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Global Market Report - 4 September

Lex Hall  |  04 Sep 2018Text size  Decrease  Increase  |  
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Australia

Australian shares look set to open slightly lower with US markets closed for the Labor Day holiday while the RBA is expected to keep rates unchanged when it meets today.

In futures trading, the SPI200 futures contract was down four points, or 0.32 per cent, to 6296 points at 8.30am. The Australian dollar is buying US72.14 cents, from US71.9 cents yesterday.

Australian shares fell yesterday with pressure on banking and mining stocks and a slide in Telstra weighing on the market.

Economists widely predict the RBA will keep the cash rate at 1.5 per cent for the 25th consecutive month, at its September board meeting on Tuesday.

The bank last cut the rate in August 2016, paving the way for the longest period without a change in modern history.

Australians splashing some cash are expected to have helped the economy grow in the June quarter.

Economists have tipped the national accounts will show 0.7 per cent in growth in the quarter when they are released on Wednesday.

The rise would mean the economy had expanded by 2.8 per cent compared with a year before.

Out today: current account second quarter; RBA policy meeting and cash rate decision; RBA governor Philip Lowe speaks at a board dinner in Perth.

Asia

MSCI's broadest index of shares outside Japan and Tokyo's blue-chip Nikkei shed about 0.7 per cent each.

Across emerging markets, turbulence continued. The Indonesian rupiah fell to the lowest levels against the dollar since the country's economic crisis two decades ago, and the central bank said it was intervening in foreign exchange and bond markets.

However, Turkey's lira, at the centre of emerging market turmoil in recent weeks, firmed on Monday to 6.56 per dollar , lifted by a statement from the central bank which said it would "adjust" its monetary stance at its upcoming September 13 meeting.

Inflation was above expectations in August, surging 18 per cent and touching the highest since December 2003.

Hong Kong shares fell, tracking regional weakness as fears over further escalation of the US-China trade war and signs of slowing manufacturing growth in China hit investor sentiment.

The Hang Seng index closed 0.6 per cent lower at 27,712.54, while the China Enterprises Index lost 0.6 per cent to 10,813.57 points.

The sub-index of the Hang Seng tracking energy shares closed down 1.3 per cent, while the IT sector closed 2 percent lower, the financial sector ended down 0.3 per cent lower and property sector closed 0.9 per cent weaker

China's manufacturing activity grew at the slowest pace in more than a year in August, with export orders shrinking for a fifth month and employers cutting more staff, a private survey showed on Monday.

The Shanghai Composite index closed down 0.2 per cent at 2725.25 points, while its blue-chip CSI300 index ended down 0.4 per cent.

Europe

Global stock markets have fallen for a third straight day, hurt by worries over the escalation of trade disputes between world powers and a deepening sell-off across emerging market currencies. European shares mostly opened lower.

There was also bad news on the economic data front as euro zone manufacturing growth slowed to a near two-year low in August as amid growing trade war fears, a survey showed on Monday.

The British pound stood out as the big underperformer, hurt by comments by the European Union's chief Brexit negotiator, Michel Barnier, that he was "strongly opposed" to British proposals on future trade ties after it leaves the EU.

Weak manufacturing survey data also weighed on sterling, which fell 0.5 per cent to $US1.29 and weakened 0.6 per cent against the euro to 90.11 pence

The weakness in the pound however helped lift London's blue-chip FTSE rose 0.7 per cent.

In European bond markets, Italian bond yields edged lower after Fitch Ratings left its credit rating unchanged at BBB, revising only its outlook to negative.

North America

A holiday in the US subdued trading activity.

Still, MSCI's All-Country World Index, a gauge of 47 markets, fell 0.2 per cent and the main emerging equity index fell 0.5 per cent, bearing the brunt of global trade fears.

US President Donald Trump said at the weekend there was no need to keep Canada in the North American Free Trade Agreement and warned congress not to meddle with the trade talks.

Worries about US tensions with China were also kept alive by a report last week that Trump had told aides he was ready to impose tariffs on an additional $US200 billion worth of imports from China as soon as a public comment period on the plan ends on Thursday.

That would be a major escalation given the US has already applied tariffs on $US50 billion of exports from China.

The dollar hovered near one-week highs against a basket of currencies, lifted by the trade worries.

Global trade concerns supported the US dollar, with dollar index nearing its highest level since August 27. It has gained nearly 7 per cent since mid-April when trade tensions first arose.

Major economic US data due this week, such as a manufacturing survey on Tuesday and an employment report on Friday, is expected to show solid conditions.

Elsewhere, oil prices steadied on Monday, weighed down by rising supply from OPEC and the US but supported by concerns that falling Iranian output will tighten markets once US sanctions bite from November.

Brent crude oil was up 23 cents at $US77.87 a barrel. US crude CLc1 was unchanged at $US69.80.

 

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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

© 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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