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Global Market Report - 31 October

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

The Australian share market is poised for a subdued open despite a solid overnight session on Wall Street, where investors are taking advantage of cheaper prices following a recent pullback for equities.

The SPI200 futures contract was down 5 points, or 0.09 per cent, to 5767.0 at 8am on Wednesday, hinting at a flat open for the ASX after it again defied early predictions to surge by more than a per cent on Tuesday.

In overseas trade, The Dow Jones Industrial Average rose 431.72 points, or 1.77 percent, to 24,874.64, the S&P 500 gained 41.38 points, or 1.57 percent, to 2682.63 and the Nasdaq Composite added 111.36 points, or 1.58 percent, to 7161.65.

The Australian dollar climbed overnight, and is buying 71.05 US cents from 70.93 US cents.
On Tuesday, local healthcare stocks led a recovery for a second straight session, with Mayne Pharma, Ansell and CSL all gaining more than two per cent each.

Meanwhile, oil prices have dropped more than 1 per cent on signs of rising supply and concern that global economic growth and demand for fuel will fall victim to the US-China trade war.

Metals have also dropped, while gold prices have eased on a stronger US dollar.
In local finance news on Wednesday, ANZ has announced its cash profit has dropped five per cent to $6.5 billion for the year as it simplifies its operations and prepares for remediation in the wake of the royal commission.

The bank had earlier flagged $421 million in remediation costs and was tipped by UBS analysts to unveil a $6.2 billion cash profit ahead of a "tough" reporting season for the big banks, with customer compensation and royal commission costs set to hit lenders where it hurts.

Asia

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Hong Kong's main Hang Seng index closed at its lowest in nearly 18 months on Tuesday after a choppy day for regional markets, as tepid investor sentiment outweighed promises of support for mainland markets by China's securities regulator.

At the close, the Hang Seng index was down 0.9 per cent at 24,585.53 points, its lowest close since 8 May, 2017. The China Enterprises Index lost 0.1 per cent to 9998.95 points.

The top gainer on the Hang Seng was Geely Automobile Holdings, which ended 2.4 per cent firmer, while the biggest loser was BOC Hong Kong Holdings, which closed down 7.1 per cent.

China's blue-chip CSI300 index ended 1.1 per cent higher at 3110.26 points after falling 3 per cent on Monday, while the Shanghai Composite Index closed up 1 per cent at 2568.05 points after Monday's 2.2 per cent drop. Both indexes reversed early losses that had seen the Shanghai Composite down as much as 0.8 per cent, and the CSI300 down as much as 0.9 per cent.

Japan's Nikkei share average ended 1.5 per cent higher at 21,457.29 points, posting the biggest daily gain since mid-August.

Europe

European shares ended a choppy session lower on Tuesday, failing to benefit from a positive open on Wall Street as they buckled under the weight of disappointing earnings and data showing the euro zone economy grew less than expected in the third quarter.

The leading eurozone stocks index was down 0.1 per cent, while Germany's DAX fell 0.4 per cent and Britain's FTSE 100 climbed 0.1 per cent.

Among the factors weighing on morale was the euro zone's quarterly growth slowing to 0.2 per cent and signs of distress in Italy highlighting concerns that the bloc's third-ranked state is becoming one of its weakest links.

A fresh batch of third-quarter results did little to lift spirits.

North America

Major US stock indexes have jumped more than 1 per cent, helped by strong gains for chip and transport stocks as investors took advantage of cheaper prices following a steep recent pullback for equities.

All 11 major S&P 500 sectors ended higher a day after a volatile session that pushed the benchmark S&P 500 lower and close to confirming its second correction of 2018.

The Philadelphia semiconductor index jumped 4.2 per cent, its biggest one-day percentage gain since March. Intel surged 5.2 per cent and gave the biggest single-stock boost to the S&P 500.

Chip stocks also gained following a brokerage upgrade of Nvidia shares and a better-than-expected report from chip-gear maker KLA-Tencor. Nvidia shares jumped 9.4 per cent and KLA-Tencor shares rose 7.6 per cent.

Chip stocks had dropped broadly on Monday, as renewed concerns about US-China trade tensions sparked declines.

The Dow Jones Transport Average jumped 2.8 per cent, its biggest one-day rise in about a year. A drop in oil prices may have boosted closely watched transport shares, Carlson said.

Market volatility has spiked in recent weeks, stemming from higher US interest rates and worries about economic growth peaking and trade tensions. Investors also may be increasingly nervous about uncertainty surrounding US congressional elections, now just a week away.

The S&P is on pace for its biggest monthly percentage drop in more than eight years.

S&P 500 companies are on pace to have posted a 25.3 per cent rise in third-quarter earnings with more than half of the constituents having reported, according to I/B/E/S data from Refinitiv.

Despite the big overall profit increase, some high-profile companies have issued disappointing reports. On Tuesday, General Electric shares tumbled 8.8 per cent after the conglomerate drastically reduced its dividend and said it faced a deeper accounting probe.

In other earnings news, Coca-Cola Co's shares rose 2.5 per cent after the beverage maker's quarterly revenue and profit topped Wall Street expectations.

Under Armour's shares surged 24.7 per cent after the sportswear maker's upbeat quarterly earnings and full-year profit forecast.

 

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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 senior 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 'regulated financial advice' under New Zealand law has 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. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. 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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