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Global Market Report - 17 August

Lex Hall  |  17 Aug 2018Text size  Decrease  Increase  |  
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Australia

Australian shares are likely to open flat, or slightly weaker, despite Wall Street rallying overnight, with investors staying cautious ahead of major local corporate earnings over the next two weeks.

In futures trading, the SPI200 futures contract was down 3 points, or 0.05 per cent, to 6279 points at 8.30am Sydney time. The Australian dollar was buying US72.65 cents, slightly lower from US72.69 cents yesterday.

US stocks rebounded with the Dow posting its biggest percentage gain in over four months, as positive earnings and waning trade jitters buoyed investor confidence.

The Dow Jones Industrial Average rose 396.32 points, or 1.58 per cent at 25,558.73 points, the S&P500 gained 22.32 points or 0.79 per cent at 2840.69 points, while the tech-heavy NASDAQ index ended up 32.41 points or 0.42 per cent at 7806.52 points.

Though metals strengthened, oil prices were left flat after data showed a surprise weekly increase in US crude stockpiles, compounding worries about a weaker global economic growth.

Brent was at just over $US70 ($96) a barrel and US crude oil last stood at $US65.12 per barrel, having fallen to two-month lows of $US64.42 per barrel, following Wednesday's 3.2 per cent fall.

Turkey's finance minister Berat Albayrak promised the country will emerge "stronger" from the currency crisis sparked by a diplomatic spat with the US, ruling out any IMF bailout.

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Out today: online retailer Kogan and property group Goodman will detail their full-year results.

Asia

Asian equities had hit one-year lows overnight as they tracked Wednesday's global falls and Tencent results disappointed, but a fresh recent high for the FTSE and modest gains elsewhere pulled Europe up early on.

Emerging markets stocks nudged lower again though after they had crossed the 20 per cent peak-to-trough threshold that defines a "bear" market. Metals markets clawed higher, however, after copper had also entered "bear" territory.

China on Thursday said a delegation led by its vice commerce minister would travel to the US for talks in late August at the invitation of Washington.

That helped Chinese stocks pare losses, with both Shanghai Composite Index and Hong Kong's Hang Seng index each down 0.8 per cent. Earlier in the day, Shanghai was down as much as 1.9 per cent while Hong Kong was off 1.7 per cent.

Japan's Nikkei average closed 0.1 per cent lower in choppy trade, with the benchmark falling as much as 1.5 per cent before a brief swing into positive territory on China news.

The euro rose 0.3 per cent and the offshore Chinese yuan gained 0.8 per cent following Sino-US trade talk news. US stock futures rose 0.4 per cent.

Chinese tech giant Tencent reported its first quarterly profit fall in nearly 13 years on weak gaming revenue - it holds a 40 per cent stake in the US firm that makes cult game Fortnite.

That had knocked other Asian tech firms with South Korea's Samsung Electronics, Asia's third largest firm by market cap, down to a one-year low.

Europe

European shares recovered on Thursday after Beijing said it would hold trade talks with the US this month, spurring risk appetite, although Italian shares fell sharply as Atlantia sank.

Europe's STOXX 600 closed up 0.5 per cent, clawing back some of Wednesday’s losses which had taken it to a six-week low as emerging markets entered bear territory.

Italy's FTSE fell 1.5 per cent to its lowest level since April 2017 as shares in motorway operator Atlantia plunged 25 per cent.

Broader markets aside, corporate results drove some sharp moves with electronic payments firm Wirecard leading the pack.

Wirecard shares jumped 9.3 per cent after the electronic payments firm raised its 2018 profits guidance, making it more likely it will replace Commerzbank in the next reshuffle of the DAX index.

French outdoor advertising firm JCDecaux rose 7.1 per cent thanks to analysts at Berenberg upgrading the stock to "buy", saying they thought Google's possible entry into the outdoor ad market in Europe could be good news.

North America

US stocks have rebounded with the Dow posting its biggest percentage gain in over four months, as positive earnings and waning trade jitters buoyed investor confidence.

A broad rally pulled all three major US indexes higher following Wednesday's sell-off.
Walmart shares jumped 9.3 per cent after the world's largest retailer topped earnings estimates and posted its best same-store sales growth in a decade.

Easing trade tensions gave relief to tariff-vulnerable industrials, which led the Dow Jones Industrial Average's advance. Boeing and Caterpillar ended the session up 4.3 per cent and 3.2 per cent, respectively.

The S&P 500 industrial sector gained 1.2 per cent. Escalating tariff rhetoric cooled down on news that Beijing will send a delegation to Washington to help resolve the growing trade conflict between the world's two largest economies.

All 11 major sectors of the S&P 500 ended the session higher, with telecom and consumer staples posting the largest percentage gains.

 

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Lex Hall is a Morningstar content editor, based in Sydney.

© 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 senior editor for Morningstar Australia

© 2021 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 'regulated financial advice' under New Zealand law has 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. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. 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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