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Global Market Report - 19 November

Lex Hall  |  19 Nov 2018Text size  Decrease  Increase  |  
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Australia

The Australian share market is expected to start the trading week higher, after an encouraging end to the latest session on Wall Street.

But the market is likely to be volatile in the week ahead as uncertainty remains around a number of global issues, including the United Kingdom’s Brexit deal.

And while US stocks moved higher on Friday after Donald Trump said China seemed willing to make a deal on trade, tensions between the US and Beijing resurfaced at the APEC meeting at the weekend.

The futures market suggests the benchmark S&P/ASX200 will rise by about 0.3 per cent, or 17 points, when Australian trade resumes today.

It comes after US stocks finished mostly higher on Friday, after an erratic day of trading ended with an 11th-hour buying spree.

The S&P 500 index rose 6.07 points, or 0.2 per cent, to 2736.27, while the Dow Jones Industrial Average gained 123.95 points,or 0.5 per cent, to 25,413.22.

Investors are also watching trade tensions between the US and China, Italy’s spar with the European Union over its 2019 budget, and whether the US central bank is preparing to pause its rate-hiking cycle.

Closer to home, investors will be keen to hear what Reserve Bank Governor Philip Lowe has to say when he addresses the Committee for Economic Development of Australia’s annual dinner on Tuesday.

The central bank will release the minutes from its November board meeting on the same day.

The Australian share market closed marginally lower on Friday, with the S&P/ASX200 down 5.4 points, or 0.09 per cent, to 5730.6.

The royal commission resumes this week and will hear from banking heavyweights, including CBA’s Matt Comyn and Catherine Livingstone.

ASIA

In Hong Kong, the Hang Seng index was up 0.3 per cent at 26,183.53 on Friday, and up 2.3 per cent for the week. The Hang Seng China Enterprises index rose 0.3 per cent on Friday, and was up 1.5 per cent for the week.

Hang Seng's hardware index jumped 2.8 per cent. The index was led higher by a 6.4 per cent gain in ZTE, which has been caught in the US-China trade conflict. The stock also got a boost from local media reports, citing the company, that it will launch a 5G phone in the first half of 2019.

The Shanghai Composite index ended 0.4 per cent higher at 2679.11, gaining 3.1 per cent for the week. The blue-chip CSI300 index was up 0.5 per cent, posting a weekly gain of 2.8 per cent.

President Donald Trump said on Friday that China had sent a list of things it was willing to do to resolve trade tensions with the US and his administration may not have to impose further tariffs, but he added the situation was still not acceptable to him.

EUROPE

European shares wobbled and closed just in the red after a choppy session on Friday as traders waited to see if May would face a no-confidence vote over her draft EU divorce deal.

The pan-European stocks index started morning trading on a gentle rebound from losses on Thursday. But it gradually lost steam as speculation mounted about a leadership challenge.

Italy's budget showdown with the European Commission also did little for risk appetite.

The STOXX 600 closed down 0.1 per cent and Britain's FTSE 100 fell 0.3 per cent.

French media company Vivendi's quarterly results helped to lift the media sector 0.6 per cent.

Vivendi shares topped the CAC 40, climbing 3 per cent after the company posted stronger than expected third-quarter sales, helped by growth in music streaming at its Universal Music Group. It also said it was lining up banks for a possible sale of part of the UMG division.

NORTH AMERICA

The S&P 500 and Dow Industrials are higher after President Donald Trump said the US may not have to impose further tariffs on Chinese goods, but falling shares of Nvidia Corp dragged down the Nasdaq.


All three US stock indexes had been lower in early trade as an underwhelming outlook from
Nvidia weighed on the tech sector.

US stocks moved higher after Trump said China seemed willing to make a deal on trade.
But lagging Nvidia shares kept the Nasdaq in negative territory.

Nvidia's shares tumbled 18.8 per cent after the chipmaker pointed to the decline in cryptocurrency mining as the cause of its declining sales. The chipmaker's shares also weighed on the Philadelphia SE Semiconductor index, which declined 1.2 per cent.

Facebook shares also dropped 3 per cent upon renewed concerns that the company could face regulatory scrutiny following a New York Times report on Wednesday about the company's attempts to deflect criticism of its handling of Russian propaganda.

Comments from Richard Clarida, newly appointed Federal Reserve vice chair, that US interest rates were nearing the central bank's estimates of a neutral rate also lent support to stocks, investors said.

For the week, however, all three indexes posted losses. The S&P 500 fell 1.61 per cent, the Dow lost 2.22 per cent, and the Nasdaq shed 2.15 per cent.

S&P 500 energy stocks rose 1.1 per cent as oil prices recovered from sharp losses this week on expectations that OPEC and its allies would agree to cut output next month.

S&P 500 utility stocks also jumped, advancing 1.3 per cent, as PG&E Corp shares surged 37.5 per cent. Statements from the California Public Utilities Commission raised hopes that the embattled company could be spared from bankruptcy if it were found liable for the state's deadliest-ever wildfire.

Consumer discretionary stocks fell 0.5 per cent. Continuing a gloomy week for retailers, shares of department store operator Nordstrom Inc tumbled 13.7 per cent after quarterly same-store sales missed estimates and the company reported charges from a credit card problem.

 

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Morningstar with AAP, Reuters

Lex Hall is content editor, Morningstar Australia

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