Global Market Report - 29 October
The Australian share market is poised to slip at the start of a new trading week, extending what is currently its worst month in ten years.
Australia
The Australian share market is poised to slip at the start of a new trading week, extending what is currently its worst month in ten years.
The SPI200 futures contract was down 17 points, or 0.3 per cent, to 5644.0 at 8am Sydney time on Monday, pointing to another drop for the benchmark ASX at the open, with the market's total losses for the month currently at 8.74 per cent despite a late lift on Friday.
With three sessions left in October, you have to go back to the same period in 2008 - in the midst of the global financial crisis - to find a monthly drop as severe.
The Australian dollar is up, however, buying 70.98 US cents from 70.25 US cents on Friday.
On Wall Street, the S&P 500 ended at its lowest level since early May on Friday and flirted with correction territory after technology and internet shares sold off further, capping another volatile week for US stocks.
Wider uncertainty also pushed industrial metals prices down, while gold rose as investors sought out the traditional safe-haven.
Oil prices rose, supported by expectations that sanctions on Iran would tighten global supplies, but futures posted a weekly drop as concerns about trade wars clouded the fuel demand outlook.
Out today: CoreLogic will release its capital city house prices for the week just ended.
Asia
It was the most volatile week on China's sharemarket since a sharp sell-off triggered aggressive government intervention three years ago.
Japanese shares posted their biggest weekly loss in more than eight months on growing worries over earnings of domestic firms, with camera maker Canon falling 5.6 per cent after lowering its annual profit forecast.
The Nikkei share average on Friday fell 0.4 per cent, taking the weekly loss of 5.7 per cent as the index ended at 21,185, its lowest close since late March.
The broader Topix shed 0.3 per cent to 1596 on Friday to also end the week 5.7 per cent down, the second biggest fall this year after a 7.1 per cent drop in early February. It marked the lowest close since September 2017.
Europe
British shares slumped to a near two-year low on Friday on growing concerns about slowing earnings growth, with investors punishing Rolls Royce and RBS. The FTSE 100, on track for its biggest monthly drop in a decade, closed down 1.4 per cent.
Notching up a fifth straight weekly loss, the Midcap FTSE 250 was down 1.2 per cent. Pan European stocks were set for their biggest monthly drop since August 2011.
Analysts have been downgrading their forecasts for European earnings at their fastest pace since 2016, according to Refinitiv IBES data.
RBS fell 5 per cent, touching its lowest since February 2017, after the UK bank warned of economic uncertainty and its profit lagged forecasts. The lender said it had taken a £100 million impairment provision to account for greater uncertainty.
Rolls Royce was rocked by news it will produce fewer engines for Airbus' new A330neo jet than expected, sending its shares down as much as 13 per cent to 1½-year lows. It recovered some ground to close down 3.5 per cent.
North America
The S&P 500 has ended at its lowest level since early May after technology and internet shares sold off further, capping a volatile week that confirmed a correction for the Nasdaq.
The benchmark S&P 500 itself flirted with correction territory - when an index closes 10 per cent or more below its all-time closing high - but recovered to end off that level.
Grim results from Amazon.com and Google-parent Alphabet, two stocks that have helped power the equity markets decade-long bull run, sparked the day's sell-off and overshadowed data showing the US economy continued to grow at a healthy clip.
Investors may see more volatility through the remainder of the US earnings season and ahead of the 6 November US midterm congressional elections, he and other money managers said.
Alphabet's revenue missed estimates, fanning concerns that regulatory scrutiny and competition would throttle its scorching pace of growth. The stock fell as much as 5.6 per cent before recovering to end down just 1.8 per cent.
Amazon tumbled 7.8 per cent in its worst daily percentage drop since October 2014, after it missed quarterly sales estimates and gave a below par holiday-season sales forecast.
The S&P 500 finished at its lowest level since May 3. The Nasdaq fell 3.8 per cent for the week, its biggest weekly drop since March 23, while the Dow was down 3 per cent and the S&P 500 was down 4 per cent on the week.
While economic growth is mostly healthy, disappointing corporate results and forecasts this earnings season have shown how tariffs, rising wages and borrowing costs as well as jitters over geopolitical events are hurting companies.
Data earlier in the day showed the US economy continued to grow at a healthy pace, offering some support.
US gross domestic product growth slowed less than expected in the third quarter as a tariff-related drop in soybean exports was partially offset by the strongest consumer spending in nearly four years and a surge in inventory investment.
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Morningstar with AAP, Reuters
Lex Hall is content editor, Morningstar Australia
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