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Overseas Market Report

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Overseas Market Report - International Markets Roundup

Tuesday 27 October 2020 | Close

[Morningstar with AAP]: Stocks on Wall Street closed little changed on Tuesday, with the Dow and S&P 500 slipping on disappointing earnings and little hope for a US coronavirus stimulus before Election Day, though the Nasdaq rose ahead of big technology company results.

Tuesday 27 October 2020 | Close

Foreign Equities Close Change %Change
Dow Jones (US) 27463 -222 -0.80
S&P 500 3391 -10 -0.30
NASDAQ 11431 72 0.64
FTSE 100 Index 5729 -63 -1.09
DAX 30 12064 -114 -0.93
CAC 40 4731 -85 -1.77
Nikkei 225 (Japan) 23486 -9 -0.04
HKSE 24787 -132 -0.53
SSE Composite Index 3254 3 0.10
NZ 50 12242 -10 -0.08

Tuesday 27 October 2020 | Close

Commodities US$ Close Change %Change
Aluminium /t 1806 -8 -0.44
Copper /t 6779 18 0.26
Nickel /t 15874 250 1.60
Gold /oz 1907 3 0.14
Silver /oz 24.4 0.1 0.41
Oil - West Texas crude /bbl 39.6 1.0 2.62
Lead /t 1760 -3 -0.18
Zinc /t 2533 5 0.18

Tuesday 27 October 2020 | Close

Currency Close Pts Change % Change
$A vs $US 0.7123 0.0007 0.09
$A vs GBP 0.5461 -0.0004 -0.08
$A vs YEN 74.41 -0.19 -0.26
$A vs EUR 0.6043 0.0019 0.32
$A vs $NZ 1.0619 -0.0034 -0.32
$US vs Euro 0.8483 0.0016 0.18
$US vs UK 0.7668 -0.0014 -0.19
$US vs CHF 0.9089 0.0012 0.13

[Morningstar with AAP]: Stocks on Wall Street closed little changed on Tuesday, with the Dow and S&P 500 slipping on disappointing earnings and little hope for a US coronavirus stimulus before Election Day, though the Nasdaq rose ahead of big technology company results.

Asia

Shanghai shares closed up in a subdued session on Tuesday as gains in materials and healthcare firms nudged the benchmark index higher, but slower profit growth at industrial firms in September underscored continuing challenges to China's recovery.

Profits at China's industrial firms rose 10.1 per cent in September year-on-year, a fifth straight monthly rise, but growth slowed from August, data from the National Bureau of Statistics showed on Tuesday, as factory-gate deflation and rising raw materials costs undercut a recovery in the manufacturing sector.

China's economic growth is expected to hit a 44-year low in 2020 as the country recovers from a coronavirus-induced slump, a Reuters poll showed on Tuesday. At the close, the Shanghai Composite index was up 0.1 per cent at 3,254.32.

Hong Kong shares ended lower on Tuesday, as global investor sentiment took a hit from surging covid-19 cases globally and slow progress on a US stimulus deal, even as a record-breaking IPO by Ant Group drew strong demand. At the close of trade, the Hang Seng index was down 131.59 points or 0.53 per cent at 24,787.19.

Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.26 per cent, while Japan's Nikkei index closed down 0.04 per cent.

Europe

European stocks extended losses on Tuesday as worries about the economic fallout of tighter coronavirus restrictions on the continent overshadowed some better-than-expected earnings reports.

The pan-European STOXX 600 index fell 1 per cent to a one-month low, on rising infections in the United States and Europe and fading hopes of a US stimulus package before the presidential election.

Focus will now be on Thursday's meeting of the European Central Bank for clues on monetary stimulus for the bloc.

'The ECB is widely expected to stand pat until the next meeting. Macro forecasts won't be updated until the December 10 meeting, but the bank will have to acknowledge the deteriorating outlook now,' said Win Thin, global head of strategy at Brown Brothers Harriman.

"There's a small risk of more jaw boning against the stronger euro." Germany's DAX shed 0.9 per cent to hit four month lows, while France's CAC 40 fell 1.8 per cent to a one-month trough as the country grappled with a runaway infection rate.

German Chancellor Angela Merkel is planning a 'lockdown light' in Europe's largest economy that would mainly focus on the closure of bars and restaurants to slow down a second wave of infections, newspaper Bild reported.

Losses on the UK's FTSE 100 were limited by a 3.4 per cent jump in Europe's biggest bank HSBC after the lender signalled a pandemic-induced overhaul of its business model, accelerating plans to shrink in size and slash costs.

But shares in oil major BP fell 2.1 per cent. The company swung back to a small profit in the third quarter, but also warned of pandemic-related uncertainties. Europe's oil and gas sector index touched its lowest level in seven months.

Spanish bank Santander closed down 1.3 per cent as it tracked broader negative investor sentiment in the market. It had earlier in the day logged gains of up to 5 per cent after saying it expects 2020 core profit to beat market expectations, helped by additional cost savings of 1 billion euros.

Spain's IBEX index fell 2.1 per cent, also on worries about the economic impact of coronavirus-related curbs.

Third-quarter earnings from Europe remain largely positive. Out of the 27 per cent of the STOXX 600 companies that have reported so far, 73 per cent have beat profit expectations, according to Refinitiv data.

French consulting and IT services provider Capgemini jumped 2.1 per cent after confirming its full-year targets.

Tobacco group Swedish Match climbed 3.5 per cent as it reported a bigger-than-expected rise in quarterly profit on the back of higher sales of smokeless products.

Miners fell 1.4 per cent, dragging markets lower, after Liberum analysts downgraded stocks of Rio Tinto, Antofagasta and KAZ Minerals.

