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Global Market Report - 2 November

Lex Hall  |  02 Nov 2018Text size  Decrease  Increase  |  
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Australia

A subdued open looms for the Australian share market despite gains on Wall Street overnight, while a booming trade surplus has seen the Aussie dollar surge past 72 US cents to a four-week high.

The SPI200 futures contract was up just 5 points, or 0.09 per cent, to 5813.0 at 8am Sydney time on Friday, pointing to a flat open for the ASX after banking and mining stocks helped it edge higher during a choppy Thursday session.

The Australian dollar has soared nearly 2 per cent on the back of a commodities-boosted September trade surplus, with the local currency rising to a high of 72.13 US cents overnight, before steadying around 72.06 US cents before Friday's open.

Wall Street gained ground amid renewed trade optimism, after US President Donald Trump's said talks with China were "moving along nicely."

The latest round of results from US companies were also mostly positive. The Dow Jones rose 264.98 points, or 1.06 per cent, to 25,380.74, the S&P 500 gained 28.63 points, or 1.06 per cent, to 2740.37 and the Nasdaq Composite added 128.16 points, or 1.75 per cent, to 7434.06.

Meanwhile, oil prices plummeted further on growing concerns that global demand is weakening at a time when output from the world's major oil producers is surging.

Most industrial metals were up overnight, while gold prices bounced 2.0 per cent off a three-week low due to a softer US dollar.

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In local finance news on Friday, Macquarie Group is scheduled to release half-year results, while explosives and fertiliser company Orica will release its full-year earnings.

The Australian Bureau of Statistics will publish retail trade figures for September.

ASIA

The Hong Kong stock market climbed on Thursday amid a stronger yuan and policy support for the Chinese economy. Real estate companies led the advance, but pressure remains on the sector as financing costs rise.

At the close of trade, the Hang Seng index was up 1.8 per cent at 25416. The Hang Seng China Enterprises index rose 1.4 per cent to 10,279.32. The sub-index of the Hang Seng tracking energy shares rose 0.6 per cent, the financial sector was 1.7 per cent higher.

The IT sector rose 4.4 per cent, led by gains in shares of Tencent Holdings, after the company's founder sets out the company's future plans in an open letter.

Japan's Nikkei fell on Thursday, pulled down by large cap mobile phone companies after NTT Docomo said lower service fees will start hitting its earnings next year, stoking concerns about the profit outlook for the sector.

On the first trading day of November, the Nikkei share average dropped 1.1 per cent to 21,687.65 points. It fell 9.1 per cent in October, its biggest monthly decline since June 2016.

EUROPE

European shares hit a two-week high on Thursday as strong results from Dutch bank ING and UK telecoms group BT helped offset a disappointing update from Credit Suisse, and ASM International brought some cheer to chipmakers.

The pan-European STOXX 600 hit a two-week high but then lost steam over the session, ending with a 0.2 per cent gain. Germany's DAX declined 0.1 per cent.

European shares built on Wednesday's rally when fresh optimism over earnings helped ease worries over economic growth and political risk which sent the pan-European index close to two-year lows in October.

Miners, banks and retail - sectors highly sensitive to the economic cycle - led the gains, in a reversal of the pattern during the sell-off, which saw cyclicals underperform.

Britain's FTSE lagged, down 0.5 per cent, as the pound strengthened after a British official said London was close to sealing a deal that would give UK-based financial services firms basic access to EU markets.

NORTH AMERICA

US stocks have risen for a third straight session as President Donald Trump said trade talks with China were "moving along nicely," reviving hopes that the two countries can resolve their trade dispute.

Adding to the upbeat mood, the latest round of results from companies was mostly positive.
Trump said he plans to meet with his Chinese counterpart Xi Jinping at the G20 summit in Argentina at the end of the month.

The trade-sensitive S&P industrial sector rose 1.7 per cent, with Boeing Co and Caterpillar Inc among companies leading the gains.

Despite ending higher on Wednesday, the S&P 500 closed out its worst month in seven years, following fears of a widening global trade dispute, rising borrowing costs, and that US earnings growth may slow more than forecast in 2019.

The S&P materials index was up 3 per cent, with DowDuPont surging after it reported strong results and plans for a $US3 billion share buyback.

Apple was up slightly ahead of its results, due after the bell. The technology index rose 1.2 per cent, continuing to recover from the recent sell-off.

Also helping were robust earnings reports from three Apple suppliers, NXP Semiconductors, Dialog Semiconductor and Qorvo.

Technology-related stocks, which have led the stock market's bull run in recent years, helped lead the selling in October, with the S&P 500 tech index down 8 per cent in the month.

The Nasdaq is up 5.4 per cent for the last three sessions, its biggest three-day gain since February 2016.

 

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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 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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