Global Market Report - July 6, 2018
The Australian share market is set to rise despite a burgeoning US-China trade war, which has been offset by reports the US and the European Union may agree to withdraw auto tariffs.
Australia
The Australian share market is set to rise despite a burgeoning US-China trade war, which has been offset by reports the US and the European Union may agree to withdraw auto tariffs.
US tech stocks looked past trade worries to add to gains in the last hour of trading on Thursday after having slightly pared gains upon the release of minutes from the Federal Open Market Committee's June meeting. Investors suggested that Friday's impending tariffs had already been priced into stocks.
Beijing said it would respond immediately and in equal measure to America’s trade tariffs - which come into effect at midnight - by imposing its own tariffs on US goods ranging from cars to soybeans.
There was no evidence of any last-minute negotiations between US and Chinese officials, business sources in Washington and Beijing said.
ASX futures were up 28 points near 7.45am AEST. The Australian dollar is buying 73.88 US cents. Financial stocks yesterday closed in the green despite a tough day for the major miners.
The benchmark S&P/ASX200 closed up 0.52 per cent at 6215.5 points on Thursday, while the broader All Ordinaries index gained 0.47 per cent, at 6302.9 points.
Out today: AiG construction data for June.
Asia
Chinese stocks fell on Thursday and the yuan wavered against the US dollar.
The blue chip CSI300 Index closed down 0.6 per cent, and the Shanghai Composite Index fell 0.9 per cent. Hong Kong's Hang Seng Index ended down 0.2 per cent.
Chinese treasury futures rose before giving up ground later in the day. Chinese 10-year treasury futures for September delivery, the most-traded contract, rose as much as 0.28 per cent in early afternoon trade, before settling up 0.06 per cent at 95.840.
The yuan closed up but was mostly flat on Thursday afternoon. The currency ended the onshore trading session slightly weaker, at 6.6372 per dollar after ending the late night session at 6.6330.
In Japan, the Nikkei share average closed at a three-month low on Thursday as trade tensions spooked investors. The Nikkei ended 0.8 per cent lower at 21,546.99, the lowest closing since April 4.
The operator of Uniqlo clothing stores, which fell 2.2 per cent on Wednesday after weak June same-store sales disappointed investors, dropped another 2.5 per cent. Thursday's tumble took 45 points off the Nikkei benchmark index.
Thursday’s losers included companies that benefit from inbound tourism demand as the US-China trade tension stokes fears that the number of tourists from China to Japan may fall.
Cosmetics maker Shiseido Co plunged 5.0 per cent, hotel operator Kyoritsu Maintenance dived 5.3 per cent and Japan Airport Terminal, which operates duty-free shops, fell 3.4 per cent.
Europe
German Chancellor Angela Merkel said she would back lowering EU tariffs on US car imports. An industry source told Reuters the US ambassador to Germany, Richard Grenell, had mentioned to German car executives that Trump could abandon threatened tariffs on imported European cars if in return the EU scrapped duties on US cars.
The minutes reflected confidence among the Federal Reserve’s policymakers in the strength of the US economy and its plans for future interest-rate hikes. In the June meeting, the Fed increased rates for the second time this year, and it has signalled that additional increases are likely.
The pan-European STOXX 600 index closed with a 0.4 per cent gain for its third straight positive session. Germany's exporter-heavy DAX, meanwhile, was helped driven 1.2 per cent higher by its carmakers.
The euro rose after Germany’s economics ministry said Thursday that total manufacturing orders rose 2.6 per cent in May compared with April, ending a four-month streak of falling orders. Economists had forecast a 1.1 per cent gain.
North America
Technology stocks led gains on the S&P 500, with shares of several chipmakers rising. The Philadelphia semiconductor index rose 2.7 per cent.
Facebook rose 3 per cent, Netflix added 2 per cent and Alphabet rose 1.9 per cent. Apple, Microsoft and Amazon also closed higher. Atlassian pared early gains to close up 0.7 per cent.
The Dow Jones Industrial Average rose 181.92 points, or 0.75 per cent, to 24,356.74, the S&P 500 gained 23.39 points, or 0.86 per cent, to 2,736.61 and the Nasdaq Composite added 83.75 points, or 1.12 per cent, to 7586.43.
Shares of chipmaker Qorvo Inc rose 5.7 per cent after KeyBanc, citing strong demand for smartphones in China and stabilising iPhone sales, upgraded the company's stock to "overweight". Chipmaker Micron Technology's shares rose 2.6 per cent after the company forecast only a small hit from a temporary ban on some sales in China.
Earlier on Thursday, the ADP National Employment Report showed private employers added 177,000 jobs in June, below Reuters' consensus of an increase of 190,000. That comes ahead of the more comprehensive non-farm payrolls report on Friday.
Advancing issues outnumbered declining ones on the NYSE by a 2.79-to-1 ratio; on Nasdaq, a 2.40-to-1 ratio favoured advancers.
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Lex Hall is a Morningstar content editor, based in Sydney.
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