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Global Market Report - 19 September

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

Australian shares look set to rebound at the open, mirroring an overnight recovery on Wall Street, after investors shrugged off trade tensions between China and the US.

In futures trading, the SPI200 futures contract was up 28 points, or 0.45 per cent, to 6195 points at 8.30 Sydney time. The Australian dollar is also up, buying 72.23 US cents, from 72.13 US cents at Tuesday's close.

Overnight, Trump announced a 10 per cent tariff on $US200 billion in imports from China - less than the immediate 20 per cent figure previously threatened - with China slapping a 10 per cent tariff of its own on $US60 billion worth of US goods in retaliation.

Wall Street rallied in the wake of the news, with the Dow Jones Industrial Average rising 184.84 points, or 0.71 per cent, to 26,246.96, the S&P 500 gaining 15.51 points, or 0.54 per cent, to 2904.31 and the Nasdaq Composite adding 60.32 points, or 0.76 per cent, to 7956.11.

Copper also recorded an unexpected rise of 2.43 per cent with investors already braced for the tariffs, supported by the unexpected resilience of global share prices and non-US currencies.

Iron ore jumped by $US1.68 a tonne overnight, but Gold prices turned negative as the US dollar strengthened.

Out today: WBC leading index August, Skilled vacancies, RBA assistant governor Kent speaks

Asia

China's blue-chip CSI300 index rose 2 per cent in the afternoon to close at 3269.43 points, while the Shanghai Composite Index gained 1.8 per cent to 2699.95 points.

In Hong Kong, the Hang Seng index rose 0.6 per cent, to 27,084.66, while the China Enterprises Index gained 0.9 per cent, to 10,556.98 points.

Shanghai's stock market has lost about 20 per cent this year, joining the crisis-hit trio of Turkey, Argentina and Venezuela among the world's four worst performers. Besides the headline drop in share values, China's currency has fallen sharply and share transaction volumes have shrunk.

Europe

European shares shuddered, then recovered, on Tuesday after Beijing retaliated with new tariffs on US goods, less than 24 hours after Trump squeezed the trigger on tariffs.

Having shrugged off the US move in morning trading, the pan-European STOXX 600 tumbled to a session low after China's retaliatory blow, down as much as 0.2 per cent while the leading index of euro zone stocks fell 0.1 per cent.

Both indices recovered rapidly, though, as it became clear the tariff levels announced by China were lower than previously expected - imposing 5 to 10 per cent tariffs on US goods it had previously listed for 10 to 20 per cent tariff rates.

The STOXX50E ended the day up 0.3 per cent with the STOXX 600 up 0.1 per cent.

Denmark's Pandora jumped as much as 10 per cent, ending the day up 6.8 per cent after a media report that private equity funds are studying a potential takeover bid.

North America

Wall Street has rebounded in a broad-based rally as investors brushed aside intensifying trade rhetoric between the US and China.

All three major US indexes closed higher on Tuesday following Monday's sell-off.
Late on Monday, US President Donald Trump announced that 10 per cent tariffs on $US200 billion ($277 billion) in imports from China would go into effect next week, escalating the tit-for-tat trade spat between the world's two largest economies.

China responded on Tuesday by unveiling 10 per cent tariffs on about $US60 billion of US goods also effective September 24.

Tech stocks were bolstered by news that Apple and fitness gadget-maker Fitbit would escape the tariffs. Apple shares closed up 0.2 per cent while Fitbit shares rose 6.4 per cent.

Trade-sensitive industrials gained ground, with Boeing Co ending 2.1 per cent higher. The plane-maker, the biggest US exporter to China, led the Dow Jones Industrial Average's advance.

Nike also boosted the blue-chip index as Telsey Advisory Group hiked its price target. The stock was reached an all-time closing high, up 2.4 per cent.

Consumer discretionary was the best performing of the 11 major S&P 500 sectors, rising 1.3 per cent.

The energy sector advanced 0.7 per cent as crude prices rose on signs that OPEC is not prepared to boost output to address shrinking supplies from Iran.

Among losers, Tesla sank 3.4 per cent after disclosing that it had received a request for documents from the US Department of Justice regarding chief executive Elon Musk's public statements about taking the company private.

Insurer Marsh & McLennan slid by 4.0 per cent on news that it will buy British insurance and reinsurance broker Jardine Lloyd Thompson for $US5.7 billion.

Defensive groups lagged, with consumer staples ending down 0.4 per cent. General Mills dropped 7.6 per cent after missing analysts' quarterly sales estimates, extending the packaged food company stock's near 26 per cent year-to-date decline.

 

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Morningstar with AAP, Reuters and Bloomberg 

Lex Hall is content editor, Morningstar Australia

© 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 content editor for Morningstar Australia

© 2020 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. The article is current as at date of publication.

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