Australian market expected to open lower 02/10/19

Australian market expected to open lower 02/10/19

OPENING CALL: The Australian share market is expected to open lower. The SPI200 futures contract expected to open down 75 points.

 

Manufacturing activity slowed around the world in September and trade flows are set to grow this year at the weakest pace since the financial crisis, as tariffs rise and the global economy cools.  

 

 

The U.K. Financial Reporting Council on Tuesday opened an investigation into Ernst & Young LLP’s audits of financial statements of Thomas Cook Group PLC, the British travel company that collapsed on Sept. 23 after rescue talks broke down

 

 

 

Overnight Summary

 

 

Each Market in Focus

 

 

Australian shares rose after the central bank cut the official cash rate by 0.25 percentage point to 0.75%, a record low.  

Although the move was broadly anticipated and is the third cut this year, the benchmark S&P/ASX 200 index closed 0.8% higher at 6742.8, the first trading day of the fourth quarter.  

Health care stocks gained 2%, while financials were 0.3% higher and energy shares ended down 0.4%. Netwealth Group led losers after dropping 3.8%, but Nufarm surged 15%, on top of a 26% gain the previous trading day when it said it would sell its South American unit.  

U.S. stocks slumped intraday, kicking off the fourth quarter on a down note as disappointing manufacturing data added to concerns about the health of the domestic economy.  
 
The new data showing U.S. factory activity contracted for a second consecutive month adds to growing evidence of a global manufacturing slowdown, which many economists attribute to the escalating trade dispute between China and the U.S.  
 
Investors will be closely watching as the two countries engage in planned high-level trade talks in Washington later this month, and they will be parsing third-quarter earnings reports in the coming weeks to see what big companies have to say about the effects of the trade war on their business.  

The S&P 500 fell 1.1%, giving up earlier gains. All 11 sectors tumbled, led by the industrial and materials segments, which dropped more than 2%. The Dow Jones Industrial Average lost 291 points, or 1.1%, while the Nasdaq Composite dropped 0.9%.  
 

 

 

 
Gold prices ended sharply higher as a drop in the U.S. Institute for Supply
Management’s manufacturing index to its lowest level since 2009 pulled benchmark stock indexes lower, fueling haven demand for the precious metal.  
Gold for December delivery on Comex rose $16.10, or 1.1%, to settle at $1,489 an ounce, after retreating 2.2% on Monday. Prices for the most-active contract declined 3.7% in September, but posted a 3.4% gain for the quarter.  

Crude futures settled lower as a reading of U.S. manufacturing activity at its lowest level in more than a decade fed concerns over a slowdown in energy demand, and Ecuador’s plan to leave OPEC led to expectations that it will add more oil to the world market.  

West Texas Intermediate crude for November delivery shed 45 cents, or 0.8%, to settle at $53.62 a barrel on the New York Mercantile Exchange, with front-month contract prices logging their lowest finish since Aug. 8, according to Dow Jones Market Data. Prices have now fallen for six sessions in a row, the longest losing streak since the 12 session decline ended Nov. 13, 2018.  

 
Investors flocked to the safety of U.S. government bonds following the release of data that showed U.S. factory activity contracted for the second straight month.  
 
The Institute for Supply Management said its U.S. manufacturing index fell to 47.8 in September from 49.1 in August. The reading is the lowest since June 2009. Readings above 50 indicate an expansion in manufacturing activity, while those below 50 indicate a contraction.  

The yield on the U.S. 10-year Treasury note fell to 1.623%, from above 1.7% earlier in the session. Bond yields fall when prices rise.  
 
 
 
European stocks closed in the red after U.S. stocks slid in the wake of downbeat manufacturing data from the U.S. and Europe.  
 
The Stoxx Europe 600 was off 1.3%, while the FTSE 100 fell 0.6%, the DAX dropped 1.3% and the CAC-40 retreated 1.4%. London’s blue-chip index fell 0.65% to 7360.32 with financial-services company Hargreaves Lansdown leading the fallers, down 3.5%.  
 
The Dow declined intraday as the Institute for Supply Management said its manufacturing index fell to 47.8 last month from 49.1, marking the lowest level since June 2009.
 
Hong Kong and mainland Chinese stock markets were closed for a holiday.  

In Japan, the Nikkei climbed 0.6%, despite data showing sentiment among Japanese large manufacturers falling to its weakest level in more than six years.  

Investors were trying to gauge how Japan’s increase in local sales tax, which came into effect Tuesday, would affect consumer spending.    
Japanese shares were led by gains in electronics and financial firms, on hopes for a policy stimulus and as the yen weakens against the dollar.  

South Korea’s benchmark Kospi closed up 0.5% at 2072.42, rising for a second straight session. The broad market lacked strong leads so the index was swayed by individual stocks, Shinhan Securities said. Trading was mixed with pharmaceutical and shipbuilding companies rising while techs and autos fell.  


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