Global Market Report - 16 November
The Australian share market is set to follow Wall Street higher at the open following reports the next round of US tariffs on Chinese goods has been put on hold.
Australia
The Australian share market is set to follow Wall Street higher at the open following reports the next round of US tariffs on Chinese goods has been put on hold.
At 8am Sydney time the SPI200 futures contract was up 14 points, or 0.24 per cent, to 5,761.0, pointing to a slight rise for the ASX, after a rally in the last hour of trade wiped out heavy afternoon losses yesterday.
The Australian dollar has climbed to a near three-month high of US72.90 cents, up from US72.74 cents yesterday.
US stocks lifted sharply from an overnight lull after reports in the Financial Times that US Trade Representative Robert Lighthizer told industry executives additional tariffs on Chinese imports have been put on hold.
US authorities later played down the report.
The US has already put 10 per cent tariffs on about $US250 billion in Chinese goods and President Donald Trump had threatened more to get China to the bargaining table.
In late trade the S&P 500 index added 1 per cent, as a 2.5 per cent jump in tech shares helped offset losses among shares of retailers. The Dow Jones Industrial Average rose 210 points, or 0.8 per cent, to 25291, while the Nasdaq Composite climbed 1.7 per cent.
ASIA
MSCI's broadest index of Asia-Pacific shares outside Japan had also ended up 0.8 per cent having fallen the previous day as the sharp slide in oil prices had heightened anxiety about the global growth outlook.
Shanghai Composite Index gained 0.9 per cent, while Hong Kong's Hang Seng rose 0.8 per cent on the China-US communications, while Australian stocks inched up 0.05 per cent and Japan's Nikkei shed 0.2 per cent.
"While it's difficult to pinpoint a specific event for the risk-off move, recent themes appear to be keeping markets cautious include oil's recent plummet, Apple's fall, US political gridlock, China's slowing growth, tightening liquidity, a hawkish Fed, earnings peak, Italian jitters, and Brexit uncertainty," wrote economists at ANZ.
EUROPE
Sterling tumbled and the rest of Europe's share markets groaned after a long-awaited Brexit agreement was thrown into chaos as Britain's chief negotiator for the deal quit just 12 hours after it had been unveiled.
Up until that point markets had looked relatively calm. Asia had cheered news that China and the US were back in contact about their bitter trade dispute and oil was holding steady again having snapped out of a record losing streak.
But then came the hammer blow. London's Brexit minister Dominic Raab quit in protest at Prime Minister Theresa May's deal for leaving the European Union.
Cue a sterling meltdown. The currency slumped a full cent to $1.2830 and though that made the FTSE stronger - a weaker pound makes life easier for exporters on the index -- the rest of Europe sank swiftly into the red.
The turmoil also boosted demand for safe-haven German government bonds. Ten-year yields on what is regarded as one of the safest assets in the world, fell over three basis points to 0.36 per cent -- its lowest in over two weeks.
EU leaders had said they would meet on November 25 to endorse the divorce deal, but May now faces the much more perilous struggle of getting parliament to approve what was agreed.
In the commodity markets, where Brexit may be a sideshow but turbulence is still acute after a 12-day losing streak was set this week, the mood was much calmer.
The FTSE 100 eventually ended broadly flat, reversing the session's earlier 0.8 per cent fall.
NORTH AMERICA
US stocks have risen on optimism the United States and China could resolve their trade dispute, after a news report said Washington would pause further tariffs on Chinese imports.
Wall Street's major indexes reversed an early drop after the Financial Times reported that US Trade Representative Robert Lighthizer told a group of industry executives the next tranche of tariffs on Chinese imports was on hold.
Wall Street momentarily pared gains after a spokesperson for Lighthizer denied the report, saying plans for the tariffs had not changed. But stocks resumed their upswing and rose further in the last half-hour of trading.
The benchmark S&P 500 index gained 28.62 points, or 1.06 per cent, to 2730.2, snapping five days of losses. Shares of Apple advanced 2.5 per cent to end a five-day losing streak and help the technology sector climb 2.5 per cent, the biggest gain among the S&P 500's major sectors.
Shares of Cisco Systems Inc advanced 5.5 per cent after the network equipment maker's quarterly revenue and earnings beat analyst estimates. Cisco was among the biggest boosts to the S&P 500 and the Nasdaq.
Department store operator Dillard's tumbled 14.8 per cent after third-quarter earnings missed analyst estimates.
The gloomy Dillard's and J.C. Penney results hurt Walmart shares, which fell 2 per cent even though the world's largest retailer beat same-store sales estimates and raised its full-year outlook.
KB Home slumped 15.3 per cent after the company cut its fourth-quarter revenue forecast. Shares of other homebuilders, including D.R. Horton, Toll Brothers and Lennar Corp, also fell.
Shares of PG&E Corp extended their losing streak to a sixth day, hitting a 15-year low of $US17.26 ($23.75) and ending down 30.7 per cent. The utility company warned it could face liability in excess of its insurance if its equipment caused the deadly Camp Fire in northern California.
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Morningstar with AAP, Reuters
Lex Hall is content editor, Morningstar Australia
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