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Global Market Report - August 10, 2018

Lex Hall  |  10 Aug 2018Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to open higher despite falls in US stocks after gains in Apple and Amazon were offset by losses in energy and financial shares.

Material stocks are also expected to trade higher on stronger commodity prices, with mining heavyweight Rio Tinto set to recover from a 1.6 per cent drop in the previous session.

In futures trading, the SPI200 futures contract was up 10 points, or 0.08 per cent, to 6249 points. The Australian dollar is buying 73.78 US cents, from 74.31 US cents on Thursday.

On Wall Street the Dow Jones Industrial Average is down 74.52 points, or 0.29 per cent at 25,509 points, while the S&P500 is down 4.12 points or 0.14 per cent at 2853 points.

Out today: News Corp releases its fourth quarter results, online real estate company REA Group releases its full-year earnings results, and later in the day James Hardie will hold its annual general meeting in Dublin.

Asia

Shanghai blue chips closed up 2.5 per cent after talk of possible government support for home-grown technology companies, the latest in a series of growth-boosting measures rolled out by Beijing as the trade dispute worsens.

Hopes for more Chinese infrastructure spending underpinned industrial resources, including iron ore and copper.

The gains in Chinese stocks helped MSCI's broadest index of Asia-Pacific shares outside Japan reverse early losses to gain 0.5 per cent.

Japan's Nikkei slipped 0.2 per cent, in part because core machinery orders fell.
Shares in Mazda Motor Corp, Suzuki Motor Corp and Yamaha Motor Co also fell on news they conducted improper fuel economy and emissions tests on their vehicles.

Japan will try to avert steep tariffs on its car exports and fend off US demands for a free-trade agreement at talks in Washington later.

Early on Thursday, China's state broadcaster said the country must counteract US tariffs and that Beijing had the confidence to protect its own interests as well as the means to do so.

China had already announced additional tariffs of 25 per cent on $US16 billion worth of US imports from fuel to autos. The tariffs will apply to billions of dollars in US petrol, diesel and other oil products, though not crude.

The oil market took the news hard on Wednesday, suffering losses of more than 3 per cent.
Prices steadied a little on Thursday, with US crude edging up 12 cents to $US67.08 per barrel. Brent rose by 24 cents to $US72.52.

Europe

European stock markets have struggled with trade war worries, Russia's rouble tumbled after the US imposed fresh sanctions on the country and Turkey's lira dropped to a new low.

A rally in Chinese stocks had helped offset the latest escalation in the Sino-US trade war in Asia overnight, but too much was going on nearby for Europe to stay upright.

London's FTSE, Frankfurt's DAX and Paris's CAC40 were down 0.6 per cent, 0.1 per cent and 0.4 per cent respectively, while German government bonds rose in broad grab for safety.

But the main fireworks were in the currency markets. The Russian rouble sank after Washington said it would impose fresh sanctions because it had determined that Moscow had used a nerve agent against a former Russian agent and his daughter in Britain .

There were also reports of a new US Senate bill that would impose widespread sanctions on Russia for meddling in US elections.

The rouble slid to its lowest since late 2016, 66 roubles to the dollar. The Russian currency dropped 1 per cent after falling 3 per cent overnight.

Turkey's lira, bond and stocks markets were also taking a pounding after meetings between officials in Washington looked to have made little progress in mending a row over Ankara's jailing of an American pastor.

The lira touched a record low of 5.44 against the dollar, weakening some 2.5 per cent from Wednesday's close. There was widespread selling in the country's bond markets and Istanbul stocks dropped 1 per cent.

North America

The S&P 500 and Dow have ended slightly lower as gains in Apple and Amazon were offset by losses in energy and financial shares.

Tesla shares also fell to a two-day low and wiped out all of the gains fuelled by chief executive Elon Musk's recent tweet announcing a plan to take the company private. The stock ended down 4.8 per cent.

The S&P 500 was in slightly positive territory most of the day, putting it once again close to the January 26 record high. The Nasdaq also neared its all-time high.

The technology sector has been at the centre of a sharp recovery in US stocks since a market rout in February.

Shares of Apple rose 0.8 per cent, while those of Amazon were up 0.6 per cent.

Leading sector declines was the S&P energy index, which fell 0.9 per cent, while the S&P financial index was down 0.6 per cent.

The Dow Jones Industrial Average fell 74.52 points, or 0.29 per cent, to 25,509.23, the S&P 500 lost 4.12 points, or 0.14 per cent, to 2853.58 and the Nasdaq Composite added 3.46 points, or 0.04 per cent, to 7891.78.

Chip stocks fell after Morgan Stanley downgraded the US semiconductor industry.
The latest data pointed to strength in the labour market, underscoring the health of the US economy despite ongoing trade tensions.

The number of Americans filing for unemployment benefits unexpectedly fell last week, a Labor Department report showed.

 

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Morningstar with AAP, Reuters and Bloomberg 

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

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