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Global Market Report - 5 October

Lex Hall  |  05 Oct 2018Text size  Decrease  Increase  |  
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Australia

A strong greenback has pummelled the local dollar during offshore trading after it had already slumped to a two-and-a-half year low, while a tumble in US stocks overnight is expected to drag Australian shares lower at the open.

At 8am Sydney on Friday, the Aussie is buying 70.79 US cents, having plummeted to an overnight low of 70.66 US cents, a 12.8 per cent drop from January's three-year high of 81.08 US cents.

The SPI200 futures contract was down 27 points, or 0.44 per cent, to 6150.0, pointing to a lower open for the ASX - which had closed higher on Thursday buoyed by the banks and commodity-related stocks.

A stumble by Wall Street overnight is expected to weigh heavily, with the Dow suffering its first decline in six sessions, while both the S&P and Nasdaq had their worst day since June as the yield on the benchmark 10-year Treasury note climbed to a seven-year high of 3.232 per cent.

The Dow Jones Industrial Average fell 200.91 points, or 0.75 per cent, to 26,627.48, the S&P 500 lost 23.9 points, or 0.82 per cent, to 2901.61 and the Nasdaq Composite dropped 145.58 points, or 1.81 per cent, to 7879.51.

Meanwhile, oil prices have dipped overnight on the prospect of increased crude production from Saudi Arabia and Russia, which could impact local energy shares on Friday.

Copper gained and aluminium retreated, while gold steadied as positive US economic data and prospects of tighter monetary policy offset limited gains from safe haven buying.

In local data news on Friday, the Australian Bureau of Statistics is expected to release August's retail trade figures.

Asia

Hong Kong stocks fell for a third straight session on Thursday, marking a three-week closing low, as a firmer dollar prompted fears of capital outflows from local and Chinese markets, while a fall in oil prices also dragged down energy-related stocks.

China's financial markets are closed for the National Day holiday and will resume trade on October 8.

Hong Kong's main Hang Seng index ended Thursday weaker, losing 467.39 points or 1.7 per cent to 26,623.87, the lowest close since September 12. The Hang Seng China Enterprises index fell 2.2 per cent to 10,547.64.

Europe

Britain's top share index suffered its biggest loss since mid-August as rising US yields took their toll across global stock markets. The FTSE 100 fell 1.2 per cent to 7418.34 points.

Defensive consumer staples fell hardest, including British American Tobacco, which lost 3.8 per cent.

Healthcare and consumer discretionary also suffered heavy losses.

Burberry fell 5.6 per cent along with shares in European luxury goods companies as fears of a China slowdown weigh on the market.

British clothing brand Ted Baker fell 10 per cent amid warnings of "challenging" months ahead, and posted a 3.2 per cent drop in pretax profit for the first half.

Financials were the standout, with HSBC advancing 0.5 per cent and RBS 0.5 per cent.

North America

Wall Street stocks stumbled on Thursday as US Treasury yields continued their ascent to multi-year highs on the latest round of strong economic data, building concerns for an acceleration of inflation.

The Dow suffered its first decline in six sessions, while both the S&P and Nasdaq had their worst day since June 25.

The yield on the benchmark 10-year Treasury note climbed to a seven-year high of 3.232 per cent, marking its largest daily jump since the 2016 US presidential election.

Data on jobless claims and factory orders were the latest in around of strong economic reports this week, putting the focus squarely on Friday's payrolls report for September.

Financials were one of the few bright spots on Wall Street, rising 0.71 per cent. Banks, which typically benefit from rising rates, gained 0.81 per cent.

Thursday's data, which showed jobless claims fell to a near 49-year low, followed comments this week from several Federal Reserve officials, including chairman Jerome Powell, that underscored the strength of the economy.

Among the biggest drags on the S&P were the so-called FANG group of stocks, which were among shares that helped propel the Nasdaq to its recent record high. Google parent Alphabet sank 2.8 per cent and Netflix slumped 3.6 per cent.

Apple lost 1.76 per cent, and Amazon.com Inc, shed 2.22 per cent. Both companies denied a Bloomberg report their systems had been infiltrated by malicious computer chips inserted by Chinese intelligence.

Market participants will be looking closely for signs of wage growth in Friday's jobs number, especially in light of anecdotal indications of rising wages such as Amazon's raising its minimum wage to $15 earlier this week.

Despite the pullback, US stocks remain near record levels, raising some concern about valuations with the quarterly earnings reporting season about to begin.

 

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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 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 '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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