Global Market Report - 5 November
Australian shares are set for a subdued open after a weak lead from Wall Street, with the market preparing to pare back the modest gains it enjoyed at the end of the week.
Australia
Australian shares are set for a subdued open after a weak lead from Wall Street, with the market preparing to pare back the modest gains it enjoyed at the end of the week.
The SPI200 futures contract was down 5 points, or 0.09 per cent, to 5783.0 at 8am Sydney time on Monday, pointing to a flat open for the ASX after a late rally from mining and health care stocks lifted market into the black on Friday.
The Australian dollar has also retreated and is buying 71.86 US cents, down from 72.37 on Friday. The dollar had hit a monthly high of 72.58 US cents in the week's final session.
On Wall Street on Friday, US stocks snapped a three-day rally as Apple shares dropped following a disappointing forecast and the White House dampened optimism over US-China trade talks.
The Dow Jones Industrial Average fell 109.91 points, or 0.43 per cent, to 25,270.83, the S&P 500 lost 17.31 points, or 0.63 per cent, to 2723.06, and the Nasdaq Composite dropped 77.06 points, or 1.04 per cent, to 7356.99.
Oil prices fell about 1 per cent and notched a weekly loss of over six per cent, as investors worried about oversupply after the US said it will temporarily spare eight jurisdictions from Iran-related sanctions. Iron ore has also dipped.
Banking giant Westpac has reported flat cash earnings growth of $8.07 billion, compared with $8.06 billion a year ago, as customer refunds and legal costs soared in the wake of damaging revelations of wrongdoing at the royal commission.
CoreLogic is also expected to release its weekly city house pricing data on Monday.
The Reserve Bank meets tomorrow and perhaps more importantly the Statement of Monetary Policy is out on Friday.
ASIA
Chinese and Hong Kong stocks rose on Friday amid initial optimism about President Donald Trump's interest in resolving the trade dispute between the US and China.
The blue-chip CSI300 index ended up 3.6 per cent at 3290.25 points, taking its gains for the week to 3.7 per cent. The Shanghai Composite index ended 2.7 per cent higher at 2676.48, and was up 3 per cent for the week.
However, both indexes remain well in the red for the year. The CSI300 has lost 18.5 per cent and the Shanghai Composite is down 19.1 per cent, pulled down by worries about the impact of the Sino-US trade row on corporate profits and economic growth.
Consumer staples firms posted particularly strong gains, with the sector index rising 6.2 per cent.
In Hong Kong, the main Hang Seng index recorded its biggest daily percentage rise since December 2011, closing up 4.2 per cent at 26,486.35.
EUROPE
European shares had a third day of gains on Friday on hopes an easing of trade tensions.
The pan-European STOXX 600 hit its highest since October 10 and sealed its best week since December 2016, rising 3.4 per cent on the week.
Germany's DAX climbed 0.6 per cent, lifted by the big exporters among its constituents, such as car maker Volkswagen, up 4 per cent.
Europe's autos index rose 1.7 per cent as signs of progress in trade talks boosted the sectors seen as most vulnerable.
NORTH AMERICA
Premature hopes of an easing in the trade war have reined in a rally in world equity markets and reversed gains on Wall Street.
Markets had earlier climbed on hopes that the world's two biggest economies were mending their shaky trade relations.
A steep decline in shares of Apple further weighed on sentiment in the US stock market after the iPhone maker warned that sales during the crucial holiday quarter would likely miss expectations.
White House economic adviser Larry Kudlow told CNBC that while Trump plans to meet Chinese President Xi Jinping later this month, he has not asked US officials to draw up a proposed trade plan, contradicting a report earlier in the day that had buoyed hopes of a trade dispute resolution.
That erased early gains in US stocks and curtailed a rally in global markets that had lifted emerging market stocks by their largest daily gain since 2016.
Apple's shares tumbled 6.6 per cent, taking its market value below $US1 trillion, after the company said sales for the final quarter would likely miss expectations.
US job growth rebounded sharply in October and wages recorded their largest annual gain in 9½ years, pointing to further labour market tightening that could encourage the Federal Reserve to raise interest rates again in December.
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Morningstar with AAP, Reuters
Lex Hall is content editor, Morningstar Australia
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