Global Market Report - May 21, 2018
The easing of trade tensions between the US and China may help the Australian share market recover and move higher despite futures pointing to a lower opening.
Australia
The easing of trade tensions between the US and China may help the Australian share market recover and move higher despite futures pointing to a lower opening.
US Treasury Secretary Steven Mnuchin says the Trump administration won’t apply tariffs on Chinese imports to the US while the two countries hammer out details of a deal to reduce the yawning US merchandise trade deficit with China.
Earlier, China’s agreement to boost imports from the US to close a trade gap between the two countries boosted hopes trade tensions could be resolved.
While the SPI futures index is this morning pointing to a 30-point fall at the open, AMP Capital chief economist Shane Oliver told AAP he expects a bounce on trade optimism. The Australian dollar was flat, buying 75.11 US cents.
The benchmark S&P/ASX200 index was down 6.9 points, or 0.11 per cent, at 6087.4 points at the close on Friday, while the broader All Ordinaries index fell 6.3 points, or 0.1 per cent, at 6190.9 points.
In the US, the Dow Jones Industrial Average finished essentially flat, up 1.11 points, while the S&P 500 was down 0.26 per cent and the Nasdaq Composite fell 0.38 per cent.
Out today: NZ retail sales volumes first quarter.
Asia
Asian stocks were steady on Friday amid caution over developments in US-China trade negotiations, while the dollar perched near a five-month peak after the benchmark US Treasury yield hit its highest in seven years.
MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed, while Hong Kong’s Hang Seng rose 0.34 per cent and Shanghai climbed 1.24 per cent as some investors bet Beijing and Washington will reach a deal in the latest round of trade talks.
Japan’s Nikkei rose 0.4 per cent, and South Korea’s KOSPI was up 0.5 per cent.
Europe
Britain’s leading stock index posted its eighth straight week of gains despite dipping slightly on Friday as investor enthusiasm waned following the previous day’s record close.
The FTSE 100 ended the session down 0.1 per cent at 7778.79 points, in line with the FTSE 250 which hit a fresh record earlier in the session before turning lower.
The FTSE sealed its longest winning streak in 13 years, marking a strong comeback for British stocks.
Commodities, a key part of the UK stock market, have driven much of the recent climb in the FTSE 100, which has also benefited from a string of brokers recommending investors buy back into the region. The index made a full recovery from its February losses.
Oil stocks were mixed on Friday, however, having surged all week thanks to crude prices which breached the $80/barrel barrier on Thursday after a strong run.
Major Royal Dutch Shell fell 0.5 per cent, while BP edged 0.4 per cent higher.
North America
The S&P 500 ended lower on Friday after a choppy trading session as bank and chipmaker stocks weighed on the index and investors grappled with US-China trade talks.
All three major US stock indexes posted a weekly loss as the markets reacted to reports from the US-China trade summit, rising US government bond yields and increasing oil prices.
China denied accounts by some US officials that it had offered a package to slash the US trade deficit by up to $200 billion, but said the consultations were “constructive”, in the latest salvo of tit-for-tat messages to emerge from the high-level meeting.
Boeing Co shares rose on hopes for a reduction in the US-China trade deficit, after an American source said the company would be major beneficiary of a narrowed trade gap. Boeing sells about a fourth of its commercial aircraft to Chinese customers. The plane maker’s shares rose 2.1 per cent, helping keep the Dow Jones Industrial Average out of negative territory.
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Lex Hall is a Morningstar content editor, based in Sydney.
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