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Global Market Report - 9 November

Lex Hall  |  09 Nov 2018Text size  Decrease  Increase  |  
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Australia

The Australian share market is set to edge lower at the open, following Wall Street's overnight slide, after the US Federal Reserve announced it was keeping interest rates steady.

The SPI200 futures contract nudged down nine points, or 0.15 per cent, to 5904.0 at 8am Sydney time on Friday, pointing to a subdued open for the ASX after banking and health care stocks lifted the market for a third straight session on Thursday.

The Australian dollar cooled overnight and is buying 72.54 US cents, down from 72.82 US cents on Thursday.

Overnight, the US central bank kept rates steady on the back of ongoing strong job gains and household spending, which it said was keeping the country's economy on track.

Investors, who are still digesting the country's midterm election results, are now suggesting a rate hike will come in December.

In the wake of the Fed's decision the Dow Jones Industrial Average fell 33.22 points, or 0.13 per cent, to 26,147.08, the S&P 500 lost 11.76 points, or 0.42 per cent, to 2802.13 and the Nasdaq Composite dropped 55.15 points, or 0.73 per cent, to 7515.61.

In company news, Australia's Robyn Denholm will become the new chair of Tesla's board, replacing Elon Musk.

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The electric car company said Denholm will leave Telstra after a six-month notice period with Australia's biggest telco. The appointment takes effect immediately.

Denholm already is on Tesla's board. The firm said her post as board chairwoman will be a full-time position. It comes after Musk agreed to vacate his post as board chairman as part of a settlement with

US regulators of a lawsuit alleging he duped investors with misleading statements about a proposed buyout of the company.

In local finance news on Friday, the Reserve Bank is set to release its quarterly monetary policy statement, having kept the interest rate at a record low of 1.5 per cent on Tuesday.

The Australian Bureau of Statistics is also expected to release housing finance data for September at 11.30am Sydney time.

ASIA

In Hong Kong, the benchmark Hang Seng Index was once up 1.3 per cent in morning trading but narrowed down its gains to 0.3 per cent to close at 26,227.72 on Thursday. The Hang Seng Chinese Enterprises Index was up 0.6 per cent to 10,703.59.

In China, the markets fared worse and shed their morning gains to end lower for a fourth day in a row.

The benchmark Shanghai Composite Index, which was at one point trading up 1 per cent, closed 0.2 per cent lower at 2,635.63.

The CSI300, which tracks the largest stocks listed in Shanghai and Shenzhen, was down 0.3 per cent to 3212.77. The Shenzhen Component Index fell 0.7 per cent to 7698.02.

EUROPE

European shares were flat to slightly higher on Thursday as strong results from Societe Generale, Commerzbank, and Sodexo soothed concerns about corporate earnings.

The pan-European STOXX 600 was up just 0.2 per cent by the close. In early dealings, the index hit its highest since October 10.

The leading index of eurozone stocks closed down 0.3 per cent, however, with Germany's DAX down 0.5 per cent and France's CAC 40 0.1 per cent lower.

Shares in Italy's third-largest lender Banco BPM jumped as much as 8.9 per cent, then pared gains to close 2.6 per cent higher, after its third-quarter net profit beat forecasts thanks to lower costs and an asset sale that helped offset flat fees and falling interest income.

Commerzbank and SocGen were up 5.2 per cent and 2.4 per cent respectively after solid earnings updates.

NORTH AMERICA

Wall Street has risen 2 per cent, led by the technology and healthcare sectors as investors breathed a sigh of relief following the US midterm elections and made bets that a divided Congress would be good news for equities.

Democrats won control of the House of Representatives on Tuesday, while President Donald Trump's Republican party expanded its Senate majority, pointing to the likelihood of political gridlock in Washington.

The S&P's biggest boosts came from the S&P technology sector and the healthcare stocks, with both indexes gaining 2.9 per cent. The consumer discretionary sector climbed 3.1 per cent, spurred by a 6.9 per cent rise in Amazon.com shares. Amazon provided the single biggest boost to the S&P 500.

The CBOE Volatility Index, the most widely followed gauge of expected near-term gyrations for the S&P 500, finished down 3.55 points at 16.36, its lowest close in about a month.

While a divided congress will make it harder for President Donald Trump to push through new legislation such as additional tax cuts, investors were not expecting a reversal of tax cuts and deregulation already enacted under Trump.

Some strategists said Democratic control of the House means that Trump will have a harder time gaining support for efforts to impose new regulations on Amazon.com.

But even as technology and healthcare stocks soared, several investors questioned whether the sectors could now be at risk of additional regulatory scrutiny.

Even after Wednesday's gains, the S&P 500 was 4 per cent below its record close in September, as investors kept their eyes on rising interest rates and the US-China trade war.

The Federal Reserve began a two-day monetary policy meeting on Wednesday, but no rate increase was expected when it releases its policy decision on Thursday. The Fed is expected to raise rates in December, at its last policy meeting of the year.

 

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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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