Global Market Report - 12 November
The Australian share market is set to again open lower as concerns about the Chinese economy's growth continue to weigh on international markets.
Australia
The Australian share market is set to again open lower as concerns about the Chinese economy’s growth continue to weigh on international markets.
At 6.30am Sydney time the SPI futures index was down 37 points.
CommSec's chief economist Craig James says the futures market should be more reliable after not being a great indicator in recent times.
He expects a quiet start to the week with the Veterans Day holiday in the US on Monday.
European, US and Canadian markets were all down on Friday.
Upcoming data from China on retail sales production and investment will give experts a better handle about how fast the country’s economy is growing.
In Australia, good outcomes are expected ahead of new wage price index and unemployment figures being released respectively on Wednesday and Thursday.
“For employment we’re looking for a gain of 25,000 and if we get those readings coming through there will be a few more question marks about interest rates and where they are going,” Mr James said.
The Australian dollar closed at US72.25 cents on Friday and Mr James expects it to remain around 71-72 cents until the end of the year.
Peter Costello has been reappointed to another five year term as the chairman of the nearly $130 billion Future Fund.
ASIA
Several Chinese tech companies reported worse-than-expected results on Friday, stoking concerns over earnings.
The Hang Seng Index slid 2.4 per cent, extending its weekly decline to 3.3 per cent, the worst in five weeks. All but one stock on the 50-member gauge dropped, with tech shares tracking overnight losses for Chinese stocks listed in the US.
Tencent Holdings slid 4.9 per cent ahead of next week's quarterly report, while AAC Technologies Holdings had its worst week since 2010 as brokers downgraded the stock after poor results. Sunny Optical Technology Group fell 1.3 per cent.
Shares also fell in mainland China, where the Shanghai Composite Index fell 1.4 per cent and the Shenzhen Composite Index fell 0.4 per cent. Financial companies led declines on the CSI 300 Index after the banking regulator set lending targets for private companies.
The Nikkei share average closed 1.1 per cent lower at 22,250.25, pulling back from a 2-1/2-week high reached during the previous session and erasing almost all gains it had made earlier in the week.
EUROPE
Italy has until Tuesday to submit a new draft budget to Brussels. EU rules require it to revise its 2019 structural deficit, so that it falls by 0.6 per cent of GDP versus this year, rather than rise by 0.8 per cent as planned now.
European shares slipped on Friday as mining and oil stocks sold off and weak results from Thyssenkrupp and Richemont weighed on sentiment.
The pan-European STOXX 600 fell 0.4 per cent but held on to a small gain for the week, its second in the black after a harsh sell-off in October.
Germany's Thyssenkrupp fell 9.2 per cent to its lowest levels since July 2016 after cutting its profit outlook for the second time this year.
NORTH AMERICA
Wall Street's three major stock indexes lost ground on Friday, after a week of recovery from the October sell-off, as oil prices fell further and more evidence of a slowing Chinese economy was reported.
Oil prices fell nearly 1.0 per cent on Friday, and have now seen the longest stretch of daily declines since 1984, on rising global supply and evidence of a slowing world economy.
The US formally imposed punitive sanctions on Iran this week, but granted eight countries temporary waivers allowing them to keep buying oil from the Islamic Republic.
The S&P energy index dropped 0.4 per cent after falling 2.2 per cent in the previous day's session when US crude prices confirmed a bear market by falling 20 per cent from their most recent high.
Investors appeared unwilling to take on risk, sending the S&P technology index down 1.7 per cent as Apple Inc dropped 1.9 per cent and semiconductor stocks tumbled 1.9 per cent.
Eight of the 11 major S&P sectors ended the day lower.
The consumer staples index was the biggest gainer with a 0.5 per cent rise while other defensive sectors such as utilities and real estate eked out small gains.
Against the backdrop of the trade policy dispute between the Washington and Beijing, Chinese data showed producer inflation fell for the fourth straight month in October on cooling domestic demand and manufacturing activity, while car sales fell for a fourth consecutive month.
The Chinese data sent global stocks into a tailspin and put pressure on trade and commodity sensitive sectors. The US industrials sector fell 1.0 per cent and materials dropped more than 1.4 per cent.
US Federal Reserve policymakers left interest rates unchanged on Thursday, as expected and its policy statement signaled more rate rises ahead even as it noted that business investment had moderated.
The latest data on US producer price inflation did little to ease worries about rising interest rates which have hampered gains in stocks this year.
Shares in tobacco companies fell after an official said that the US Food and Drug Administration would issue a ban on the sale of fruit and lolly flavoured e-cigarettes in convenience stores and gas stations.
Altria Group ended 2.98 per cent lower while British American Tobacco's US shared fell 4.2 per cent.
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Morningstar with AAP, Reuters
Lex Hall is content editor, Morningstar Australia
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