Global Market Report - July 20, 2018
The local share market is poised to open lower following a fall in base metals and fall in US stocks as investors fear the European Union could impose retaliatory tariffs on US imports.
Australia
The local share market is poised to open lower following a fall in base metals and fall in US stocks as investors fear the European Union could impose retaliatory tariffs on US imports.
The Australian futures index was 11 points, or 0.18 per cent, at 6201 points at 8.30am Sydney time. The Australian dollar was buying 73.55 US cents, down from 73.98 US cents yesterday.
On Wall Street the Dow Jones Industrial Average is down 134.79 points, or 0.53 per cent at 25,064 points. Major indexes briefly pared their losses after President Donald Trump said he hoped the Fed would resist raising rates because of fears it would curb growth and competitiveness.
Copper prices plunged to one-year lows as fund selling accelerated because of fears about demand from the trade tussle between the US and top consumer China.
Copper lost 1.55 per cent to $6054.50 a tonne. Other metals such as zinc also fell.
Global benchmark Brent crude fell as concerns about mounting supply returned after a brief rally on comments that Saudi Arabia’s exports would fall in August.
Asia
Hong Kong shares fell on Thursday, as an accelerated depreciation of the Chinese currency hit airline stocks and soured investor appetite for yuan-based assets.
The Hang Seng index fell 0.4 per cent, to 28,010.86, while the China Enterprises Index lost 0.5 per cent, to 10,523.24 points.
The Chinese yuan fell to a one-year low against the dollar, having weakened about 7 per cent against the greenback since the end of the first quarter.
Hong Kong-listed air carriers, including Air China, China Eastern Airlines and China Southern Airlines, slumped amid concerns that a weaker yuan could make their heavy dollar borrowings more costly.
Japan's Nikkei share average snapped a four-day winning streak in choppy trade on Thursday as investors took profits, with weakness in inbound-tourism related stocks offsetting gains in oil names and machinery makers.
The Nikkei closed 0.1 per cent lower at 22,764.68. It was the first drop in five days, after reaching 22,949.32 on Wednesday - the highest level since June 13.
The broader Topix dropped 0.1 per cent to 1749.59.
Europe
A rally in European stocks fizzled out on Thursday as poor results drove down advertising agency Publicis and a slide in metals prices dragged on the market.
As the earnings season got into full swing, the pan-European STOXX 600 ended the session 0.2 per cent lower, down from the one-month high it reached in the previous session, as investors focused on a mixed bag of company results.
France's Publicis shares fell 8.8 per cent after an unexpected drop in second-quarter sales caused by underperformance at its US healthcare communications business.
London's FTSE gained 0.1 per cent, while France's CAC lost 0.6 per cent, and the German DAX lost 0.6 per cent.
North America
US stocks have dropped after earnings disappointed and trade jitters escalated over worries that the EU could slap retaliatory tariffs on goods imported from the US.
Officials from the EU Trade Commission, due in Washington next week for trade talks, are said to be preparing a list of tit-for-tat actions in response to proposed US tariffs on EU cars.
The Dow Jones Industrial Average fell 110 points, or 0.4 per cent, to 25093. The S&P 500 shed 0.4 per cent, and the technology-heavy Nasdaq Composite dropped 0.4 per cent.
The S&P's financial sector was the weakest of the 11 sectors in the broad index, falling 1.3 per cent. Shares of big US banks had risen over much of the past week after the firms posted results that generally beat market expectations. But reports from American Express, Bank of New York Mellon and Travelers weren't received as favourably.
American Express fell 2.8 per cent, despite reporting strong card-member spending and loan growth. Bank of New York fell 4.8 per cent after posting weaker-than-expected revenue, and Travelers dropped 3.2 per cent as weather-related catastrophes dented its bottom line.
The WSJ Dollar Index, which measures the currency against a basket of 16 others, pared its gains on the comments and was recently up 0.2 per cent. Yields on 10-year US Treasuries settled at 2.845 per cent, down from 2.875 per cent yesterday. Yields fall as prices rise.
Mr Trump said a failure to negotiate "something fair" with European and North American allies could lead to "tremendous retribution".
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Morningstar with AAP and Reuters
Lex Hall is a Morningstar content editor, based in Sydney.
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