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Global Market Report - 26 October

Lex Hall  |  26 Oct 2018Text size  Decrease  Increase  |  
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Australia

A limping Australian share market is poised to claw back ground from its new 12-month low, with early trade set to mirror a tech-driven bounce on Wall Street overnight.

The SPI200 futures contract was up 73 points, or 1.3 per cent, to 5701.0 at 8am Sydney time on Friday, signalling a lift for the ASX after it bled red during Thursday's session, losing 3 per cent and closing at its lowest since October last year.

The Australian dollar is also up, buying 70.81 US cents from 70.74 US cents on Thursday.
US stocks gained overnight as Microsoft’s strong earnings helped Nasdaq-listed companies stage a rebound from the tech-heavy index’s worst decline since 2011.

The Dow Jones Industrial Average rose 401.13 points, or 1.63 per cent, to 24,984.55, the S&P 500 added 49.47 points, or 1.86 per cent, to 2705.57 and the Nasdaq Composite jumped 209.93 points, or 2.95 per cent, to 7318.33.

This is likely to herald a turnaround for the ASX, which saw its worst month in more than three years continue on Thursday.

The local bourse is down more than 8 per cent for October - and down 10 per cent since August - edging ever closer to an 18-month low of February 2016 after five straight session of losses.

Meanwhile, Qantas will hold its annual meeting today, having already announced a 6.3 per cent rise in first-quarter revenue.

Elsewhere, a sharp drop in copper inventories has outweighed fears over sliding stock markets and the potential for slower global growth, pushing the metal's price higher.

Iron ore and oil prices also gained overnight, while gold cooled as global stocks rebounded.

Asia

China's main onshore stock market indexes clawed back from midday losses for a second day of weak gains on Thursday.

In Tokyo, the Nikkei share average ended 3.7 per cent down at 21,268.73, its lowest close since March 29.

The broader Topix hit a fresh one-year low, dropping 3.1 per cent to 1600.92, causing market capitalisation to fall below 600 trillion yen for the first time since September 2017.

The Nikkei has dropped 13 per cent from a 27-year peak of 24,448.07 touched on October 2.

Europe

The European Central Bank stuck to plans to claw back unprecedented stimulus, even as the growth outlook continues to darken.

Eurozone shares ended a choppy session well in positive territory on Thursday as positive corporate results in France and a late boost from a weakening euro - a boon for exporters - lifted the market.

Shares had earlier fallen amid a global sell-off, with weak results from blue chips such as AB InBev or WPP underlining investor concern about slowing earnings growth.

The eurozone STOXX rose 1 per cent with France's CAC 40 gaining as much as 1.6 per cent, lifted by a batch of positive corporate results.

The region's exporters also got a lift from a falling euro after European Central Bank chief Mario Draghi said Europe's monetary union remained fragile, doing little to assuage concerns about financial instability in Italy.

Top of the STOXX was Kion, jumping 13 per cent after the German logistics company reported strong order intake.

North America

US stocks have jumped, giving the Nasdaq its biggest daily gain since March, as Microsoft's upbeat earnings spurred a rebound in technology names and investors snapped up oversold shares.

The Nasdaq rose 3 per cent on Thursday, a day after it confirmed a correction and registered its biggest decline since 2011.

The Dow and S&P 500 both moved back in positive territory for the year.
Microsoft jumped 5.8 per cent after it beat consensus estimates for revenue and profit. That, along with gains in chipmakers, helped technology stocks rise 2.89 per cent.

The latest round of upbeat results came from a wide range of companies, including Ford Motor Co, Visa, Whirlpool and Twitter, and offered relief after the earnings season began on a tepid note and then geared lower on sluggish outlooks from manufacturers and chipmakers.

The Nasdaq registered its biggest daily percentage gain since March 26.

Stocks have sold off recently amid worries over the impact of tariffs and China's profit slowdown, as well as concerns ranging from rising costs, bond yields, Italy's budget struggles and the US congressional elections.

In a further sign economic growth is moderating, US business spending on equipment appeared to have remained slow in September and the goods trade deficit widened further as rising imports outpaced a rebound in exports.

But the recent sell-off has also made stocks slightly cheaper. The S&P 500's valuation fell to a 2½-year low of 15.3 times profit estimates for the next 12 months from 15.8, according to Refinitiv data.

Results from S&P 500 companies have pushed up third-quarter profit growth estimates to 23.6 per cent from 21.8 per cent in the last 10 days.

But dour forecasts have pulled down fourth-quarter growth estimates to 19.4 per cent from 19.9 per cent, according to I/B/E/S data from Refinitiv.

Ford, which is struggling with sales in China, rose 9.9 per cent as its earnings report raised hopes for a strong finish to the year, bolstering gains in the consumer discretionary sector.

Advanced Micro Devices' weak forecast sent its stock tumbling 15.4 per cent. But the Philadelphia Semiconductor index rose 2.3 per cent, helped by Xilinx's 15 per cent jump on its strong quarterly report.

After the bell, shares of Amazon.com and Alphabet fell sharply following the release of their results. Amazon was down 3.9 per cent while Alphabet was down 3.4 per cent.

 

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Morningstar with AAP, Reuters

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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