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Global Market Report - August 1, 2018

Lex Hall  |  01 Aug 2018Text size  Decrease  Increase  |  
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Australia

Australian shares look set to open higher on the back of a rebound on Wall Street overnight following reports of renewed trade negotiations between the US and China.

In futures trading, the SPI200 futures contract was up 19 points, or 0.31 per cent, to 6237 points at 8.30am Sydney time. The Australian dollar is buying 74.26 US cents, from 74.27 US cents on Tuesday.

On Wall Street the Dow Jones Industrial Average is up 108.36 points, or 0.43 per cent at 25,415 points, while the S&P500 is up 13.69 points or 0.49 per cent at 2816 points.

The tech-heavy NASDAQ index is up 41.78 points or 0.55 per cent at 7671 points.

After the closing bell, Apple reported better than expected results and that could help renew the sector which has been hit by a sell-off initiated by Netflix and accelerated by Facebook.

Out today: AiG manufacturing index for July; CoreLogic dwelling prices for July; NZ QB house prices July; Second-quarter unemployment rate.

Asia

China funds boost equity exposure on signs of policy easing: Chinese fund managers increased their suggested equity exposure for the next three months, as market sentiment improved amid signs of monetary and fiscal policy easing.

The official Purchasing Managers’ Index (PMI) released on Tuesday fell to 51.2 in July, from 51.5 in June and below the 51.3 in a Reuters poll of economists. It was also the lowest index reading since February but remained above the 50-point mark that separates growth from contraction for a 24th straight month.

Firms were hurt by trade frictions, rain and high temperatures in July, which is also a cyclically slow season for some sectors, said statistics bureau official Zhao Qinghe in a statement released with the data.

The gauge of factory activity is the first major reading of the world’s second largest economy since the second quarter of this year, when China logged a modest slowdown in growth, weighed by government efforts to tackle debt risks and escalating US trade tensions.

Europe

The Stoxx Europe 600 index closed up 0.2 per cent at 391.61, as UK stocks outperformed after solid results from oil giant BP.

Other oil and mining stocks also gained, while Italian aerospace group Leonardo jumped 10.6 per cent after second-quarter results topped expectations. Simmering trade tensions between the US and China helped equity sentiment more broadly.

Germany's DAX closed up 0.1 per cent, France's CAC 40 was up 0.4 per cent and the UK's FTSE 100 was up 0.6 per cent. Italy’s FTSE MIB ended up 1.3 per cent and Spain's IBEX 35 was up 0.2 per cent.

North America

US stocks have rebounded on Tuesday, boosted by gains in industrial shares following reports of renewed trade negotiations between the US and China.

Both the S&P 500 and the Dow Jones Industrial Average posted their biggest monthly percentage gains since January, when markets hit peak levels.

The markets were buoyed by a Bloomberg report that US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are exploring ways to cool down the tariff war brewing between the world's two largest economies.

The trade-sensitive industrial sector led the S&P 500 and the Dow industrials higher, rising 2.1 per cent a day after a broad sell-off in technology stocks pulled markets lower.

Apple shares were up over 2 per cent in aftermarket trading after posting results that topped Wall Street expectations, driven by sales of higher-priced iPhones.

The US Federal Reserve meets this week and is expected to leave interest rates unchanged, but robust economic data and rising inflation will likely keep it on track for two more rate hikes this year.

The Dow Jones Industrial Average rose 108.36 points, or 0.43 per cent, to 25,415.19, the S&P 500 gained 13.69 points, or 0.49 per cent, to 2816.29 and the Nasdaq Composite added 41.79 points, or 0.55 per cent, to 7671.79.

The second-quarter reporting season remains in full swing, and analysts now expect second-quarter profits for S&P 500 companies to have increased 22.9 percent from last year, up from the 20.7 increase seen on July 1.

Drugmaker Pfizer beat second-quarter estimates but lowered its full-year revenue forecast. The stock closed up 3.5 per cent.

CBS Corp reversed its slide, rising 2.7 per cent after Les Moonves survived as the company's chief executive following the board's decision to select an outside counsel to investigate claims of sexual harassment.

 

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Morningstar with AAP, Reuters and Bloomberg 

Lex Hall is a Morningstar content editor, based in Sydney.

© 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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