Global Market Report - 11 October
Australian shares are tipped to plummet almost 2 per cent at the open after an overnight tumble on Wall Street, with rising US Treasury yields and increasing trade worries smashing the major overseas indexes.
Australia
Australian shares are tipped to plummet almost 2 per cent at the open after an overnight tumble on Wall Street, with rising US Treasury yields and increasing trade worries smashing the major overseas indexes.
The SPI200 futures contract was down 109 points, or 1.81 per cent, to 5914.0 at 8am on Thursday, pointing to bleak open for the ASX, which had clawed back some ground on Wednesday after a turnaround in financial stocks and a strong performance by the healthcare sector.
The advance of US Treasury yields to more than seven-year highs, as well as escalating fears over US-China trade relations, has hurt equity investor confidence, with the major US indexes losing more than 2 per cent overnight.
The Nasdaq on Wednesday registered its biggest daily drop since June 24, 2016, hurt by technology stocks which had their biggest one-day drop since August 2011.
The S&P 500 ended the day down 3.3 per cent, representing a 4.95 per cent drop from its September 20 record closing high.
The Dow Jones Industrial Average fell 831.83 points, or 3.15 per cent, to 25,598.74, the S&P 500 lost 94.66 points, or 3.29 per cent, to 2785.68 and the Nasdaq Composite dropped 315.97 points, or 4.08 per cent, to 7422.05.
The Aussie is buying 70.73 US cents, up from Wednesday's close of 70.13 US cents, but down from Wednesday's peak of 71.27 US cents.
Commodity prices are also down amid wider global uncertainty, with oil slipping 2 per cent, iron ore flat, and copper and aluminium edging lower.
Gold prices have inched up, however, as investors sought refuge in the metal. The local materials sector is already down for three consecutive sessions for the first time since July.
In other local finance news, the chief executives of Commonwealth Bank and Westpac are scheduled to face intense questioning from parliamentarians over revelations from the royal commission, including product mis-selling, charges for services-not-rendered, and fees taken out of dead client accounts.
Toll giant Transurban is scheduled to hold its annual general meeting in Melbourne.
Asia
China's blue-chip index fell for a third consecutive day on Wednesday, but the main Shanghai Composite index rose as investors weighed government support for continued growth against the impact of the US-China trade war.
The Shanghai Composite index rose 0.2 per cent at 2725.84.
The blue-chip CSI300 index fell 0.2 per cent, with its financial sector sub-index higher by 0.2 per cent, the consumer staples sector fell 2.6 per cent, the real estate index rose 0.1 per cent and healthcare sub-index was down 1.2 per cent. It was the third straight day of losses for the CSI300 index, bringing its losses for the week to 4.6 per cent.
Japan's Nikkei edged higher in choppy trade as investors picked up defensive stocks on the dips, while index-heavyweight SoftBank dived on news it was to buy a majority stake in US shared office space provider WeWork.
Europe
European shares had their worst day on Wednesday since June as concerns around rising debt yields gripped equity markets worldwide, while tech stocks sank on signs of slowing demand in the semiconductor industry.
The pan-European STOXX 600 index tumbled 1.6 per cent to its lowest since April 4 while Germany's DAX dropped 2.2 per cent. It was the biggest fall for the STOXX since June 25.
FTSE 100 hits new 6-month low: Britain's top share index hovered near a six-month low on Wednesday.
The tech sector sank 4.3 per cent, its worst day since the Brexit referendum selloff, as investors dumped the highly-valued sector on signs of weakening demand for chips.
North America
US stocks have tumbled, with the S&P 500 and the Dow marking their biggest daily declines since February 8 and technology stocks were at the centre of the carnage as rising US Treasury yields sent investors fleeing from risky assets.
US long-dated Treasury yields rose again in extension of a trend during the past few weeks fuelled by solid US economic data that reinforced expectations of multiple interest rate hikes in the next 12 months.
Investors also worried about the impact of trade tensions on corporate profits and Hurricane Michael's landfall in Florida adding to the uncertainty.
All three indices hit records between August 30 and October 3. The Russell 2000 small-cap index closed down 2.9 per cent.
The S&P technology sector dropped 4.8 per cent, with Apple creating the biggest drag with a 4.6 per cent decline.
The communications services, consumer discretionary, energy and industrial sectors showed declines of more than three per cent.
The energy sector was one of the biggest losers for much of the day as US oil production was decimated while the industry waited out Hurricane Michael.
The CBOE Volatility Index rose seven points, or nearly 44 per cent, to 22.96, going above 20 for the first time since April 11 and hitting its highest close since April 2.
The best performer was the defensive utilities sector, which closed down 0.5 per cent.
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Morningstar with AAP, Reuters
Lex Hall is content editor, Morningstar Australia
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