Global Market Report - May 3, 2018
The Australian share market is expected to open flat, after gains in base metals prices were offset by a weak lead from US stocks and a decision by the Federal Reserve to leave interest rates unchanged.
Australia
The Australian share market is expected to open flat, after gains in base metals prices were offset by a weak lead from US stocks and a decision by the Federal Reserve to leave interest rates unchanged.
At 7.45am (AEST), the Australian share price futures index was up four points, or 0.07 per cent, at 6050 points.
On commodities markets, copper and nickel prices bounced off their multi-week lows as Chinese steel prices soared and a private survey showed growth in China’s manufacturing sector unexpectedly picked up in April.
The Australian share market yesterday posted its fourth straight day of gains, taking the major stock indexes to their highest level in two months. The benchmark S&P/ASX200 was up 35 points, or 0.58 per cent, at 6050.2 points, while, the broader All Ordinaries index was up 36.7 points, or 0.6 per cent, at 6136.7 points.
The Australian dollar has followed Wall Street lower after the US Federal Reserve indicated that it is on track to raise its interest rate at its next policy meeting in June.
At 8.45am (AEST), the local currency was worth US74.91c, down from US75.11c yesterday.
Out today: ABS building approvals figures for March, and international trade data, also for March.NAB half-year results; QBE Insurance and Santos hold their annual general meetings.
Asia
Asian equities eased on Wednesday, while the dollar traded near a four-month high as investors await the Federal Reserve’s upcoming policy statement for clues on the future pace of US monetary tightening.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3 per cent, while Japan's Nikkei shed 0.2 per cent.
Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore, said that in addition to focusing on the Fed’s policy statement equity investors may be turning cautious on the outlook for corporate profits, given potential cost pressures from recent rises in oil prices.
Europe
British shares traded higher on Wednesday, posting a fifth session of gains in a row as metal prices boosted miners and first-quarter earnings reports lifted the London stock market.
The FTSE index ended the session up 0.3 per cent at 7543.20 points, its highest since the end of January, when sterling was, however, about four per cent higher than it is now against the US dollar.
The release of construction PMI data showed British construction activity rebounding faster than expected, pushing the pound slightly higher but with little effect on the FTSE.
Germany's DAX 30 was up 1.5 per cent, and France’s CAC40 rose 0.16 per cent.
Euro zone PPI March, CPI estimate; UK Markit/CIPS services PMI April
North America
Stocks briefly rose but returned to negative territory to close almost one per cent lower, after the Federal Reserve left interest rates unchanged, but kept the door open for a rate rise in June.
On commodities markets, copper and nickel prices bounced off their multi-week lows as Chinese steel prices soared and a private survey showed growth in China’s manufacturing sector unexpectedly picked up in April.
The Federal Open Market Committee unanimously decided to keep its lending rate in a target range of between 1.50 and 1.75 per cent. It expressed a confident economic outlook, saying activity had expanded at a moderate rate and that inflation was close to its two per cent target. The Fed is expected to increase rates in June.
Investors focused on the Fed’s description of its inflation target as “symmetric”, which they said signalled the Fed’s willingness to stick to its projected pace of interest rate increases even if the rate of inflation were to move slightly beyond two per cent.
The Dow fell 174.07 points, or 0.72 per cent, to close at 23,924.98, the S&P 500 lost 19.13 points, or 0.72 per cent, to 2635.67 and the Nasdaq Composite lost 29.81 points, or 0.42 per cent, to 7100.90.
Apple rose 5 per cent after it late Tuesday posted resilient iPhone sales in the face of waning global demand and promised $100 billion in additional stock buybacks.
Out today: US trade balance March, Markit services PMI April, ISM non-manufacturing April, Factory orders March, Durable goods orders March
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Lex Hall is a Morningstar content editor, based in Sydney
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