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Global Market Report - June 22, 2018

Lex Hall  |  22 Jun 2018Text size  Decrease  Increase  |  
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Australia

An eighth straight fall in US stocks and simmering US-China trade tensions are paving the way for the Australian market to open lower.

American online retailers fell after a Supreme Court ruling to impose sales tax, and industrials fell for the seventh straight time. Trade friction forced Asian stocks down while calls for a rate rise by the Bank of England put pressure on Britain’s top index.

At 8.30am (AEST) the Australian futures index was down 30 points at 6151. The Australian dollar was trading at US73.77c at 7am, from US73.49c on Thursday.

The Australian share market yesterday reached its highest level in more than 10 years, with big gains across most sectors as investors looked past fears of a looming trade war between the US and China.

The benchmark S&P/ASX200 index was up 0.96 per cent at 6232.1 points, while the broader All Ordinaries was up 0.93 per cent at 6332.9 points.

Asia

Hong Kong stocks have ended at a six-month low, as trade fears curbed risk appetite.

The Hang Seng index ended 1.35 per cent lower at 29,296.05, while the China Enterprises Index closed lower by 1.2 per cent at 11,364.66 points.

The sub-index of the Hang Seng tracking energy shares dipped 1.5 per cent, while the IT sector slipped 0.86 per cent, the financial sector closed 1.36 per cent lower and property sector lost 1.2 per cent.

The top gainer on Hang Seng was Country Garden Services Holdings Company Ltd, which ended 15.3 per cent higher, while the biggest loser was Sunny Optical Technology Group, which closed 8.91 per cent down.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.67 per cent, while Japan's Nikkei index closed up 0.61 per cent.

The yuan was quoted at 6.5032 per US dollar at 0810 GMT, 0.44 per cent weaker than the previous close of 6.475.

Europe

Britain's top share index has fallen as sterling bounced from seven-month lows following a Bank of England policy vote that bolstered expectations of a rate hike in August.

As widely expected, the BoE kept rates unchanged but its chief economist unexpectedly joined the minority of policymakers calling for a hike.

Its Monetary Policy Committee voted 6-3 to keep rates at 0.5 per cent. Economists in a Reuters poll had said they expected a continued 7-2 split.

The surprise pushed sterling higher after an earlier drop. That in turn sent the FTSE 100 down and the export-oriented index closed 0.9 per cent lower. The FTSE 100 Index fell 70.96 points, or 0.93 per cent, to 7556.44 points.

Financials and energy stocks weighed on the FTSE as expectations of an OPEC deal to raise output sent oil prices tumbling.

North America

US stocks have fallen, with the Dow slumping for an eighth straight decline as industrials wobbled again on trade war concerns while Amazon and other online retailers weakened after a US Supreme Court ruling on state sales tax collection.

Big US manufacturers and carmakers were under pressure after Germany’s Daimler cut its 2018 profit forecast and BMW said it was looking at “strategic options” because of a trade war between the US and China.

Caterpillar lost 2.52 per cent and Boeing fell 1.5 per cent on Thursday, with the S&P industrials off 1.19 per cent and on track for their seventh fall in eight sessions.

The Trump administration on Wednesday reversed an administration policy that separated children and parents who entered the country illegally at the US-Mexico border.

Amazon fell almost 2 per cent after the court ruling, which allows states to force online retailers to collect sales taxes, before paring losses to trade down 1.1 per cent. Wayfair lost 1.6 per cent, Overstock.com tumbled 7.2 per cent, Etsy declined 1.4 per cent and Ebay dropped 3.2 per cent.

Intel also weighed heavily on the S&P 500, down 2.4 per cent after chief executive officer Brian Krzanich resigned following a probe that revealed a past consensual relationship with an employee violated company policy.

The Dow Jones Industrial Average fell 196.1 points, or 0.8 per cent, to 24,461.7, the S&P 500 lost 17.56 points, or 0.63 per cent, to 2749.76 and the Nasdaq Composite dropped 68.56 points, or 0.88 per cent, to 7712.95.

The Dow index is heavily affected by industrial companies, and trade concerns pushed it into negative territory for the year earlier this week, with the index on pace for its eighth straight decline.

Ford fell 1.35 per cent, General Motors dropped 1.98 per cent and Tesla lost 4.06 per cent. The S&P 500 cars and components index slumped 1.79 per cent.

Energy was the worst-performing sector, down 1.93 per cent as oil prices fell ahead of a meeting of the Organisation of the Petroleum Exporting Countries, where producers are expected to boost output.

The S&P 500 posted 25 new 52-week highs and 9 new lows; the Nasdaq Composite recorded 130 new highs and 40 new lows.

 

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Morningstar with AAP

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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