Global Market Report - 9 October
The Australian share market is set to lose more ground at the open on the back of its worst day in six months, with continued weaknesses in US and European equity markets again predicted to weigh on sentiment.
Australia
The Australian share market is set to lose more ground at the open on the back of its worst day in six months, with continued weaknesses in US and European equity markets again predicted to weigh on sentiment.
The SPI200 futures contract was down 7 points, or 0.12 per cent, to 6070.0 at 8am Sydney time on Tuesday, pointing to a subdued open for the ASX, which was hovering around four-month lows on Monday, weighed down further by the banks and miners.
The Aussie is buying 70.81 US cents on Tuesday, having broken four straight losing sessions and recovering from multi-year lows to reach 70.60 US cents at Monday’s close.
The US bond market was closed for the Columbus Day holiday overnight, but the yield on the 10-year Treasury note, which hit a seven-year high last week, kept Wall Street on edge.
The Dow Jones Industrial Average rose 46.47 points, or 0.18 per cent, to 26,493.52, the S&P 500 gained 0.46 points, or 0.02 per cent, to 2886.03 and the Nasdaq Composite dropped 50.09 points, or 0.64 per cent, to 7738.36.
Oil prices almost fully recovered from a sharp drop overnight, while copper firmed and iron ore edged higher in what could mean a lift for local materials stocks, which on Monday also recorded the sharpest one-day drop since March.
Aluminium prices are set to slide further, however, amid easing supply fears as the world's biggest alumina refinery in Brazil prepares to resume production.
In local finance news, Western Australian Federal Labor MP Matt Keogh will host a WA Banking Royal Commission roundtable, while NAB is due to release its September business confidence and conditions.
Asia
China's stock market fell 3.6 per cent on Monday after the country returned from a week-long break to growing fears about rising US hostilities, and the long-term effect of a trade war on the world's second-largest economy.
On Monday, the blue-chip CSI300 index fell 4.3 per cent to 3290.90 points, its sharpest one-day percentage fall since February 2016.
The Shanghai Composite Index lost 3.7 per cent, to 2716.51 points, its worst day since June 19.
For the year, both Chinese indexes are down about 18 per cent.
In Hong Kong, the benchmark Hang Seng Index dropped 1.4 per cent to close at its lowest points in 15 months, extending last week's 4.4 per cent loss.
Europe
European shares fell on Monday as fears a trade war could have a bigger impact than expected on China added to concerns that rising US interest rates are gradually making stock markets less attractive for investors.
A mounting clash between Rome and Brussels over the Italian government's spending plans also soured the mood.
The pan-European STOXX 600 benchmark index fell 1.1 per cent to its lowest close in around six months, while the export-oriented German index fell 1.4 per cent.
Italy's FTSE MIB suffered the most, falling 2.4 per cent to its lowest in more than 17 months as banking stocks came under fresh pressure after Italy's borrowing costs soared further.
North America
The tech-heavy Nasdaq has fallen for the third straight day as a sell-off in Chinese markets sparked concerns about slowing global economic growth, though the S&P 500 pared losses to end nearly flat.
Beijing announced a steep cut in the level of cash that banks must hold as reserves, aimed at lowering financing costs and spurring growth amid the trade spat.
In Monday's session, the first trading session for mainland China investors since new US and Chinese tariffs went into effect, both Chinese stocks and the yuan slid.
The possibility of tapering global growth, led by China's slowdown, spurred a retreat from the high-flying tech sector , which declined 1.2 per cent.
Among the biggest drags on both the Nasdaq and the S&P 500 were Microsoft Corp, down 1.1 per cent, and Adobe Systems Inc, down 3.2 per cent.
By contrast, defensive sectors, including utilities , consumer staples, and real estate, led the S&P's major sectors in per centage gains.
The Dow Jones Industrial Average rose 39.73 points, or 0.15 per cent, to 26,486.78, the S&P 500 lost 1.14 points, or 0.04 per cent, to 2,884.43 and the Nasdaq Composite dropped 52.50 points, or 0.67 per cent, to 7,735.95.
The US bond market was closed for the Columbus Day holiday.
Shares of Google parent Alphabet were pressured after Google announced that data from up to 500,000 users of its social network Google+ may have been exposed to external developers.
The company said it would shut down the consumer version of Google+. Alphabet shares ended 1 per cent lower.
General Electric Co shares rose for the sixth day in a row after the company said it plans to sell $US1 billion in energy investments to Apollo Global Management LLC. GE shares ended the session up 3.3 per cent.
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Morningstar with AAP, Reuters
Lex Hall is content editor, Morningstar Australia
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