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Global Market Report - July 23, 2018

Lex Hall  |  23 Jul 2018Text size  Decrease  Increase  |  
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Australia

Australian shares look set to open lower on the back of a disappointing end to the week on Wall Street on Friday, a dip in European markets and ongoing trade tensions.

In futures trading, the SPI200 futures contract was down 18 points, or 0.29 per cent, to 6207 points in latest trading. The Australian dollar is buying 74.21 US cents, up from 73.71 US cents in trading on Friday.

On Wall Street the Dow Jones Industrial Average finished the week down 6.38 points, or 0.03 per cent at 25,058 points.

CommSec chief economist Craig James said talk of a full-blown trade war was unsettling for business. The week ahead is all about prices, James said, with the consumer price index expected to be released on Wednesday before export and import prices.

James tips the inflation rate to hold close to 2 per cent, and still believes the Reserve Bank would keep interest rates on hold until at least 2019.

Meanwhile, rising global interest rates are combining with a bout of bank caution on lending (via extreme vetting of loan applications in the wake of royal commission revelations) to generate a mini-credit crunch, a Deloitte report warns.

The CPI data and the latest skilled vacancies report will be released on Wednesday. Trade price data is scheduled to be released on Thursday with PPI on Friday.

Asia

Japanese stocks ended weaker on Friday as an earlier decline in the Chinese yuan rekindled worries about the stability of the world's second largest economy, which faces rising risks from a major trade conflict with the US.

Japan's Nikkei share average fell 0.29 per cent to 22,697.88 while the broader Topix shed 0.26 percent to 1744.98. However, both indexes posted their second straight weeks of gains.

Futures on Hong Kong's Hang Seng advanced 0.3 per cent.

China is set to release industrial profits on Friday, when the US releases second quarter GDP.

Europe

European shares fell on Friday as earnings updates disappointed, with auto stocks bearing the brunt of trade tensions that caused a selloff in the Chinese yuan overnight.

The broader pan-European STOXX 600 fell 0.15 per cent, with losses capped by gains in healthcare and consumer staples, considered less risky sectors.

London's FTSE fell 0.1 per cent; France's CAC is down 0.4 per cent; and Germany's DAX is down 1 per cent.

Listed European firms are expected to report stronger earnings growth in the second quarter, while investors are honing in on companies' future guidance for any change due tariff developments, with autos particularly in focus.

North America

US stocks have closed slightly lower as escalating trade anxieties driven by US President Donald Trump's latest tariff threats against China offset a string of robust earnings led by Microsoft.

The Dow Jones Industrial Average posted its third consecutive weekly gain, while the S&P 500 also rose for a third straight week after eking out a gain for the period.

Microsoft shares hit a record high and ended the session up 1.8 per cent on the heels
of a strong second-quarter earnings beat. The company narrowed the race with Apple and Amazon.com in the race to be worth $1 trillion in market value.

Microsoft's advance provided the biggest support to the S&P 500 and the Nasdaq.

Trump said he was ready to impose tariffs on all $500 billion of Chinese imports, the latest salvo in a series of protectionist moves that have prompted retaliatory measures from US trading partners around the world.

Long-dated US government bond yields rose on worries that the president's comments would encourage Fed chairman Jerome Powell to slow the pace of rate hikes by the US central bank, which could increase inflationary pressure.

As the second-quarter reporting season picks up steam, analyst forecasts have grown rosier. Earnings for S&P 500 companies are now estimated to have grown 22.0 per cent in the quarter, compared with the 20.7 per cent seen on July 1.

So far, 87 companies of the S&P 500 have posted results, of which 83.9 per cent have beat consensus estimates.

The Dow Jones Industrial Average fell 6.38 points, or 0.03 per cent, to 25,058.12, the S&P 500 lost 2.66 points, or 0.09 per cent, to 2801.83 and the Nasdaq Composite dropped 5.10 points, or 0.07 per cent, to 7820.20.

 

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Morningstar with AAP and Reuters

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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