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Global Market Report - May 31, 2018

Lex Hall  |  31 May 2018Text size  Decrease  Increase  |  
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Australia

The local share market is set to open higher after strong gains on Wall Street amid hopes of a solution to the Italian political crisis.

At 8.30am (AEST), the Australian share price futures index was up 40 points, or 0.67 per cent, at 6035 points.

US stocks rebounded after Italy's 5-Star Movement party made a renewed bid to form a coalition government, and called for eurosceptic economist Paolo Savona to withdraw his candidacy as economy minister.

The Australian share market yesterday fell below 6000 points to a one-month low, with financial stocks slumping amid fears about possible economic fallout from the Italian turmoil.

The benchmark S&P/ASX200 was down 28.9 points, or 0.48 per cent, at 5984.7 points, while the broader All Ordinaries index was down 27.9 points, or 0.46 per cent, at 6093.8 points.

Out today: the ABS releases capital expenditure, or business investment data, for the March quarter.

Asia

Asian stocks extended a global sell-off on Wednesday as Italy's political crisis shook financial markets, forcing the euro to a 10-month low, increasing borrowing costs for Rome and pushing investors into safer assets such as US Treasuries.

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MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.4 per cent, while Japan's Nikkei average sold off 1.5 per cent to a six-week low.

Chinese shares also fell, with the Shanghai Composite index down 2.5 per cent, and South Korea's KOSPI slipped 2 per cent.

Out today: Japan industrial output April.

Europe

A rebound by oil stocks helped Britain's blue-chip index recover from a global sell-off prompted by a political crisis in Italy and fresh fears of a trade war between the US and China.

The UK's FTSE 100 ended up 0.75 per cent on Wednesday after ending the previous session at its lowest level in nearly three weeks.

Frankfurt's DAX index closed 0.93 per cent higher, and the CAC in Paris was down 0.2 per cent.

Oil majors BP and Royal Dutch Shell both rose more than two per cent as oil prices climbed to $US76 a barrel, supported by tight supplies despite expectations OPEC and its allies will pump more in the second half of 2018.

Among smaller companies, engineering firm Bodycote rose nearly 7 per cent after predicting it would top market expectations for full-year profit and said it would pay a special dividend.

Discount retailer B&M European Value reported a 25 per cent jump in full-year profit, sending its shares up 4.5 per cent.

Out today: Euro zone unemployment April, CPI estimate May; UK GfK consumer confidence May.

North America

US stocks rose on Wednesday, with the S&P 500 set to erase all its losses from Tuesday as signs of easing political turmoil in Italy emerged.

The Italian government's successful auction of five- and 10-year bonds also assuaged concerns about the country's ability to finance itself after a sell-off in Italian bonds on Tuesday resulted in the biggest one-day surge for two-year yields in 26 years.

Fears about instability in Italy had sent investors scurrying to safety assets on Tuesday. US stocks took a beating, with the S&P 500 posting its first 1 per cent drop in May, while the US Treasury market had its best day since at least July 2011.

At the close of trade, the Dow Jones Industrial Average was up 306.33 points, or 1.26 per cent, to 24,667.78, the S&P 500 gained 34.15 points, or 1.27 per cent, to 2724.01 and the Nasdaq Composite added 65.86 points, or 0.89 per cent, to 7462.45.

Out today: US personal income and spending April, Core PCE inflation April, Chicago PMI May, Pending home sales April.

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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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