Australia

Australian stocks are poised for a steadier open, having clawed back ground from a new six-month low, though futures trading is mirroring Wall Street's choppy overnight session.

The SPI200 futures contract was even at 5818.0 at 8am Sydney on Tuesday, indicating a flat open for the ASX, which bled throughout Monday's trade before steadying late in the session.

The Australian dollar has jumped to 71.30 US cents from 71.05 US cents at Monday's close.
Wall Street fluctuated overnight, with tech stocks weighing heavily and the three major US indexes ending down.

The Dow Jones Industrial Average fell 89.44 points, or 0.35 per cent, to 25,250.55, the S&P 500 was down 16.34 points, or 0.59 per cent, to 2750.79, while the Nasdaq Composite was down 66.15 points, or 0.88 per cent, to 7430.74.

Monday proved a bleak day for global markets as bounce in oil prices and rising tensions between Western powers and Saudi Arabia added to the concerns that battered stocks last week.

Trade tensions have kept pressure on most metals, but uncertainty has powered safe-haven gold to its highest level in two and a half months.

In local company news, Telstra shareholders are set to decide on how executive bonuses are calculated after the telecommunications giant was forced to apologise to investors who feel they are still too high.

The Reserve Bank will release its latest board minutes, having left interest rates on hold at 1.5 per cent earlier this month, while the Australian Bureau of Statistics is scheduled to release lending finance data for August.

Asia

The Shanghai Composite Index tumbled another 1.5 per cent on Monday, cementing its position as 2018's worst global benchmark.

China's stock market is now worth $US5.4 trillion, less than Japan's, and only $US517 billion above Hong Kong's. In 2015, the difference was as much as $US4.8 trillion.

The Hong Kong stock market closed lower on Monday, weighed down by the falling mainland market and concerns over the US-China trade conflict continued to limit investors' appetite.

The Hang Seng index was down 1.4 per cent at 25,445.06. The Hang Seng China Enterprises index fell 1.5 per cent to 10,144.34.

Japan's Nikkei slumped 1.8 per cent on Monday, with car maker shares hitting 13-month lows after Washington said it would seek a provision about currency manipulation in future trade deals with Japan.

Europe

European shares failed to rebound and hit a 22-month low on Monday after their worst week since a correction in February as threats such as trade wars, rising US yields, Chinese growth, Brexit and the Italy/EU budget row continued to weigh on markets.

For European bourses there was no wind of optimism from Asia where stocks suffered as rising diplomatic tensions between Riyadh and the West over the disappearance of a journalist pushed oil higher.

The pan-European STOXX 600 was down 0.6 per cent at 356.8 points, levels not seen since December 2016.

North America

US stocks have fallen at the open as an increase in tensions between Western powers and Saudi Arabia added to worries over rising borrowing costs and the impact of tariffs, following the main three indexes' biggest weekly declines in over seven months.

Among the biggest drag on the three major indexes was Apple, which fell 1.6 per cent after Goldman Sachs said there were multiple signs of rapidly slowing consumer demand in China, which could affect demand for iPhones this (northern) autumn.

Apple's drop weighed on technology stocks, which fell 1.34 per cent and much like last week, led the market lower on Monday. The gainers among the 11 major S&P sectors were led by the defensive utilities, real estate and consumer staples companies.

With the third-quarter earnings season entering high gear this week, Goldman's warning on weak demand from China would only add to fears about the impact of the US-China trade war on corporate profits.

Also adding to the tensions was US President Donald Trump's threat of "severe punishment" if it was found journalist Jamal Khashoggi, who disappeared on 2 October, was killed in the Saudi consulate in Istanbul. Saudi Arabia has vowed to retaliate to any move to punish the Kingdom.

The clearest picture yet of the impact of the US-China trade war will be the third-quarter earnings season, especially the company forecasts. Profits at S&P companies are expected to have risen 21.5 per cent, according to I/B/E/S data from Refinitiv, less than the growth in the past two quarters.

The S&P 500 retailers index dropped 1.14 per cent after data showed US retail sales barely rose in September, as a rebound in motor vehicle purchases was offset by the biggest drop in spending at restaurants and bars in nearly two years.

Bank of America gave up earlier gains to trade 2 per cent lower despite posting a better-than-expected quarterly profit, boosted by lower costs, higher interest rates and lending growth.

L3 Technologies rose 10.2 per cent and Harris Corp climbed 9 per cent after the military communication equipment providers announced an all-stock merger on Sunday, to create the sixth-largest defence contractor in the US.

Sears Holdings fell 16.3 per cent after the retailer filed for Chapter 11 bankruptcy, throwing into doubt the future of the company which has withered in the age of internet shopping.

 

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Morningstar with AAP, Reuters 

Lex Hall is content editor, Morningstar Australia

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