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Global Market Report - June 4, 2018

Lex Hall  |  04 Jun 2018Text size  Decrease  Increase  |  
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Australia

A bullish US jobs report and a rise in tech stocks have boosted Wall Street and set the Australian share market on course for a rally today.

Technology stocks led the rally, with gains in companies such as Apple, Microsoft and Alphabet lifting the S&P 500 tech index to a record high. Government data showed that in May the US economy added 223,000 non-farm jobs and average hourly wages increased 0.3 per cent, both topping economist estimates.

The unemployment rate fell to an 18-year low of 3.8 per cent. Data on construction spending and industrial production also pointed to accelerating economic growth.

At 8.30am, Australian futures were up 34 points or 0.6 per cent. The Australian dollar is buying 75.66 US cents.

On Friday, the benchmark S&P/ASX200 index was down 0.36 per cent, at 5990.4 points, while the broader All Ordinaries index dropped 0.32 per cent, at 6104 points.

Out today: CoreLogic’s weekly capital city house prices report; ABS releases retail trade figures for April, as well as business indicators data for the March quarter. The RBA is expected to leave rates unchanged when it meets tomorrow.

Asia

Japan’s Nikkei share average ended lower on Friday, as selling in large cap stocks and concerns about US tariffs on metal imports erased earlier gains made after a weaker yen supported exporter firms.

The Nikkei fell 0.1 per cent to 22,171.35, swinging into negative territory after a rise earlier in the session. For the week, it dropped 1.2 per cent.

Chinese stocks fell as US tariffs reignited fears of a global trade war, overshadowing the long-awaited inclusion of A-shares in MSCI Inc’s benchmark indexes, which had been expected to trigger a surge of cash from foreign investors.

The addition was upstaged overnight after the US slapped tariffs on metal imports from major allies and several quickly retaliated, days ahead of a third round of trade talks between Washington and Beijing, which were already looking rocky.

The Shanghai Composite Index started out flat but ended the day down 0.7 per cent, while the benchmark CSI300 dropped 0.8 per cent.

In Hong Kong, the Hang Seng China Enterprises Index, which tracks mainland shares, bounced between negative and positive territory to end the day up 0.4 per cent. Hong Kong’s blue-chip index was little changed.

Europe

European shares got a reprieve on Friday as Italian stocks benefited after a deal to form a coalition government ended three months of political deadlock and removed the risk of another general election.

The pan-European STOXX 600 index rose 1 per cent, while German stocks gained 0.9 per cent and Britain’s FTSE 100 rose 0.3 per cent.

Italian stocks rallied as much as 2.9 per cent, the standout performers in Europe as Italian banks gained 3.8 per cent. Recent political uncertainty has roiled Italian stocks, resulting in a slide of more than 9 per cent for the Italian benchmark in May, its worst month since June 2016.

Giuseppe Conte was sworn in on Friday as Italy’s prime minister, heading western Europe’s first anti-establishment government. Investors had feared that a repeat vote could become a proxy referendum on Italy’s euro membership.

Britain’s top share index lifted as shares in cyclical stocks such as miners and financials rallied, joining in broader gains for European stocks as relief over Italy’s political crisis lifted risky assets.

The blue chip FTSE 100 index gained 0.3 per cent, while mid caps also advanced 0.7 per cent.

British blue chips managed to escape the wider market sell-off relatively unscathed, posting a gain of 2.2 per cent in May, the best-performing European market thanks to its heavy weighting in large, international stocks such as miners and oil majors.

On the day, a rise in shares of banks Barclays, HSBC and Lloyds saw financials contribute the biggest boost to the FTSE. Banking stocks have been caught up in a broad sector sell-off led by Italian lenders.

Mining stocks were also higher, with shares in Glencore, Rio Tinto and Anglo American up 1.2 per cent to 2.7 per cent, while oil majors BP and Royal Dutch Shell edged up as crude oil prices clawed back losses.

North America

Wall Street stocks have closed higher after the latest monthly jobs report pointed to strength in the US economy and geopolitical tensions eased.

The Dow Jones Industrial Average rose 219.37 points, or 0.9 per cent, to 24,635.21, the S&P 500 gained 29.35 points, or 1.08 per cent, to 2734.62 and the Nasdaq Composite added 112.22 points, or 1.51 per cent, to 7554.33.

The US and China have reported some progress in talks about how to reduce China’s $375 billion goods-trade surplus with the US, but Donald Trump’s revival last week of a plan to slap tariffs on $50 billion of Chinese imports has cast the talks into turmoil.

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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

© 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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