Global Market Report - 12 October
The Australian share market is poised to extend losses at the open after a volatile overnight session on Wall Street, with sliding oil prices adding to investor jitters over global trade.
Australia
The Australian share market is poised to extend losses at the open after a volatile overnight session on Wall Street, with sliding oil prices adding to investor jitters over global trade.
The SPI200 futures contract was down 47 points, or 0.81 per cent, to 5778.0 at 8am Sydney time on Friday, pointing to another decline open for the ASX, and hot on the heels of the worst day for Australian shares since February.
Thursday's trade saw 2.7 per cent wiped off the benchmark ASX 200 to send it to a five-month low.
Overnight, Wall Street indexes extended their decline as volatility spiked and investors shunned risky investments, and Nasdaq looked like it could confirm a correction.
The Dow Jones Industrial Average fell 266.04 points, or 1.04 per cent, to 25,332.7, the S&P 500 lost 33.58 points, or 1.21 per cent, to 2752.1 and the Nasdaq dropped 15.31 points, or 0.21 per cent, to 7406.74.
The Aussie is buying 71.24 US cents, up from 70.70 US cents at Thursday's close.
Tumbling global stock markets have also weighed on oil prices, which slumped to more than two-week lows overnight, while gold jumped as investors sought refuge in the traditional safe-haven.
Copper and iron ore prices have edged slightly higher.
In local finance news on Friday, the Reserve Bank is scheduled to release its half-yearly assessment of the condition of the financial system and potential risks to stability.
The Australian Bureau of Statistics will also publish data on August housing finance.
ANZ chief Shayne Elliott will be questioned by federal politicians about "appalling behaviour" uncovered at the banking royal commission.
He is the third banking head to be grilled by the MPs this week, after the Commonwealth Bank's Matt Comyn and Westpac's Brian Hartzer fronted the group on Thursday, where they both acknowledged their institutions took too long to address misconduct that was eventually uncovered by the inquiry.
Asia
Among Asia's biggest stock market losers yesterday were Shanghai and Taipei, closing down 5.2 and 6.3 per cent respectively.Chinese stock markets plunged to their lowest levels in four years.
Japan's Nikkei tumbled to a one-month low on Thursday and suffered its biggest daily decline since March, hit by a sell-off in global shares, while tech firms and industrial equipment makers underperformed.
The Nikkei share average ended 3.9 per cent lower at 22,590.86, the weakest closing level since September 10.
The benchmark index has fallen about 8 per cent from a 27-year high of 24,448.07 hit last week.
Europe
UK shares closed at their lowest since April as a global sell-off on equity markets caused by fears of fast-rising rates showed no sign of ending on Thursday despite data showing slower than expected US inflation.
The FTSE 100 ended the day down 1.9 per cent, a fall broadly in line with European benchmarks, all retreating as the S&P 500 and the Nasdaq were set for a second session of heavy losses after their Wednesday plunge. Frankfurt ended down 1.5 per cent.
North America
Wall Street indexes continued their slide in a volatile session as investors worried about rising interest rates and braced for a trade war hit to corporate earnings.
In its sixth consecutive day of declines, the S&P closed down 2.1 per cent after shedding 3 per cent in Wednesday's session. At its session low, the benchmark fell 2.7 per cent to its lowest level since early July.
The Nasdaq narrowly avoided confirming a correction. During the session it fell as much as 10.3 per cent from its August 29 closing record high but ended the day 9.6 per cent below the record.
Investors worried that equity markets would have trouble recovering as rising interest rates coincide with uncertainty about how much earnings growth would be hurt by a US trade war with China.
After hitting an intraday high of 28.84, the CBOE Volatility Index, popularly known as the "fear gauge," ended the day up 2 points at 24.98, its highest close since February 12.
The energy sector, pressured by a drop in oil prices, was the lead decliner, while insurers were some of the biggest losers in the financial sector a day after powerful Hurricane Michael slammed into Florida.
The S&P's 11 major sectors all ended the day in the red with only the communications services sector managing a decline of less than 1 per cent.
Energy was the biggest loser with a 3.1 per cent drop as oil prices hit two-week lows following an industry report showed a bigger-than-expected build in US crude inventories.
The financial sector fell 2.9 per cent, also hurt by a 2.7 per cent drop in bank stocks a day before three of the biggest banks were to report quarterly results.
Wall Street expects S&P 500 companies to report third-quarter earnings growth of 21.3 per cent for the third quarter.
The technology sector, the biggest loser in Wednesday's sell-off, closed down 1.3 per cent on Thursday.
Stocks had seen some support earlier in the session from US data showing a smaller-than-anticipated rise in consumer prices as it helped ease fears of increasing inflation pressures.
The data helped push US Treasury yields to a one-week low, further soothing equity investors.
But investors still faced a sea of worries, including uncertainty ahead of US midterm congressional elections on 6 November, and hawkish comments last week from US Federal Reserve officials.
More from Morningstar
• Make better investment decisions with Morningstar Premium | Free 4-week trial
Morningstar with AAP, Reuters
Lex Hall is content editor, Morningstar Australia
© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.
