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Global Market Report - August 2, 2018

Lex Hall  |  02 Aug 2018Text size  Decrease  Increase  |  
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Australia

Australian shares look set to open lower amid a fall on Wall Street overnight as as gains in Apple shares were offset by a drop in energy and industrial companies.

In futures trading, the SPI200 futures contract was down 26 points, or 0.42 per cent, to 6200 points at 8.30am Sydney time. The Australian dollar is buying 74.04 US cents, from 74.07 US cents on Wednesday.

On Wall Street the Dow Jones Industrial Average is down 81.37 points, or 0.32 per cent at 25,333 points, while the S&P500 is down 2.93 points or 0.1 per cent at 2813 points.

The tech-heavy NASDAQ index is up 35.49 points or 0.46 per cent at 7,707 points.

Apple shares hit an all-time high after posting results on Tuesday, beating estimates and forecasting better-than-expected sales on strong smartphone demand. The company is closing in on $1 trillion in market value.

Locally, Rio Tinto has delivered a 33 per cent jump in first-half net profit to $US4.38 billion ($5.9 billion), driven by a recovery in commodity prices.

Asia

Shares in Hong Kong ended lower on Wednesday, dragged by property developers as China's government vowed to "resolutely curb" home price increases, and as weak data and an escalating trade war dimmed the outlook for growth in China.

At close of trade, the Hang Seng index was down 0.85 per cent to 28,340.74, while the China Enterprises Index lost 0.5 per cent to 10,973.04.

At the close, the Shanghai Composite index was down 1.8 per cent at 2876.40.

The blue-chip CSI300 index was down 2.01 per cent, with the real estate sub-index skidding 4.52 per cent. The smaller Shenzhen index ended down 1.72 per cent and the start-up board ChiNext Composite index was weaker by 1.24 per cent.

Japan’s Nikkei share average rose on Wednesday, brushing a 12-day high, buoyed by strong earnings for blue chips such as Sony and Sharp and the yen’s slide to near two-week lows against the dollar.

The Nikkei ended the day up 0.86 percent at 22,746.70 after touching 22,775.47, its highest since July 20.

Europe

European shares retreated slightly on Wednesday as a mixed batch of corporate earnings failed to offset concerns about the US-China trade conflict and subdued eurozone manufacturing growth.

The pan-European STOXX 600 fell 0.5 per cent while Germany's DAX also declined 0.5 per cent. France's CAC 40 gave up early gains to close 0.2 per cent lower.

Autos stocks were the biggest sectoral fallers, down 2.4 per cent as shares in Schaeffler, Volkswagen and Porsche fell as much as 5.1 per cent.

Shares in Ferrari dropped 8.4 per cent after the company's CEO said that their financial targets to 2022 were "aspirational".

The autos sector has been hit particularly hard by uncertainty over global trade and tariffs.

Basic materials were also on the back foot, down 1.6 per cent as copper prices slid following reports that the US may propose a higher, 25-per cent tariff on $US200 billion of Chinese imports.

Rio Tinto added pressure on the sector as disappointing results sent its stock down 3.4 per cent despite news of an additional $US1 billion share buy-back.

North America

The S&P 500 and Dow have slipped as gains in Apple shares were offset by a drop in energy and industrial companies with the US Federal Reserve remaining on course for an expected interest rate hike in September.

Technology companies pushed the Nasdaq higher in Wednesday's trade.

The central bank left rates unchanged, and reiterated its view that the US economy is growing and the job market is strengthening, as inflation continues to hover near the Fed's 2 per cent target since it last raised rates in June.

While technology stocks pulled the Nasdaq into positive territory and gave a boost to the S&P and the Dow, trade worries intensified as the Trump administration proposed hiking tariffs on imports from China.

Officials told reporters that Trump had directed US Trade Representative Robert Lighthizer to consider a tariff rate increase on $US200 billion worth of Chinese goods to 25 per cent from 10 per cent as part efforts to ensure that it has "the right tools in place in order to encourage China to change its actions."

China called the move "blackmail," and warned it would respond in kind.
The US congressional midterm elections will be held on November 6. Trade-sensitive stocks fell on the news, with the S&P 500 industrials index dropping 1.3 per cent.

The Dow Jones Industrial Average fell 81.37 points, or 0.32 per cent, to 25,333.82, the S&P 500 lost 2.93 points, or 0.10 per cent, to 2813.36 and the Nasdaq Composite added 35.50 points, or 0.46 per cent, to 7707.29.

Of the 11 major sectors of the S&P 500, eight ended the session in negative territory.
With the second-quarter earnings reporting season nearly two-thirds complete, analyst estimates for S&P 500 profit growth are now at 23.3 per cent, up from 20.7 per cent a month ago.

Financial stocks advanced after yields on benchmark 10-year Treasuries hit 3 per cent for the first time since June 13.

Shares of Tesla were up in choppy trading after the bell following the electric carmaker's second-quarter earnings report.

 

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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

© 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 '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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