Australia

The Australian share market is poised to open higher after US stocks posted their biggest gains in more than a month, while the UK faces political turmoil over Brexit. 

In the US, bank shares jumped ahead of earnings reports later this week.
Industrial, energy and consumer discretionary shares also rose sharply, while S&P utilities and telecommunications - among the market's recent outperformers - led percentage declines.

Commodities were bolstered by a stronger US dollar as well as no immediate signs of an escalation of the US-China trade war.

BHP Billiton rose 2.6 per cent and Rio Tinto 2.2 per cent, boosting London’s FTSE 100.

The Australian futures index is up 27 points at 6267 at 8.30am, Sydney. The Australian dollar is buying 74.64 US cents, up slightly on yesterday.

The Australian share market closed yesterday higher for a third straight trading session, buoyed by mining and financial stocks.

The benchmark S&P/ASX 200 index closed up 0.22 per cent at 6286 points on Monday at a fresh 10 1/2-year high, while the All Ordinaries index gained 0.17 per cent, at 6366.4 points.

Out today: NAB business conditions and business confidence for June; trade data for May; Industrial production May; NIESR GDP estimate for June.

Asia

Chinese large cap stocks climbed the most in two years, bouncing back from a bruising run of losses in the lead up to the imposition of US tariffs last Friday. The yuan also rose after retreating for four weeks straight.

The Shanghai Composite Index jumped 2.5 per cent, the most since May 2016, following seven weekly declines in a row. The SSE 50 Index of the largest mainland-listed stocks climbed 2.9 per cent, its biggest gain since August 2016; the CSI 300 gauge added 2.8 per cent, also the most since August 2016.

The Hang Seng Index advanced 1.3 per cent in Hong Kong to the highest close this month.

Japan's Nikkei share average rebounded to one-week highs on Monday as investors took heart from US jobs growth last week, while Eisai extended its gains to its daily-limit high on optimism for its Alzheimer’s drug.

Europe

The British pound had a volatile session as British PM Theresa May faces leadership pressure following several resignations from her cabinet, including foreign minister Boris Johnson.

However, key European equity markets closed up, extending pre-weekend gains after Friday’s solid American jobs report boosted confidence in the US economy and eased trade war nerves.

London's FTSE 100 closed up 0.9 per cent, the DAX 30 in Frankfurt and the CAC 40 in Paris both rose 0.4 per cent.

Analysts said the news in London persuaded many investors that Britain could be heading towards a so-called “soft” Brexit, and that took sterling to a one-month high against the dollar above $1.33.

North America

The S&P banks index climbed 2.7 per cent, registering its biggest daily percentage gain since March 26. The S&P 500 financial index rose 2.3 per cent, leading gains among sectors.

JPMorgan Chase & Co, Wells Fargo & Co and Citigroup Inc are scheduled to report results on Friday, kicking off the second-quarter earnings season in earnest.

A stronger economy and plans for more buybacks also are helping bank shares, he said.
Investors may also be shifting their focus for now away from trade tensions between the US and China. The two countries slapped tit-for-tat tariffs on $34 billion of each other's goods on Friday.

Helping to boost the Dow, Caterpillar Inc rose 4.1 per cent. The S&P industrial sector jumped 1.8 per cent. Caterpillar and other industrials have been among hardest hit by recent trade worries.

The Dow Jones Industrial Average rose 320.11 points, or 1.31 per cent, to 24,776.59, the S&P 500 gained 24.35 points, or 0.88 per cent, to 2784.17 and the Nasdaq Composite added 67.81 points, or 0.88 per cent, to 7756.20.

A Bank of America Merrill Lynch research report showed earnings per share for S&P 500 companies for 2018 was revised higher amid better-than-expected first-quarter results, higher oil prices and stronger-than-expected US economic growth.

US analysts' estimates for S&P 500 second-quarter profit growth have risen slightly since April, putting the latest forecast at around 21 per cent, according to Thomson Reuters data.

Twitter sank after the Washington Post reported that the social media company suspended more than 70 million fake accounts in May and June, which analysts said could be negative for user growth, but it pared losses after its CFO tweeted that most accounts Twitter removes are not included in reported metrics. The stock ended down 5.4 per cent.

 

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Morningstar with AAP

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

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