Global Market Report - August 7, 2018
Australian shares look set to open steady on the back of a slight rise on Wall Street overnight as investors applauded a strong US earnings season.
Australia
Australian shares look set to open steady on the back of a slight rise on Wall Street overnight as investors applauded a strong US earnings season.
In futures trading, the SPI200 futures contract was down two points, or 0.03 per cent, to 6206 points at 8.30am Sydney time. The Australian dollar is buying 73.86 US cents, compared to 73.95 US cents on Monday.
On Wall Street the Dow Jones Industrial Average closed up 39.6 points, or 0.16 per cent at 25,502 points, while the S&P500 rose 10 points or 0.35 per cent at 2850 points.
The tech-heavy NASDAQ index ended 47.66 points or 0.61 per cent higher at 7859 points.
In the local market, toll-road operator Transurban will detail its full-year earnings. IOOF and Navitas also report.
Investors will also be focused on the Reserve bank's decision on cash rate at its board meeting later on Tuesday. The central bank is widely tipped to maintain the rate at a record low of 1.5 per cent for the 24th consecutive month.
Asia
After an initial rise, Asian shares earlier succumbed to selling pressure, with Chinese shares sliding into negative territory.
The trade dispute remains a live issue for markets with China proposing tariffs on $US60 billion worth of US goods on Friday, while a senior Chinese diplomat cast doubt on prospects of talks with Washington to resolve the bitter trade conflict.
At the same time, Trump said his strategy of placing steep tariffs on Chinese imports is "working far better than anyone ever anticipated", citing losses in China's stock market. He predicted the US market could "go up dramatically" once trade deals were renegotiated.
The People's Bank of China's intervention last week to impose a reserve requirement on foreign exchange forward contracts had the desired impact of halting the slide in the yuan.
In offshore markets, the Chinese currency fell 0.1 per cent against the dollar to 6.8562 on Monday, but was well away from the 6.91 weak point the yuan had plumbed last week.
Japan's Nikkei ended 0.1 per cent lower at 22,507.32 after swinging between positive and negative territory throughout the day.
Europe
European shares have struggled as fears of the escalating US-China trade conflict outweighed the boost to sentiment from Chinese authorities' intervention last week to shore up its currency.
Disappointing corporate earnings in the European banking sector added to the cautious start to the week's trading.
The pan-European share index dropped 0.06 per cent while Germany's DAX fell 0.34 per cent and France's CAC 40 was virtually flat, down 0.02 per cent.
The biggest plunge in German industrial orders in nearly 18-months added to pressure on German stocks.
The MSCI world equity index, which tracks shares in 47 countries edged down 0.08 per cent.
The euro inched down to $US1.155.
The British pound slid towards a fresh 10-month low after the UK trade minister warned Britain was headed for a no-deal Brexit.
Gold hovered near 17-month lows and was last at $US1211.89.
Brent crude futures rose 0.5 per cent to $US73.55, while US crude oil futures added 0.7 per cent to $US68.94 a barrel.
North America
The three major US stock indexes closed higher as investors applauded a strong US earnings season with results from Berkshire Hathaway impressing and Facebook getting a boost.
The S&P edged closer to a record on Monday, closing within a percentage point of the all-time high for the first time since the current correction began.
Investors were focused on robust corporate earnings and shrugged off worries about US tensions with countries including China and Iran.
Iranian President Hassan Rouhani dismissed a US call for talks on Monday, hours before Washington was due to impose new sanctions following Donald Trump's decision to pull out of a 2015 agreement over Iran's nuclear program.
The Dow Jones Industrial Average rose 39.6 points, or 0.16 per cent, to 25,502.18, the S&P 500 gained 10.05 points, or 0.35 per cent, to 2850.4 and the Nasdaq Composite added 47.66 points, or 0.61 per cent, to 7859.68.
The Cboe Volatility Index, the most widely followed barometer of expected near-term gyrations for the S&P 500, closed down 0.37 point at 11.27, its lowest close since late January.
Nine of the S&P's 11 major industry sectors advanced, with the technology index, which rose 0.6 per cent and the financial sector, which gained 0.4 per cent, providing the biggest boosts to the benchmark.
Of the 413 S&P 500 companies that have reported second-quarter results so far, 79.2 per cent have topped earnings estimates, according to Thomson Reuters data. That compares with the 72 per cent average for the past four quarters.
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Lex Hall is a Morningstar content editor, based in Sydney.
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