Global Market Report - 6 November
The ASX is in for a flat open with tech stocks dragging on Wall Street, with the RBA set to reveal if it will keep rates at a record low of 1.5 per cent for the 27th consecutive month.
Australia
The Australian share market is in for a flat open with tech stocks dragging on Wall Street, with the Reserve Bank set to reveal if it will keep interest rates at a record low of 1.5 per cent for the 27th consecutive month.
The SPI200 futures contract was up 6 points, or 0.1 per cent, to 5816.0 at 7am Sydney time on Tuesday, pointing to a subdued open for the ASX after energy and healthcare stocks dragged it into the red on Monday.
The Australian dollar climbed overnight and is buying 72.17 US cents, up from 71.93 on Monday.
On Wall Street overnight, rising oil prices lifted energy stocks and defensive sectors as the S&P 500 and the Dow rebounded at the start of a packed week, which includes the US midterm elections and a Federal Reserve meeting.
The Dow was up 107.82 points, or 0.43 per cent, at 25,378.65, the S&P 500 was up 5.32 points, or 0.20 per cent, at 2728.38 and the Nasdaq Composite was down 68.52 points, or 0.93 per cent, at 7288.47.
The Reserve Bank is expected to hold its horses on Melbourne Cup day and keep the official cash rate at a record low.
Economists widely predict the central bank will keep the cash rate at 1.5 per cent for the 27th consecutive month at its November board meeting on Tuesday.
Weak household spending remains a source of uncertainty for the economy and was a factor in the central bank's decision to hold the rate last month.
The RBA last cut the rate in August 2016 and has signalled things are not likely to change for some time.
Capital Economics is among firms expecting business as usual from the RBA in November, ahead of a change of rate from late 2020.
ASIA
The Hong Kong stock market fell on Monday as investors shunned riskier assets, with hopes fading for an early resolution of the US-China trade war, and uncertainty cast by US mid-term elections. The main Hang Seng index was down 2.1 per cent at 25,934.39. The Hang Seng China Enterprises index lost 1.3 per cent to reach 10,544.92.
In Tokyo, the Nikkei share average dropped 1.6 per cent to 21,898.99, pulling back from a two-week high on Friday.
Fast Retailing tumbled 4.8 per cent and sliced more than 105 points off the Nikkei benchmark index, after the operator of Uniqlo clothing said its October domestic same-store sales dropped 10 per cent on the year hit by weak winter clothes sales on unseasonably warm weather.
EUROPE
European shares eased on Monday as last week's rebound ran out of steam on investor nervousness over fast-rising US interest rates and Washington's trade dispute with Beijing.
The pan-European STOXX 600 benchmark index fell 0.1 per cent with most country indexes also hovering around neutral.
Tuesday's US mid-term elections also kept traders cautious, as did uncertainty over whether renewed hopes of a breakthrough in Brexit negotiations were misplaced.
Results from the European banking stress tests had little impact, with the sector ending down 0.4 per cent.
NORTH AMERICA
The S&P 500 and the Dow Jones Industrial Average have risen, supported by energy stocks and strong results from Berkshire Hathaway, while a 3 per cent drop in Apple shares has dragged down the Nasdaq.
The S&P energy index has risen 1.21 per cent, leading gains among the major S&P sectors, after oil prices were boosted by the restoration of US sanctions on Iran.
Apple slid 3.3 per cent on Monday, adding to its near 7 per cent fall on Friday, after the Nikkei reported the company has told two smartphone assemblers to halt plans for additional production lines dedicated to the lower-cost iPhone XR.
Barring losses in the technology group and the FANGs - Amazon, Alphabet, Netflix and Facebook - the markets gained broadly at the start of the week, which will see the all-important US midterm elections and a Federal Reserve meeting.
Opinion polls show a strong chance for President Donald Trump's Republican Party holding the Senate but losing control of the House of Representatives to the Democrats - a potential hurdle to Trump's pro-business agenda, which has been a major factor for the stock market's rally since the 2016 election.
With the Federal Reserve meeting on Wednesday and Thursday, investors are fretting over tighter US monetary policy, especially after a string of strong economic data, including Friday's jobs report.
The upbeat report did little to stop the US market from snapping a three-day rally on Friday, following a bruising October, on Apple's downbeat forecast and the White House dampening optimism over US-China trade talks.
Berkshire Hathaway jumped 4.6 per cent after the conglomerate run by billionaire Warren Buffett said its quarterly operating profit doubled.
The gains lifted the S&P financial index up 1.1 per cent.
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Morningstar with AAP, Reuters
Lex Hall is content editor, Morningstar Australia
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