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Global Market Report - 28 August

Lex Hall  |  28 Aug 2018Text size  Decrease  Increase  |  
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Australia

Australian shares are likely to open subdued, despite across-the-board gains on Wall Street overnight, with last week's domestic political turmoil still weighing on sentiment.

In futures trading, the SPI200 futures contract was down 5 points, or 0.08 per cent, to 6231 points at 8.30am. The Australian dollar is buying 73.22 US cents, from 73.13 US cents on Monday.

On Wall Street, a broad-based rally pushed the S&P 500 and the Nasdaq to record-high closes for the second straight session as a trade agreement reached between the US and Mexico buoyed investor sentiment.

The Dow Jones Industrial Average ended 259.29 points, or 1.01 per cent higher at 26,049.64 points, the S&P 500 was up 22.05 points or 0.77 per cent at 2896.74 points, while the tech-heavy NASDAQ index rose 71.91 points or 0.91 per cent at 8017.90 points.

Reporting today: Blackmores, Caltex, Regis Resources, Viva Energy Group

Asia

A strengthening in the Chinese yuan, one causality of heightened trade tensions, also boosted sentiment in world markets.

The yuan hit a 2-1/2-week high versus the dollar after China's central bank revived a "counter-cyclical factor" in its daily fixing to support the currency, arresting a record 10-week slide that has rattled global markets and irritated Washington.

The announcement was seen as the latest signal from the People's Bank of China that is not comfortable with further depreciation in the yuan, which could spark capital outflows from the cooling economy.

A firmer tone in the currency helped lift Chinese shares to two-week highs, with the Shanghai Composite index closing up 1.9 per cent.

The move also raised hopes that a yuan recovery could boost companies with significant dollar-denominated costs, such as airlines.

China Southern Airlines gained 4.5 per cent and Air China rose 3.25 per cent.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.1 per cent and Japan's blue-chip Nikkei closed at a 10-week high.

That left the MSCI All-Country World index, which tracks shares in 47 countries, at its highest level since August 9.

Europe

In Europe, data on Monday showed German business morale improved by much more than expected in August, suggesting that concerns about a global trade war among company executives in Europe's largest economy have eased.

The Munich-based Ifo economic institute said its business climate index jumped to 103.8 after 101.7 in the previous month.

That added to the upbeat tone in equity markets but weighed on safe-haven German bond yields, which rose to more than two-week highs.

Stock markets in Paris and Frankfurt rose 0.4 per cent each. British markets were closed for a public holiday.

The dollar index, which tracks the greenback against a basket of six major rivals, was broadly flat at 95.180, after slipping more than 0.5 per cent in the previous session.

The euro was little changed at $1.1609 after going as high as $1.1654, its strongest since August 2, while hopes of progress in US/ Mexican NAFTA talks lifted the Mexican peso 0.8 per cent to 18.78 per dollar.

Oil prices fell, while gold edged lower as the dollar recovered.

North America

Comments from Fed chief Jerome Powell at the Jackson Hole symposium on Friday affirming that the US central bank was sticking with its strategy of gradual rate hikes to protect economic growth sparked a rally in stocks that gathered pace as a new week swung into gear.

Helping to brighten the mood, US and Mexican trade negotiators reached a common position on the North American Free Trade Agreement.

US stocks kept setting all-time highs, and the Mexican peso and Canadian dollar both strengthened on the trade-deal news.

The S&P 500 closed just short of 2900, as makers of autos and their parts surged. Treasuries fell, with the 10-year yield adding more than three basis points. WTI neared $69, and gold also advanced.

 

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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 content 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 '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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