jitters, and caution ahead of results by several local frontline companies.
Australia
Australian shares are likely to open lower amid falls on Wall Street overnight, escalating trade jitters, and caution ahead of results by several local frontline companies.
In futures trading, the SPI200 futures contract was down 35 points, or 0.56 per cent, to 6259 points at 8.30am Sydney time. The Australian dollar is buying 72.24 US cents, slightly lower from 72.30 US cents on Wednesday.
Overnight, Wall Street fell in a day of heavy trading, with the S&P 500 posting its biggest percentage drop since late June as investors turned risk-averse on disappointing earnings and escalating global tariff worries.
The Dow Jones Industrial Average fell 137.51 points, or 0.54 per cent, to 25,162.41, the S&P 500 lost 21.59 points, or 0.76 per cent, to 2818.37, while the tech-heavy Nasdaq Composite dropped 96.78 points, or 1.23 per cent, to 7774.12.
In results news, Telstra's full-year profit has dropped 8.4 per cent to $3.56 billion, as the telco giant faced strong competition in the market and was hurt by the further rollout of NBN.
Total revenue for the 12 months to June 30 was largely unchanged at $26 billion, and the company declared a total final dividend of 11 cents per share, down from 15.5 cents a year earlier.
The company said challenging trading conditions are expected to continue in 2018/19, with earnings likely to be impacted by ongoing pressure on average revenue per user and the NBN network rollout.
Other companies reporting today include insurer QBE, and Treasury Wine Estate, while investors also await the official employment data at 11.30am.
Asia
Shares ended mostly lower across Asia on Wednesday. Japan's Nikkei 225 index fell 0.7 per cent to 22,201.21 and in Hong Kong, the Hang Seng dropped 1.7 per cent to 27,271.50.
Gaming sector stocks fell due to concerns over delays in new games releases in China, as Beijing halted approvals for licences.
The Nikkei share average ended 0.7 percent lower to 22,204.22, after soaring 2.3 percent - its biggest one-day percentage gain since March - on Tuesday.
The Shanghai Composite index sank 1.5 per cent to 2,740.11. Shares fell in Taiwan and Singapore and gained in Indonesia. South Korea's markets were closed for a holiday.
Turkey announced on Wednesday it was increasing tariffs on imports of series of US products, escalating a feud with the US that has helped trigger a currency crisis.
The Turkish lira had steadied as officials from Turkey and the US said the countries were in talks to ease tensions that have led to higher US tariffs on Turkish steel and aluminum.
Economists say Turkey's central bank needs to raise interest rates significantly to strengthen its currency, but President Recep Tayyip Erdogan has ruled out that step.
China's equities and currency slid, with the yuan weakening past 6.9 a dollar for the first time since May 2017 and losses in tech stocks spiraling into a broad selloff.
The Hang Seng China Enterprises Index fell 2 per cent at the close for its fourth day of losses.
Europe
European shares sold off sharply on Wednesday after Turkey doubled tariffs on some US imports, and miners had their worst day since Britain’s 2016 Brexit vote on sliding commodity prices.
The pan-European STOXX 600 ended the day down 1.4 per cent with Germany's DAX dropping 1.6 per cent.
Autos stocks were among the worst performers, pushing the DAX down to a six-week low after Turkey doubled tariffs on US alcohol, car and tobacco imports.
Miners fell 4.2 per cent in their biggest daily loss since the Brexit vote aftermath in June 2016, as renewed anxiety over trade piled pressure on a sector already dented by falling copper prices.
Earnings triggered some big moves: Danish wind turbine maker Vestas rose 3.1 per cent after reporting better-than-expected second-quarter operating profits and launching a 200 million euro ($US227 million) share buy-back.
British insurer Admiral rose to the top of the FTSE 100, gaining 3.6 per cent, after posting a 9 per cent rise in first-half pre-tax profit.
Atlantia, which owns Autostrade per l'Italia, was down 5.4 per cent after Italy's transport minister called for the resignation of senior managers of the company which operated the motorway bridge that collapsed in Genoa on Tuesday.
Shares in French video game maker Ubisoft fell 3.6 per cent after Tencent surprised the market with slower than expected gaming growth.
North America
Wall Street has fallen in a day of heavy trading, with the S&P 500 posting its biggest percentage drop since late June as investors turned risk-averse on disappointing earnings and escalating global tariff worries.
Chinese technology company Tencent reported its first profit decline in almost 13 years, putting pressure on the US tech sector.
Tech stocks were the biggest drag on the S&P 500 and the Nasdaq, with the S&P 500 technology index down 1.1 per cent.
Retail shares fell as Macy's fell 15.9 per cent after margin fears spooked investors, overshadowing its stronger-than-expected sales and earnings.
Second-quarter US earnings have mostly been stronger than expected, with 79.1 per cent beating analyst expectations, according to Thomson Reuters I/B/E/S.
The trade fracas heated up as Turkish President Tayyip Erdogan doubled tariffs on some US imports, and China lodged a complaint with the WTO against American trade policies.
The tariff-sensitive industrial sector slipped 0.5 per cent, with Caterpillar and Boeing Co weighing on the Dow.
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Lex Hall is a Morningstar content editor, based in Sydney.
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