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Global Market Report - August 6, 2018

Lex Hall  |  06 Aug 2018Text size  Decrease  Increase  |  
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Australia

The Australian share market is set to open higher on the back of Wall Street closing last week on a high as upbeat earnings helped US investors shrug off heightened trade tensions and weaker-than-expected July jobs growth.

The Australian futures index was up 21 points at 8.30am Sydney time, or 0.34 per cent, to 6204 points in the latest figures. The Australian dollar is buying 73.99 US cents, from 73.66 US cents on Friday.

On Wall Street, the Dow Jones Industrial Average was up 136.42 points or 0.54 per cent, at 25,462 points, while the S&P500 closed up 13.13 points or 0.46 per cent at 2840 points.

The tech-heavy Nasdaq index was up 9.32 points or 0.12 per cent at 7812 points.

Locally, the Hayne royal commission resumes where industry/retail super funds are set to face a grilling.

The RBA is widely expected to keep the cash rate on hold when it meets tomorrow; RBA governor governor Philip Lowe will speak early afternoon on Wednesday and the RBA's Statement on Monetary Policy is out on Friday.

Asia

China has ceded its ranking as the world's No 2 stock market to Japan. After a Thursday slump, Chinese equities were worth $US6.09 trillion, according to data compiled by Bloomberg.

That compares with $US6.17 trillion in Japan. The US has the world's largest stock market at just over $US31 trillion.

China's stock market overtook Japan's in late 2014, then soared to an all-time high of more than $US10 trillion in June 2015.

Chinese equities and the nation's currency have suffered this year amid trade tensions with the US, a government-led campaign to cut debt and a slowing economy.

At Friday's close, the Shanghai Composite index was down 26.94 points or 1 per cent at 2768.02. For the week, the index lost 4.6 per cent, its worst performance since early February. The blue-chip CSI300 index was down 1.7 per cent. It lost 5.9 per cent for the week.

Hong Kong shares dipped on Friday amid slowing growth in China, a vaccine scandal that weighed on healthcare shares and US-China trade fears.

The Hang Seng index fell 0.1 per cent to 27,676.32, while the China Enterprises Index lost 0.4 per cent to 10,693.79. The Hang Seng fell 3.9 per cent for the week, its worst weekly performance since February.

Europe

Earnings, particularly in the banking sector, lifted European shares on Friday at the end of a volatile week, as investors welcomed Apple becoming the world's first trillion-dollar company.

The pan-European STOXX 600 index closed up 0.7 per cent but ended the week on a 0.5 per cent loss.

Financials climbed as shares in RBS rose 3 per cent after the recovering state-owned bank announced its first dividend in a decade.

France's Credit Agricole posted the best performance of Paris's CAC 40 index with a 2.3 per cent rise with second-quarter profits ahead of estimates.

The banking sector's profitability is up 22 per cent year-on-year and credit quality is improving, Goldman Sachs analysts said, calling the quarter a healthy one for banks.

Overall, European corporates have delivered 7.8 per cent year-on-year earnings growth for the second quarter so far, up on first quarter gains, according to Thomson Reuters data.

North America

US stocks have advanced as upbeat earnings helped investors shrug off heightened trade anxieties and weaker-than-expected July jobs growth.

For the week, the S&P 500 and the Nasdaq gained ground, up 0.8 per cent and 1.0 per cent, respectively, while the Dow was essentially flat. The S&P 500 notched its fifth straight weekly gain, its longest such streak of the year.

The second-quarter reporting season nears its final stretch with 406 of the companies in the S&P 500 having reported, 78.6 per cent of which came in above Street estimates, according to Thomson Reuters data.

China launched its latest salvo in the ongoing trade spat, unveiling new tariffs on 5207 goods imported from the US, including liquefied natural gas (LNG) and some aircraft.

Earlier this week, Chinese officials promised retribution after the Trump administration proposed hiking tariffs to 25 per cent on $US200 billion ($271 billion) worth of goods imported from China.

A report from the Labor Department showed the US economy added 157,000 jobs in July, fewer than the 190,000 economists expected, though the unemployment rate edged down to 3.9 per cent.

Other data showed the US trade deficit surged 7.3 per cent in June to $US46.3 billion ($62.7 billion), its biggest increase since November 2016. The politically sensitive trade gap with China widened by 0.9 per cent to $US33.5 billion ($45.4 billion).

Shares of Apple rose modestly a day after becoming the first publicly-traded US company to reach $US1 ($1.4) trillion in market value.

The S&P consumer staples sector rose 1.2 per cent. Its advance was led by Kraft Heinz, up 8.6 per cent after the packaged foods company topped quarterly profit and revenue estimates.

The Dow Jones Industrial Average rose 136.42 points, or 0.54 per cent, to 25,462.58, the S&P 500 gained 13.13 points, or 0.46 per cent, to 2840.35 and the Nasdaq Composite added 9.33 points, or 0.12 per cent, to 7812.02.

Of the 11 major sectors of the S&P 500, energy was the sole per centage loser. Oil prices gave up gains from the previous session, weighed upon by concerns about trade and demand for crude, while hedge funds and other money managers cut their bullish crude bets this week.

 

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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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