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Global Market Report - 17 December

Lex Hall  |  14 Dec 2018Text size  Decrease  Increase  |  
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Australia

Australian shares are set for an early dive after Wall Street plummeted in late-week trade, with growth concerns and political uncertainty weighing on global markets as Christmas approaches.

The SPI200 futures contract is down 32 points, or 0.57 per cent, to 5580.0, at 8am Sydney time on Monday, hinting that the ASX will drop at the open.

On Friday, the ASX lost more than 1 per cent, with financial stocks weighing heavily as renewed fears about a global growth slowdown gripped investors pessimistic about dour economic data from China.

The benchmark S&P/ASX200 index was down 59.6 points, or 1.05 per cent, at 5602.0 at 4.15pm Friday, while the broader All Ordinaries lost 0.99 per cent.

Wall Street's three major indexes tumbled on Friday as weak data from China and Europe stoked fears of a global economic slowdown.

The Dow Jones Industrial Average fell 2.02 per cent, 10 per cent below its October 3 closing high, while the S&P 500 lost 1.91 per cent, 11.3 per cent lower than its September 20 record close, marking the worst performance for the benchmark in two years.

The Nasdaq Composite dropped 159.67 points, or 2.26 per cent, to 6,910.67.

The Aussie has also lost ground, and is buying 71.74 US cents from 71.93 US cents on Friday.

In local finance news on Monday, CoreLogic is set to release capital city house price data for the week just ended.

Meanwhile, the Reserve Bank will release minutes from its most recent meeting on Tuesday.

ASIA

In China, enduring trade tensions and fears of a slowdown in economic activity have hurt sentiment throughout the year.

Copper posted a third straight weekly fall after weaker than expected Chinese industrial data dampened expectations of demand from the largest metals consumer.

China's November industrial output rose by the least in nearly three years, according to official data. Copper, used in power and construction, has fallen 16 per cent this year, pushed lower by fears that China's economy is cooling and a US-China trade dispute could accelerate the slowdown.

Automobile sales also fell about 14 per cent year-on-year in November, the steepest such drop in nearly seven years.

The Shanghai Composite Index is down 22 per cent this year, while the yuan has dropped more than 5 per cent.

The CSI 300 Index closed down 1.7 per cent, with healthcare stocks leading the losses on Friday. and the ChiNext gauge of small caps slid 2.8 per cent, while Hong Kong's Hang Seng Index fell 1.6 per cent.

The yuan weakened 0.41 per cent in offshore trading and the yield on 10-year government debt rose 1 basis point to 3.37 per cent.

EUROPE

European stocks closed lower Friday as weaker-than-expected economic data intensified fears of a slowdown in global economic growth.

The pan-European Stoxx 600 closed provisionally down 0.63 per cent, with almost all sectors and major bourses in negative territory.

In London, the FTSE was down 0.5 per cent, while in France the CAC lot 0.9 per cent, and Germany’s DAX fell 0.5 per cent.

NORTH AMERICA

Wall Street's three major indexes tumbled and the Dow confirmed a correction as weak data from China and Europe stoked fears of a global economic slowdown.

Johnson & Johnson shares were the biggest drag after Reuters reported the company knew for decades that its Baby Powder contained asbestos.

The S&P 600 small cap index confirmed it was in a bear market after closing 20 per cent below its August 31 peak, falling 1.6 per cent on the day.

The Johnson & Johnson report, which the company has disputed, sent its shares tumbling 10 per cent in heavy volume, making it the biggest weight from a single stock on the S&P 500 and the Dow Industrials.

Investors focused on global growth concerns and worried about US growth after China reported weak monthly retail sales growth and industrial output numbers, as disappointing economic data was released from the eurozone.

These fears are reflected in a Reuters poll of economists which found the risk of a US recession in the next two years rose to 40 per cent and found a significant shift in expectations toward fewer 2019 Federal Reserve interest rate rises.

The Dow Jones Industrial Average fell 496.87 points, or 2.02 per cent, to 24,100.51, 10 per cent below its October 3 closing high.

The S&P 500 lost 50.59 points, or 1.91 per cent, to 2,599.95, 11.3 per cent lower than its September 20 record close, marking the poorest performance for the benchmark since it fell more than 14 per cent between May 2015 and January 2016.

And with Friday's close the losses inflicted by the correction are deeper than the declines suffered earlier this year.

The Nasdaq Composite dropped 159.67 points, or 2.26 per cent, to 6910.67.

Johnson & Johnson helped pull down the S&P healthcare index 3.4 per cent, making it the biggest percentage decliner among the S&P's 11 major sectors.

The technology index, which includes a number of companies with global operations, especially China, dropped 2.5 per cent.

The energy index fell 2.4 per cent.

Strong US retail sales data appeared to have little impact on markets, with the S&P retail sector falling 2.4 per cent.

The market struggled all week with choppy trading, on concerns ranging from US-China trade talks, interest rates and a flattening US Treasury yield curve and the shape of Brexit.

For the week, the S&P fell 1.25 per cent and the Dow lost 1.2 per cent while the Nasdaq shed 0.84 per cent.

Investors appeared to shrug off Beijing's announcement it would suspend additional tariffs on US-made vehicles and auto parts for three months starting January 1.

Amazon.com was the S&P's second biggest drag with a 4 per cent drop. Another highflyer, Apple, fell 3.2 per cent, with reports citing a top analyst slashing iPhone sales estimates for the decline.

Costco Wholesale Corp dropped 8.5 per cent after reporting a fall in quarterly gross margin and was the biggest laggard in consumer staples.

 

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