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Global Market Report - 31 August

Lex Hall  |  31 Aug 2018Text size  Decrease  Increase  |  
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Australia

Australian shares look set for a higher open despite falls on Wall Street overnight, as US stocks ended their four-day winning streak in the wake of growing trade anxieties.

In futures trading, the SPI200 futures contract was up 12 points, or 0.19 per cent, at 6336 points at 8.30am Sydney time. The Australian dollar is buying 72.67 US cents, from 72.88 US cents on Thursday.

On Wall Street the Dow Jones Industrial Average closed down 137.65 points, or 0.53 per cent at 25,986 points, after US President Donald Trump threatened to withdraw from the World Trade Organisation if "they don't shape up".

Such a move could undermine one of the foundations of the modern global trading system.
The S&P500 was down 12.91 points or 0.44 per cent at 2901 points, while the tech-heavy
NASDAQ index was down 21.32 points or 0.26 per cent at 8088 points.

The price of iron ore fell 2.2 per cent overnight to $US65.87 per tonne.

In local equities, diversified foods producer Freedom Foods Group has forecast higher sales and earnings across Australia and Asia in the next two years after boosting full-year profits by 71 per cent.

Harvey Norman reports later today.

Asia

Hong Kong stocks fell on Thursday, as fears of slower China growth amid Beijing's escalating trade war with the United States kept investor sentiment fragile.

The Hang Seng index fell 0.9 per cent to 28,164.05, while the China Enterprises Index dropped 1.0 per cent to 10,967.61 points.

Activity in China's vast factory sector likely slowed for the third straight month in August as domestic demand remained weak and exporters faced rising uncertainties from the trade war with the United States, a Reuters poll showed.

Mainland Chinese stocks fell for a third straight session of losses, as worries lingered over the country's economic health amid its trade spat with the United States. The blue-chip CSI300 index fell 1.0 per cent to 3351.09 points, while the Shanghai Composite Index also closed down 1.1 per cent at 2737.74 points.

In Japan, the Topix index gained 0.69 per cent, while the Nikkei index rose 1.5 per cent in the last week, to snap their three-week losing streak.

Europe

European shares fell back on Thursday, tracking a decline in Asian trading as weakness in Chinese markets eclipsed optimism that a NAFTA deal could be struck by Friday’s deadline.

The pan-European STOXX 600 extended early losses to 0.5 per cent, while Germany's DAX, which is sensitive to China due to its prominence as a German export market, dropped 0.9 per cent.

Chinese stocks fell after a Reuters poll showed activity in the factory sector likely slowed for the third straight month in August amid uncertainty over an escalating trade war with the United States.

In Europe, trade-sensitive mining stocks tumbled 1.3 per cent and autos fell 0.7 per cent.

Shares in Europe’s largest property company Unibail-Rodamco-Westfield fell 5 per cent even though the company reported a boost to profits from its acquisition of Australian shopping centre giant Westfield.

North America

US stocks have ended their four-day winning streak as risk reduction ahead of the long holiday weekend accelerated on growing trade anxieties.

The broad-based sell-off steepened in mid Thursday afternoon following a Bloomberg report that US President Donald Trump wants to impose proposed tariffs on an additional $US200 billion of Chinese imports as early as next week, sooner than expected.

The CBOE Volatility Index, a gauge of investor expectations for near-term volatility, rose to a near two-week high in a low-volume, pre-holiday session, closing at 13.53.

The Bloomberg report coincided with continuing efforts by Canada and the United States to revamp the North American Free Trade Agreement (NAFTA) ahead of a Friday deadline.

Apple shares closed at a record high, rising 0.9 per cent following news that it would unveil its latest iPhones on September 12.

Amazon stock rose 0.2 per cent, closing above $US2,000 for the first time and edging the company closer to becoming the second US company after Apple to reach $US1 trillion in market value.

Of the 11 major sectors of the S&P 500, only utilities advanced.

Campbell Soup Co shares dipped 2.1 per cent after it announced plans to sell its international and fresh refrigerated-foods units and left open the possibility of putting the whole company up for sale.

Shares of Abercrombie & Fitch plunged 17.2 per cent after the apparel retailer missed quarterly same-store sales estimates.

Discount retailers Dollar Tree and Dollar General were down 15.5 per cent and 1.0 per cent, respectively, after both gave disappointing profit outlooks on margin worries.

In economic news, the Federal Reserve's preferred inflation gauge, the core PCE price index, posted a 2 per cent year-on-year increase, hitting the central bank's target and boosting the likelihood of additional rate hikes this year.

 

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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

© 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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