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Global Market Report - July 24, 2018

Lex Hall  |  24 Jul 2018Text size  Decrease  Increase  |  
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Australia

Australian shares look set to open higher despite Wall Street falling overnight as investors showed concern about the effects of international trade tensions on the US dollar.

In futures trading, the SPI200 futures contract was up 18 points, or 0.29 per cent, to 6186 points at 8.30 Sydney time. The Australian dollar is buying 73.80 US cents, down from 74.16 US cents on Monday.

On Wall Street, the Dow Jones Industrial Average fell 13.83 points, or 0.06 per cent, to 25,044.29, the S&P 500 gained 5.15 points, or 0.18 per cent, to 2806.98 and the Nasdaq Composite added 21.68 points, or 0.28 per cent, to 7841.87.

But some investors worried about the effects of international trade tensions on the US dollar, which has climbed in recent months. Several US multinationals are re-evaluating their currency hedging strategies.

Asia

Japan's Nikkei fell 1.3 per cent, as a jump in the yen helped push currency-sensitive shares lower.

Hong Kong stocks rose slightly on Monday amid falls in tech and consumer shares. There were gains in financial and property plays after Beijing moved to ease fears of liquidity shortages.

The Hang Seng index rose 0.1 per cent, to 28,256.12 points, while the China Enterprises Index gained 0.5 per cent, to 10,731.36 points.

China stocks rose amid strength in financials and industrial stocks, but vaccine scandal capped gains in healthcare shares. The CSI300 index rose 0.9 per cent to 3525.75 points while the Shanghai Composite Index ended up 1.1 per cent at 2859.54 points.

Europe

European shares fell on Monday in a broad-based pullback led by declines in Ferrari  and Fiat Chrysler after deteriorating health forced Fiat's CEO to quit, while a disappointing earnings update sent Ryanair sharply lower.

The STOXX 600 was down 0.2 per cent at its close, posting its third straight day of losses as worries over trade tensions lingered following Washington’s threat last week to slap tariffs on $500 billion of Chinese imports.

France's Atos  dropped 6.7 percent after the French IT services company reported revenue growth of only 1.5 percent for the second quarter and said that it was going to buy Michigan-based IT services provider Syntel in a $3.4 billion cash deal.

London's FTSE100 fell 0.3 per cent, France's CAC fell 0.4 per cent, and the German DAX was down 0.1 per cent.

North America

The benchmark US S&P 500 and the Nasdaq have closed higher as a jump in 10-year bond yields boosted financial sector stocks and investors anticipated continued strength in corporate earnings and US economic growth.

The financial sector stock index rose 1.3 per cent after 10-year US Treasury yields climbed to their highest level in five weeks. The Federal Reserve was seen as likely to continue raising interest rates despite criticism from President Donald Trump.

Analysts now forecast profit growth of about 22 per cent for the second-quarter earnings season, up from 20.7 per cent at the start of the month.

News of ongoing trade talks helped US stocks edge upward. Mexican President-elect Andres
Manuel Lopez Obrador sent Trump a letter urging a quick wrap-up of NAFTA trade negotiations, and trade officials from Mexico and the US will meet later this week.

Also, European Commission President Jean-Claude Juncker is scheduled to meet with Trump on Wednesday over the imposition of import tariffs, though he will not arrive in Washington with a specific trade offer.

Shares of Illinois Tool Works fell 7.2 per cent, contributing to the S&P 500 industrial sector's 0.6 per cent decline. The machinery parts maker cut its full-year earnings forecast, joining Netflix in blaming the strong dollar for the cut.

Amazon.com slipped 0.6 per cent and was the biggest drag on the Nasdaq and the S&P 500 after Trump renewed his attacks on the retailer.

Shares of Alphabet rose more than 4 per cent in after-hours trading after the internet giant reported quarterly results.

 

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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

© 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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