Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

Global Market Report - July 26, 2018

Lex Hall  |  26 Jul 2018Text size  Decrease  Increase  |  
Email to Friend

Australia

The Australian share market is set to open higher following strong gains on Wall Street after the US won some trade concessions from the EU.

The Australian futures index was up 8 points at 6199 at 8.30am Sydney time. The Australian dollar was buying 74.48 US cents, up from 74.05 US cents yesterday.

Donald Trump and European Commission President Jean-Claude Juncker agreed to expand European imports of US liquified natural gas and soybeans and lower industrial tariffs on both sides. The US and EU will "hold off on other tariffs" while negotiations proceed.

On Wall Street the Dow Jones Industrial Average ended up 172.16 points, or 0.68 per cent at 25,414 points, while the S&P500 was up 25.67 points or 0.91 per cent at 2,846 points.

The tech-heavy NASDAQ index was up 91.47 points or 1.17 per cent at 7932 points.

In breaking news, Nine Entertainment and Fairfax Media have announced plans to merge. The TV company and media publisher announced they plan to merge "to establish Nine as one of Australia's leading independent media companies".

In financials, Macquarie Group has picked asset management boss Shemara Wikramanayake to take the reins as chief executive from Nicholas Moore in November.

Investing Compass
Listen to Morningstar Australia's Investing Compass podcast
Take a deep dive into investing concepts, with practical explanations to help you invest confidently.
Investing Compass

Tumbling house prices in Sydney and Melbourne are the main drivers behind the first annual drop in national property in six years, according to a report by Domain. It's the first have fallen on an annual basis since June 2012.

Out today: first quarter trade price indices.

Asia

President Donald Trump accused China on Wednesday of targeting American farmers in a "vicious" way and using them as leverage to get concessions on trade a day after the administration announced a $US12 billion farm aid package.

The US exported $US138 billion in agriculture products in 2017, including $US21.5 billion of soybeans, the most valuable US export, China alone imported $US12.3 billion in soybeans last year, according to the US Department of Agriculture.

Hong Kong shares rose on Wednesday, led by energy stocks, as sentiment improved on signs Beijing is loosening monetary and fiscal policies to prevent a drastic slowdown in the economy.

The Hang Seng index rose 0.9 per cent to 28,920.90, while the China Enterprises Index gained 0.9 per cent to 11,074.16 points.

China stocks ended slightly lower on Wednesday as investors paused for breath after three straight days of gain.

The blue-chip CSI300 index ended down 0.1 per cent at 3577.75 points while the Shanghai Composite Index also eased 0.1 per cent to 2903.65 points. Both indexes were up for the past three session in a row as investors cheered Beijing's stimulus plan.

Japanese shares rallied for a second day on Wednesday, buoyed by gains in steelmakers and metal producers, as markets cheered Beijing’s pledges of a more vigorous fiscal policy.

The benchmark Nikkei share average rose 0.46 percent to 22,614.25, erasing more than half of its losses from Monday after media reports that the Bank of Japan may adjust its policy.

Europe

Warnings from carmakers Fiat Chrysler and General Motors weighed on European shares on Wednesday as investors braced for a high-level trade meeting in Washington.

The pan-European STOXX 600 fell 0.3 per cent as auto stocks, which rely heavily on exports for growth, declined 1.9 per cent to lead sectoral losers in the region.

In European afternoon hours, the Washington Post reported that several of Trump's senior economic advisers believe he plans to impose a 25 per cent tariff on close to $US200 billion of foreign-made automobiles later this year.

That further weighed on auto stocks, which had already been hammered earlier in the day by disappointing earning updates from Fiat Chrysler and General Motors, both partly due to trade tariffs.

Fiat Chrysler reported second-quarter operating profit below expectations and it cut its full-year outlook in response to a weaker performance in China.

Its shares fell 15.5 per cent, it second biggest daily fall ever. Fiat's warning came a few days after the group named its Jeep brand head Mike Manley as CEO to succeed Sergio Marchionne, who died on Wednesday after surgery complications.

Deutsche Bank fell 1.4 per cent after Germany's largest bank detailed progress on its restructuring and announced a 14 per cent drop in net profit in the second quarter, which was marked by weakness in its key trading business.

London’s FTSE fell 0.7 per cent; Germany’s DAX fell 0.9 per cent, and in Paris the CAC was down 0.1 per cent.

North America

The benchmark S&P 500 jumped more than half a per cent in the last half-hour of trading on news of the concessions and closed at its highest level since 29 January.

Trump said that the US and the European Union had agreed to work toward eliminating tariffs on industrial goods and increasing US exports of liquified natural gas and soybeans to Europe.

The S&P and the Nasdaq had already been boosted earlier in the trading session by gains in the technology sector. Shares of Facebook and Microsoft hit record highs earlier in Wednesday’s session. Facebook shares closed up 1.3 per cent, and Microsoft shares ended the session up 2.9 per cent.

In after-hours trading, however, Facebook shares sank as much as 9 per cent after data on its monthly active users came in below estimates.

The sanguine news regarding trade helped the Dow reverse earlier losses in Wednesday's session. It had been weighed by Boeing Inc's report of higher costs for its aerial refueling tanker program. Boeing shares closed down 0.7 per cent.

Indeed, investors noted that strong corporate earnings have helped prop up US stocks despite ongoing concerns about tariffs raising companies' costs and cutting into their profits.

Of the 148 S&P 500 companies that have reported earnings so far, 85.8 per cent have topped analyst expectations. If the beat rate holds, it will be the highest on record, dating back to the first quarter of 1994, according to Thomson Reuters I/B/E/S.

The Dow Jones Industrial Average rose 172.16 points, or 0.68 per cent, to 25,414.1, the S&P 500 gained 25.67 points, or 0.91 per cent, to 2,846.07 and the Nasdaq Composite added 91.47 points, or 1.17 per cent, to 7932.24.

Nasdaq futures, however, pared gains after the market close following Facebook's results.
Coca-Cola Co shares rose 1.8 per cent after the beverage company's quarterly sales and profit beat estimates.

Shares of HCA Healthcare jumped 9.2 per cent after the hospital operator raised its full-year earnings forecast.

However, General Motors shares fell 4.6 per cent after the automaker cut its 2018 profit forecast, citing rising steel and aluminum costs due to tariffs. After the bell, Ford Motor also lowered its profit forecast, and its shares dropped more than 4 per cent in after-hours trading.
 

More from Morningstar

Inflation to keep RBA sidelined on rates

5 best and worst performing equity funds of FY2018

Make better investment decisions with Morningstar Premium | Free 4-week trial

 

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 senior editor for Morningstar Australia

© 2021 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 'regulated financial advice' under New Zealand law has 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. For more information, refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. 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.

Email To Friend