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Global Market Report - 28 November

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

The Australian share market is set for a subdued open after a choppy overnight session on Wall Street, with US stocks eventually eking out gains on hopes trade tensions with China will ease.

At 8am Sydney time the SPI200 futures contract has edged 5 points higher, or 0.09 per cent, to 5739.0, pointing to a flat open for the ASX.

Australian stocks closed higher yesterday after a positive afternoon of trading, buoyed by the financial sector and supported by commodity-related stocks.

However, the Aussie dollar has dipped to US72.28 cents, down from US72.34 cents yesterday.

Oil prices also edged lower overnight, copper fell again, but iron ore broke its losing streak to rise 94 cents to $65.19 a tonne.

The major US indexes climbed late in the session after White House economic adviser Larry Kudlow said the post-G20 meeting between President Donald Trump and his Chinese counterpart would be an opportunity to "turn the page" on a trade war.

The Dow Jones Industrial Average rose 25.41 points, or 0.1 per cent, to 24,665.65, the S&P 500 gained 3.54 points, or 0.13 per cent, to 2676.99 and the Nasdaq Composite added 4.69 points, or 0.07 per cent, to 7086.55.

In local finance news today, investors will be keeping an eye on AMP shares after the under-fire lender said it underestimated the scale of its fees- for-no-service problems.

ASIA

Stocks in Hong Kong eased slightly on Tuesday as investors stayed clear of potential volatility inspired by likely surprises at the G20 summit and the pace of rate hikes in the US.. Hopes for advances in the local market vanished after mainland stocks ended flat before the Hong Kong close.

The Hang Seng index was down 0.2 per cent at 26,331.96, while the Hang Seng China Enterprises index fell 0.1 per cent.

The Shanghai Composite was flat, while the CSI300 blue chip index lost 0.1 per cent. Trading volume in Shanghai was lower than the two preceding sessions.

EUROPE

European shares fell on Tuesday after a new threat by Washington to impose more tariffs on Chinese products and fears the trade war could spread to Europe after a report in Germany of possible new US taxes on imported cars.

The pan-European STOXX 600 benchmark closed down 0.2 per cent, pulling back from the one-week high reached the day before on optimism over Brexit and a possible Italian budget compromise with Brussels.

European auto stocks lead losers with a 2.5 per cent fall and Germany's DAX, seen as a trade war proxy because of its export-heavy constituents, retreated 0.4 per cent.

Among other sectoral fallers were mining companies, down 2.3 per cent as copper prices slid for the third day, pressured by Trump's comments.

Travel stocks fell 0.9 per cent and were under pressure after Thomas Cook cut its profit forecast for the second time in two months and suspended its dividend after the hot British summer deterred holidaymakers from going abroad.

Thomas Cook shares fell 22.6 per cent to a six-year low.

NORTH AMERICA

US stocks have declined after President Donald Trump's threat to move ahead with additional tariffs on Chinese goods dampened hopes of resolving the trade spat at the upcoming G20 summit.

Ahead of a meeting where the leaders of the world's two largest economies are widely expected to enter a trade deal, Trump told the Wall Street Journal he expects to raise tariffs on $US200 billion ($277 billion) in Chinese imports to 25 per cent, calling it "highly unlikely" that he would accept China's request to hold off on the increase.

Apple fell 1.6 per cent on Tuesday and led the declines in the technology sector after Trump said tariffs could also be placed on laptops and iPhones imported from China.

Chipmakers, which have the highest revenue exposure to China among S&P 500 companies, also declined, with the Philadelphia SE Semicoductor index losing 0.79 per cent.

Shares of Boeing, the single largest US exporter to China, fell 1.2 per cent and fellow Dow component Caterpillar fell 1.6 per cent, weighing on industrial stocks.

The downbeat mood comes after Wall Street started off the week on a high note, partly helped by retail stocks gaining on the hopes of a robust holiday season.

United Technologies tumbled nearly 6 per cent, the most on the benchmark S&P 500 index. The industrial conglomerate was up in premarket trading after it announced plans to separate into three companies.

All the major S&P sectors were in the red, with the technology sector's 0.95 per cent drop leading the slide.

Federal Reserve vice chairman Richard Clarida said the central bank should continue to gradually raise interest rates, but it is "especially important" to closely monitor new economic data as monetary policy is getting close to a neutral stance.

Fed chairman Jerome Powell is scheduled to speak on Wednesday and his commentary will be closely watched for further clues on the path of interest rate hikes and signs of slowing economic growth in the face of rising trade tensions.

 

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