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Global Market Report - 25 September

Lex Hall  |  25 Sep 2018Text size  Decrease  Increase  |  
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Australia

Australian shares look set for a flat open after a Wall Street tumbled overnight, with simmering US-China trade tensions and a looming rate hike taking a toll.

In futures trading, the SPI200 futures contract was down 6 points, or 0.1 per cent, to 6182.0 at 7.30am. The Australian dollar is buying US72.52 cents, down from US72.65 cents at yesterday's close.

Local shares closed slightly lower yesterday after a lack of direction from overseas markets, with major Asian exchanges closed for holidays.

Asia

The US and China imposed fresh tariffs on each other's goods on Monday, as the world's biggest economies showed no signs of backing down from an increasing bitter trade dispute.

News of Beijing's decision to skip the talks pushed China's yuan currency down 0.3 per cent on Monday in offshore trade, reinforcing investors' fears that both sides are digging in for a long fight. Mainland China markets were closed for a holiday.

Europe

The US-China trade war dented European stocks on Monday after tariffs from the world's biggest economies came into force and China cancelled planned talks, triggering new fears of a protracted, costly trade dispute.

Europe's STOXX 600 fell 0.5 per cent, extending losses after remarks from ECB president Mario Draghi bolstered expectations of rate hikes next year.

Autos, among the most dependent on smooth global trade, fell the most, down 1.5 per cent, while rate sensitive banks ended down 0.8 per cent after briefly turned higher following Draghi's comments.

The leading euro zone stocks index fell 0.6 per cent, breaking its longest winning streak since 1997.

Luxury stocks were in focus after reports that US fashion group Michael Kors had agreed to take control of Italy’s Versace in a deal that could value the company at $2 billion.

North America

The S&P 500 and the Dow have closed lower after new US-China trade tariffs kicked in, dampening last week's hopes for talks between the two countries, and as investors awaited an expected interest rate hike by the Federal Reserve.

Seven of the S&P's 11 major sectors lost ground after US tariffs on some $US200 billion worth of Chinese goods took effect, along with Beijing's retaliatory duties.

US equities made strong gains last week as investors held out hope that the US and China would hold trade talks.

The industrial sector, which has borne the brunt of the protracted trade war, was one of the biggest drags on the S&P with a 1.3 per cent drop.

Interest rate sensitive sectors such as consumer staples, down 1.5 per cent, and real estate, off 1.9 per cent, were under pressure ahead of the two-day Fed meeting that begins on Tuesday and is widely expected to end with a rate hike.

The biggest percentage gainer among the S&P sectors was energy as oil prices rose to a four-year high, above $US80 a barrel, after Saudi Arabia and Russia ruled out any immediate increase in production despite calls by US President Donald Trump for action to raise global supply.

The technology sector closed up 0.3 per cent, lifted by a 1.4 per cent gain in Apple, whose products have been spared from the new tariffs on China.

Other gainers included the new Communications Services index, which ended its first session 0.2 per cent higher.

The biggest boost to the new index, which houses media and telecom stocks, was Facebook, which closed up 1.5 per cent.

 

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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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