Global Market Report - 5 February
Australian shares are expected to edge higher at the open, when all eyes will be watching how banking stocks react to the release of the financial services royal commission report.
Australia
Australian shares are expected to edge higher at the open, when all eyes will be watching how banking stocks react to the release of the financial services royal commission report.
The SPI200 futures contract was up 29 points, or 0.50 per cent, at 5,866.0 at 8am Sydney time, pointing to a positive start for the benchmark S&P/ASX200 on Tuesday. Yesterday, financial stocks gave the ASX a surprising lift despite the sector bracing for the fallout from the landmark misconduct inquiry.
The benchmark S&P/ASX200 index closed 28.4 points, or 0.48 per cent, higher at 5,891.2 points on Monday, while the broader All Ordinaries was up 27.7 points, or 0.47 per cent, at 5963.0 as analysis of Kenneth Hayne's financial services report gets under way.
The Aussie dollar was lower, buying 72.24 US cents from 72.30 US cents on Monday.
Investors will have their first chance to react to Haynes' recommendations after his royal commission report was released following the close of trade on Monday afternoon.
The report stops well short of fears of banning big banks making and selling financial products — vertical integration — saying it would be "both costly and disruptive".
There was a strong lead from Wall Street overnight, with the Dow Jones Industrial Average up 0.70 per cent, the S&P 500 up 0.68 per cent and the Nasdaq Composite up 1.15 per cent.
ASIA
Asian markets finished broadly higher today with shares in China leading the region. The Shanghai Composite is up 1.30 per cent while Japan's Nikkei 225 is up 0.46 per cent and Hong Kong's Hang Seng is up 0.21 per cent.
The final day of trading in the Year of Dog was unkind to newly mainland Chinese companies listed in Hong Kong, reports the South China Morning Post.
Shares of Chinese smartphone maker Xiaomi and online food delivery giant Meituan Dianping ended the lunar year trading below their initial public offering prices.
EUROPE
European shares were flat on Monday as the heavyweight banking sector fell further following poor results from Julius Baer and as optimism fuelled by strong US economic data faded.
The pan-European STOXX 600 index added 0.1 per cent after being lifted on Friday by upbeat US jobs data which helped eased worries over the health of the global economy.
Eurozone stocks fell 0.1 per cent, while the UK's FTSE 100 rose 0.2 per cent, helped by a weaker pound.
Banks were the biggest drag to the STOXX 600 with Julius Baer falling more than 4 per cent after a tough end to 2018 caused the Swiss private bank to scale back growth targets.
German payment company Wirecard soared 13.7 percent after it said its law firm found no conclusive evidence of criminal misconduct. The Financial Times last week alleged financial wrongdoing at its Singapore office, sending its shares down as much as 40 per cent.
NORTH AMERICA
Wall Street gained on Monday, with all three major indexes closing near session highs as sustained optimism on the prospects for US-China trade relations propelled technology shares.
The S&P 500 index and the Nasdaq both closed above their 100-day moving averages for the first time since October.
Shares of Apple and Microsoft each rose 2.7 per cent and were the top boosts to the benchmark S&P 500 index and the Nasdaq. Apple and Microsoft's gains helped S&P 500 technology stocks gain 1.6 per cent, the greatest rise among the benchmark index's major sectors.
High expectations for Alphabet Inc's quarterly results, announced after the bell, were likely a contributor to tech and internet stocks' advance during market hours, said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
Yet in after-hours trading, Alphabet shares fell more than 2 per cent. While its fourth-quarter revenue and profit beat Wall Street's expectations, spending grew more than expected.
FAANG earnings have been a mixed bag. Shares of Apple and Facebook rose after those companies' quarterly results, while downbeat forecasts from Netflix and Amazon.com dragged down those companies' shares.
S&P 500 industrial stocks, another trade-sensitive group, posted the second-highest percentage gain among sectors, advancing 1.3 per cent.
The Dow Jones Industrial Average rose 175.48 points, or 0.7 per cent, to 25,239.37, the S&P 500 gained 18.34 points, or 0.68 per cent, to 2,724.87 and the Nasdaq Composite added 83.67 points, or 1.15 per cent, to 7,347.54.
After having dropped nearly 20 per cent below its record 20 September close, the S&P 500 is now less than 8 per cent away from reaching that level. US stocks have been lifted so far this year by the Federal Reserve's resolve to be "patient" with further interest rate hikes in addition to signs of progress in US-China trade talks.
Earnings season has also been relatively positive. About 71 per cent of the S&P 500 companies that have reported so far have exceeded analysts' estimates, according to IBES data from Refinitiv.
Analyst estimates for fourth-quarter profit growth are now at 15.4 per cent. The profit growth forecast for the first quarter of 2019, however, is much lower at 0.5 per cent.
Allergan shares fell 3.8 per cent after the FDA approved Evolus's cheaper version of blockbuster Botox. Evolus shares jumped 11.8 per cent.
Shares of Ultimate Software Group surged 19.7 per cent after the HR software provider announced it had agreed to be acquired in a deal valued at about $US11 billion ($15 billion).