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Global Market Report - 21 November

Lex Hall  |  21 Nov 2018Text size  Decrease  Increase  |  
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Australia

The Australian share market is set to dive amid a global equities sell-off, with oil and metals prices also falling and the Aussie dollar taking a hit overnight.

The SPI200 futures contract is down 65 points, or 1.14 per cent, to 5613.0, at 8am Sydney time on Wednesday, pointing to a steep drop for the ASX at the open, after a late rally from banking stocks had helped it claw back some ground in the previous session.

The Aussie is buying 72.18 US cents, down from 72.76 cents on Tuesday, and more than a per cent down from the 73.32 cents reached at the weekend.

On Wall Street, the S&P 500 has hit a three-week low, as weak earnings from retailers including Target and Kohl's, as well as a fall in energy shares, added to lingering turmoil from a sell-off in technology stocks.

The Dow Jones Industrial Average fell 513.95 points, or 2.05 per cent, to 24,503.49, the S&P 500 lost 46.72 points, or 1.74 per cent, to 2644.01 and the Nasdaq Composite dropped 119.76 points, or 1.7 per cent, to 6908.72.

Oil prices were caught up in the wider equities slump, dropping seven per cent to the lowest level in more than a year, while copper and iron ore prices have also slipped as uncertainty swirls before a meeting of US and Chinese leaders.

On local shores on Wednesday, supermarket giant Woolworths is scheduled to hold its annual general meeting in Sydney, while the newly-floated Coles will begin trading.

ASIA

The CSI300 index fell 1.8 per cent to 3236.38 points at the end of the morning session, while the Shanghai Composite Index lost 1.5 per cent to 2662.28 points.

In Hong Kong, the Hang Seng index fell 1.8 per cent to 25,890.35 points, while the Hong Kong China Enterprises Index lost 1.6 per cent to 10,458.31.

Financial and technology sectors were among the biggest casualties in China, both dropping over 2 per cent. In Hong Kong, financial stocks fell 1.6 per cent while IT shares slumped 2.6 per cent.

Japan's Nikkei fell to a three-week low on Tuesday as a drop in Nasdaq shares dragged down Japanese tech names, while Nissan Motor plunged on news of chairman Carlos Ghosn's arrest and dismissal.

The Nikkei share average ended 1.1 per cent lower to 21,583.12, the lowest closing level since October 31.

Nissan Motor Co was the most-traded stock by turnover and fell 5.5 per cent to end at 950.7 yen, its lowest since August 2016, after Nissan said Ghosn had been arrested over alleged financial misconduct and would be fired from the board this week.

EUROPE

European stocks fell on Tuesday, with banks weighing heavily on worries about slowing economic growth, fading earnings momentum, Italy's budget, and a lower likelihood of rate hikes in Europe next year.

The pan-European STOXX 600 index fell 1.1 per cent to its lowest level in more than three weeks, with Germany's DAX down 1.2 per cent and Britain's FTSE 100 down 0.8 per cent.

Though European stocks have substantially lagged the United States this year and valuations have fallen, investors said it was too early for the region to be an attractive value play.

Europe's bank stocks index sank 2.3 per cent, its worst day in nearly six weeks, with Italian lenders down 2.6 per cent at their lowest level since the end of November 2016.

Italian government bond yields soared as investors fled its sovereign debt again with Rome showing no signs of backing down in a budget row with the European Commission.

Mediobanca, UniCredit, Banco BPM, and UBI Banca fell 2.4 to 5.4 per cent.

NORTH AMERICA

US stocks have extended their recent sell-off, with the S&P 500 hitting a three-week low, as energy shares dropped with oil prices and retailers including Target and Kohl's sank after weak earnings and forecasts.

Target Corp shares slumped 9.5 per cent after third-quarter profit missed analysts' estimates. The company's investments in its online business, higher wages and price cuts hurt margins.

Department store operator Kohl's Corp shed 7.8 per cent after its full-year profit forecast fell below expectations.

Warnings from retailers added to caution for investors, already on edge over recent sharp losses in technology shares, a slowdown in global growth, peaking corporate earnings and rising interest rates.

The S&P 500 and Dow slipped into negative territory for the year, and the Nasdaq fell to its lowest level in more than seven months.

The S&P energy index tumbled about 3 per cent and led sector losses as US oil prices ended the day down 6.6 per cent amid concerns about rising global supplies. The S&P 500 retail index lost 2.3 per cent, on track for its eighth straight session of losses.

Among other retailers, home improvement chain Lowe's Cos Inc fell 5.3 per cent after it unveiled further plans of restructuring in the face of worse-than-expected sales numbers.

TJX Cos Inc slipped 3.8 per cent after the discount retailer's holiday-quarter earnings forecast came in largely below estimates. Smaller rival Ross Stores fell 8.1 per cent after it forecast fourth-quarter same store sales below analysts' expectations.

Apple shares fell 4.5 per cent as concerns lingered over slowing demand for iPhones. The stock, which has led the market through much of its long bull run, is at its lowest level since early May.

Signs of cooling demand for iPhones have wide-ranging implications for technology and internet companies.

Should Apple's loss hold through the day, its shares would have lost more than 20 per cent of their value, or around $US250 billion, since its October 3 record closing high.

 

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Morningstar with AAP, Reuters

Lex Hall is content editor, Morningstar Australia

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