Global Market Report - 17 October
The Australian share market is poised to hitch a ride on Wall Street's overnight rally, with the major US indexes shrugging off a recent slump to gain more than 2 per cent.
Australia
The Australian share market is poised to hitch a ride on Wall Street's overnight rally, with the major US indexes shrugging off a recent slump to gain more than 2 per cent.
The SPI200 futures contract was up 32 points, or 0.55 per cent, to 5886 at 8am Sydney time on Wednesday, pointing to another opening lift for the ASX, which recovered ground on Tuesday on the back of resurgent mining and financial sectors.
The Aussie dollar has also continued its rise, buying 71.41 US cents from 71.22 US cents at Tuesday's close.
In overnight trade, the Dow Jones Industrial Average was up 543.36 points, or 2.15 per cent, to 25,793.91, while the S&P 500 gained 61.39 points, or 2.23 per cent, to 2812.18 and the Nasdaq Composite climbed 207.2569 points, or 2.79 per cent, to 7638.0005.
The Wall Street surge comes after upbeat earnings reports from major companies including UnitedHealth and Goldman Sachs and solid economic data, as equities rebounded from a recent sharp sell-off.
Oil prices have edged up in cautious trade but iron ore slipped, while copper prices are down amid lean factory-gate inflation data in China and nagging concerns about global growth, trade tensions and rising US interest rates.
Gold has held steady at near 2½-month highs as dollar weakness offset improved risk appetite among investors.
In local finance news for Wednesday, healthcare giant CSL, Origin Energy, and Tabcorp are all set to hold their annual general meetings.
Meanwhile, Samarco, a joint mining venture between Brazil's Vale and BHP Billiton, could resume production at a third of its capacity at the beginning of 2020, Vale's chief executive has said.
Asia
Stocks in Hong Kong ended higher on Tuesday, gaining a footing after recent losses, although data showing cooling factory-gate inflation in China for a third straight month in September and a warning from S&P on government debt curbed further gains.
The Hang Seng index ended 0.1 per cent higher at 25,462.26 points, while the China Enterprises Index closed 0.5 per cent higher at 10,198.33 points.
China's factory-gate inflation cooled for a third straight month in September amid ebbing domestic demand, pointing to more pressure on the world's second-biggest economy as it remains locked in an intensifying trade war with the US.
The blue-chip CSI300 index ended 0.8 per cent weaker at 3100.97 points, while the Shanghai Composite Index also closed 0.8 per cent lower at 2546.33 points.
MSCI's Asia ex-Japan stock index was firmer by 0.5 per cent, while Japan's Nikkei index closed 1.3 per cent higher.
Europe
European shares rebounded from a 22-month low on Tuesday as optimism fuelled by the start of the reporting season and buoyant results from Goldman Sachs from Morgan Stanley lifted investor sentiment.
The pan-European STOXX 600 index was up 1.5 per cent after hitting levels not seen since December 2016 in the previous session amid fears of risings US Treasury yields and a mix of geopolitical tensions.
Upbeat earnings from US blue-chip companies and the top six American lenders pushed Wall Street higher, with the S&P 500 and the Nasdaq up 1.4 per cent and 1.9 per cent respectively.
In Europe, about 6 per cent of STOXX 600 companies are due to report results this week, with the earnings season passing its mid-point during the first week of November.
North America
Stocks across the world have bounced back, supported by strong earnings results and expectations, while oil prices rose as evidence of higher US production was overshadowed by concerns about supply from Iran and Saudi Arabia.
Despite the rally in stocks, US Treasury yields were little changed.
European shares pulled up from Monday's 22-month lows , partly on expectations that the reporting season will deliver double-digit earnings growth. A rebound in Italian assets helped battered equities find firmer ground.
On Wall Street, tech shares led the way a day after a decline in Apple weighed on the Nasdaq, while the healthcare sector rose after earnings reports from Johnson & Johnson and UnitedHealth Group.
Willie Delwiche, investment strategist at Baird in Milwaukee, said Tuesday's gains were the result of sharp selling over the past weeks.
The pan-European FTSEurofirst 300 index rose 1.41 per cent and MSCI's gauge of stocks across the globe shed 0.45 per cent.
Emerging market stocks lost 0.86 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.11 per cent lower.
Crude futures rose in choppy trading as expectations of higher US shale output and inventories were more than offset by worries over looming US sanctions on Iran and growing tensions with top oil producer Saudi Arabia.
US Senator Lindsey Graham accused Saudi Crown Prince Mohammed bin Salman of ordering the murder of Saudi journalist Jamal Khashoggi and said the prince was jeopardising relations with the US.
US crude rose 0.07 per cent to $US71.83 per barrel and Brent was last at $US81.32, up 0.67 per cent on the day.
Sterling rose against the US dollar after data showed basic wages of workers in Britain rose at their fastest pace in nearly a decade. The British currency was last trading at $US1.3187, up 0.28 per cent on the day.
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Morningstar with AAP, Reuters
Lex Hall is content editor, Morningstar Australia
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