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Global Market Report - 24 August

Glenn Freeman  |  24 Aug 2018Text size  Decrease  Increase  |  
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Australia

Australian shares are likely to start higher but gains could be capped following a weaker finish on Wall Street overnight, and as domestic political turmoil rolls into its third day.

The Australian dollar was the worst-performing major currency yesterday, down a further 0.9 per cent to $0.728

Australian shares are down more than 1.5 percent since the first leadership challenge this week.

In futures trading, the SPI 200 futures contract was up 9 points, or 0.14 per cent, to 6,230 points at 8am, pointing to a higher open for the Australian stock market.

Wall Street's major indexes fell as trade-sensitive stocks were hit by a fresh round of tariffs in the trade dispute between the United States and China, with the two countries imposing tariffs on
US$ 16 billion worth of each other's goods.

The Dow Jones Industrial Average fell 76.62 points, or 0.3 per cent, to 25,656.98, the S&P 500 lost 4.84 points, or 0.17 per cent, to 2,856.98, while the tech-heavy Nasdaq Composite dropped 10.64 points, or 0.13 per cent, to 7,878.46.

In local equities, Medibank Private (ASX: MPL) , Star Entertainment (ASX: SGR), Automotive Holdings (ASX: AHG) and Tassal will be among the companies reporting results on Friday.

The Australian dollar is buying 72.86 US cents, from 72.96 US cents on Thursday.

Asia

Asian stocks were set for a mixed end to the week after US equities edged lower and the dollar climbed – as investors awaited an address by FOMC chair Jerome Powell and US President Trump indicated he would press on with a US-China trade war.

Futures indicated a higher start for shares in Japan and Australia, while Hong Kong equities pointed to declines.

Futures on Hong Kong’s Hang Seng fell 0.4 percent, while futures on Japan’s Nikkei edged up by the same margin yesterday, after a weak yen supported overall sentiment.

The Nikkei share average ended 0.2 percent higher at 22,410.82.

Investors continued to hold formation, as China-US trade talks were underway, and the US Federal Reserve held its annual symposium.

US and Chinese officials met for the first time in more than two months – but there was no evidence the low-level discussions would halt a new round of US tariffs due Thursday.

Auto shares, tire makers and auto parts manufacturers fell, dragged down by a 13 per cent share price dive at Continental AG.

Toyota Motor Corp fell 1.1 per cent, Nissan Motor Co dropped 2 percent, and Bridgestone Corp lost 2 per cent,

Yokohama Rubber was down 2.7 per cent, Denso Corp lost 2.8 per cent and Tokai Rika dropped 3.2 per cent.

Europe

European shares were also down on Thursday in response to US-China tariffs, which knocked trade-sensitive automotive stocks. Negative sentiment from Wall Street falls also took a toll.

The STOXX 600 edged down 0.16 per cent to 383.42 points, and most European bourses posted only modest losses.

European auto stocks were the worst performers, down 1.4 per cent, led down by Continental AG.

Carmakers Daimler, BMW and Volkswagen fell by 0.6 to 1.6 percent, while Peugeot, Michelin and Renault were down 3.2 percent, 2.2 percent and 1.8 percent respectively.

Outside the tariff-hit sectors, shares in budget airline Ryanair jumped 5.5 percent.

Danish medical equipment supplies and distribution company Ambu posted the worst performance of the STOXX 600 index, down 12 percent on a sub-par third quarter financial result.

In currencies, the British pound fell the most a fortnight in response to further government warning on Brexit.

The Russian ruble swung from a loss to a gain after the central bank announced a suspension of foreign exchange purchase through to the end of September.

North America

No major breakthroughs were achieved in the two days of US-China talks between mid-level officials from the two countries. The trade war has now escalated, as another $16 billion round of tariffs on each other's goods kicks in.

The S&P 500 edged lower yesterday, down 0.2 per cent, particularly on falls among trade-sensitive stocks.

The Dow Jones Industrial Average on Thursday fell 76.9 points, or 0.3 per cent, to 25,656.9, the and the Nasdaq Composite added 29.92 points, or 0.38 per cent, to 7,889.10.

The dollar rose for the first time in six days, pressuring commodity prices on products from copper to soybeans.

The two-year Treasury yield gained ahead of scheduled comments by Federal Reserve chairman Jerome Powell Friday, and US 10-year treasury yields were flat, up just 0.004..

The Mexican peso dropped against the greenback as investors waited to see if a deal would be reached on Nafta.

 

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Morningstar with AAP, Reuters and Bloomberg 

Glenn Freeman is senior 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

© 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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