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Global Market Report - June 29, 2018

Lex Hall  |  29 Jun 2018Text size  Decrease  Increase  |  
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Australia

A rally in US tech stocks has helped offset trade fears and set up a positive open for the Australian sharemarket.

US stocks started the day at their lowest levels in almost a month. Contradictory reports from US officials about trade policy led the market to lurch between gains and losses, sometimes by the hour.

At 8.30am (AEST) the Australian futures index was up 13 point at 6185. The Australian dollar is buying 73.47 US cents, slightly up on yesterday.

The Australian share market yesterday broke a four-day losing streak and ended the day higher, with energy and materials stocks leading the gains.

The benchmark S&P/ASX200 closed up 0.31 per cent at 6215.4 points on Thursday, while the broader All Ordinaries index gained 0.24 per cent at 6305.8 points.

Asia

The Tokyo Stock Market remained almost unchanged on Thursday as the yen depreciated against the dollar, compensating for concerns over escalating US-China trade tensions.

The benchmark index Nikkei dropped by 1.38 points or 0.01 percent to close at 22,370.39 points, while the second indicator Topix, which tracks stocks of the First Section, fell 4.45 points or 0.26 percent to close at 1,727.00 points Tokyo stocks had opened in the red with investors concerned over a fresh trade dispute between the two largest economies of the world, after US President Donald Trump announced a plan to restrict Chinese investments in his country on Wednesday.

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However, investors responded positively to the yen weakening against the dollar, a trend which benefits export companies, since they become more competitive abroad.

Air transport, finance and insurance sectors were the biggest losers, while metal and rubber stocks gained the most.

Europe

The UK's top share index has fallen on renewed concerns over global trade but a strong performance of defensive stocks and a weaker pound helped limit its losses.

The blue chip FTSE 100 index closed down 0.1 per cent at 7,615.63 points while the pan-European STOXX 600 fell 0.8 per cent.

Though British shares have enjoyed a respite over the past two sessions from the selling pressure, worries over US-China trade and the beginning of a tense EU summit contributed to the subdued mood ahead of the end of the quarter.

Stocks in so-called "safe-haven" sectors were in demand, with consumer staples and health stocks rising.

Many of these big, international stocks were also boosted by a fall in sterling, as they earn the bulk of their revenues in dollars. Shares in Diageo and Imperial Brands l rose between 0.9 per cent and 2.8 per cent respectively.

Sectors more exposed to the economic cycle, however, such as materials and financials, wiped the most points off the FTSE 100.

Among smaller companies, stocks exposed to the UK consumer were once again on the back foot as shares in pub operator Greene King tanked nine per cent following the publication of its full year earnings.

Greene King reported a drop in pretax profit on the back of softer consumer spending, higher costs and bad weather at the start of the year.

North America

A rally for technology companies helped US stocks recover some of their recent losses, but trading remained uneven as investors tried to figure out if a trade war is in the offing.

The S&P 500 index added 16.68 points, or 0.6 per cent, to 2716.31, the Dow Jones Industrial Average rose 98.46 points, or 0.4 per cent, to 24,216.05 and the Nasdaq composite gained 58.60 points, or 0.8 per cent, to 7503.68.

Technology companies and banks were responsible for the bulk of the gains on Thursday.
Amazon surged and shook investors in two separate industries. The online retailer said it is buying online pharmacy PillPack, which led to sharp losses for drugstores and companies that distribute prescription medications to pharmacies.

Amazon rose 2.5 per cent to $1701.45 while Walgreens fell 9.9 per cent to $59.70, and medication distributor Cardinal Health shed 4.8 per cent to $50.37. Pharmacy benefits manager Express Scripts dipped 1.4 per cent to $77.62.

Amazon also announced a new program under which contractors around the country can launch businesses that deliver Amazon packages, meaning Amazon will have new ways to deliver products without relying on companies like UPS and FedEx. UPS lost 2.3 per cent to $105.88 and FedEx declined 1.3 per cent to $226.67.

The S&P 500 is down 2.4 per cent in the last two weeks, trimming its gain for the quarter to 3 per cent. The Dow is up just 0.5 per cent.

The volatility may worsen at the beginning of the third quarter, as the US is set to impose a 25 per cent tariff on billions of dollars of Chinese products starting July 6. In response, China will raise import duties on $34 billion worth of American goods.

 

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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 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.

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