North America

Stocks on Wall Street closed little changed on Tuesday, with the Dow and S&P 500 slipping on disappointing earnings and little hope for a US coronavirus stimulus before Election Day, though the Nasdaq rose ahead of big technology company results.

Investor sentiment sagged after the White House said a deal on covid-19 relief could come in 'weeks,' meaning a deal is unlikely before the 3 November election.

But the tech-heavy Nasdaq rose as Microsoft Corp firmed in the run-up to its results after the closing bell, and the technology heavyweights kept the S&P 500 slightly in the black for much of the session.

Microsoft beat Wall Street estimates for quarterly revenue which rose 12 per cent to $37.2 billion, as the software giant benefited more from a global shift to work and learning from home.

Shares of drugmaker Eli Lilly and Co fell 6.9 per cent after quarterly profits took a hit from increased costs to develop a covid-19 treatment. A trial of its antibody therapy failed to show a benefit in hospitalised patients.

'This pullback that we've seen is a little bit more of a risk-off move as an additional stimulus package now has been pushed aside,' Kevin Flanagan, head of fixed income strategy at WisdomTree Investments, said. 'That led to some disappointment.'

On Monday, the three major US stock indexes posted their biggest declines in about four weeks on a record number of new coronavirus cases in the United States and some European countries, and as the elusive stimulus rattled investors.

Sectors sensitive to economic growth took a hit. The S&P 500 banks index fell 2.73 per cent and the S&P energy sector slid 1.38 per cent.

Meanwhile, Wall Street's fear gauge rose to its highest level since early September on election jitters.

Democratic challenger Joe Biden leads President Donald Trump in nationwide polls but the race is much tighter in battleground states which should determine the outcome.

The Dow Jones Industrial Average fell 222.19 points, or 0.8 per cent, to 27,463.19 and the S&P 500 lost 10.29 points, or 0.30 per cent, to 3,390.68. The Nasdaq Composite added 72.41 points, or 0.64 per cent, to 11,431.35.

The Nasdaq advanced in anticipation of results later this week from Apple Inc, Amazon.com, Google-parent Alphabet and Facebook Inc. The tech bellwethers together account for more than one-fifth of the S&P 500's total value.

The NYSE FANG+TM Index rose about 2.15 per cent.

Analysts expect the tech sector to post a 0.4 per cent increase in third-quarter earnings from a year earlier, while overall S&P 500 profit is forecast to fall 16.2 per cent, according to Refinitiv data.

Concerns over a rise in US coronavirus cases are weighing on the market but the technology sector seems to be the least exposed, said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.

'A focus on big technology companies may move this market to rally despite the problems the virus is creating,' he said.

Semiconductor designer Advanced Micro Devices Inc fell 4.1 per cent after it agreed to buy Xilinx Inc in a $35 billion all-stock deal. Xilinx shares soared 8.6 per cent, the largest percentage gainer on the S&P 500, while those of AMD-rival Intel fell 2.3 per cent.

Shares of Franklin Resources Inc fell 13.6 per cent, the largest decliner on the S&P 500, as the money manager reported quarterly adjusted earnings of 56 cents per share, below analysts' expectations.

Australian Market

Local Markets Are Expected To Open Lower

Ahead of the local open SPI futures were 24 points lower at 6020.

Tuesday 27 October 2020 - close [Morningstar with AAP]: The Australian share market has fallen to a three week low in a result one fund manager described as an over-reaction to drops in US stocks.

The S&P/ASX200 benchmark index finished down by 104.6 points, or 1.7 per cent, to 6051 on Tuesday, after the Dow Jones Industrial Average fell by 2.29 per cent on surging coronavirus infections and election jitters.

The ASX200 edged lower for most of the day, and reached its weakest point of 6033.8 at 1410 AEDT.

The All Ordinaries closed down by 110.1 points, or 1.73 per cent, to 6247.2.

Information technology was the worst sector, lower by 3.25 per cent.

Energy had a 2.91 per cent drop, while materials fell 2.12 per cent.

Burman Invest chief investment officer Julia Lee said the result was an over-reaction to US markets.

She noted that Japan's Nikkei, Korea's main index and the Shanghai Composite were all faring better.

"A lot of money is coming off the table in Australia," she said.

"Australia has fared worse because of our exposure to commodities."

Ms Lee said some selling may have been linked to sales of ASX ecommerce and technology shares on Monday, following news that Melbourne's virus restrictions would be eased.

"Anything that's high growth has been sold off," Ms Lee said.

The ASX result was its fourth consecutive loss.

The ANZ-Roy Morgan consumer confidence index grew by a further 1.6 per cent to 99.7 points in the past week, the highest level since March.

The index has risen for eight straight weeks.

Bendigo and Adelaide Bank say two-thirds of clients have restarted loan repayments after deferrals were put in place at the height of the pandemic.

As of October 16, just 6,797 customer accounts worth about $2.5 billion had deferred repayments, down 63 per cent since August and down 69 per cent since May.

Shares ended higher by 2.25 per cent to $6.82.

ANZ Bank finished down by 0.91 per cent to $19.50, the Commonwealth dropped 1.38 per cent to $68.75, NAB shed 1.24 per cent to $19.09 and Westpac lost 0.75 per cent to $18.56.

Blackmores is selling its Global Therapeutics business to health products supplier McPherson's for $27 million.

Blackmores bought the therapeutics business in 2016 but management believe it is no longer a core brand.

Shares in Blackmores finished higher by 0.68 per cent to $63.77.

Shares in McPherson's were not trading due to an impending share sale.

Boral was up 0.01 per cent to $4.74 after agreeing to sell its 50 per cent share in USG Boral to Knauf for $US1.01 billion.

Boral will make a profit before tax of $540 million from the sale.

In mining, BHP dropped 2.21 per cent to $34.94, Rio Tinto shed 2.49 per cent to $92.30 and Fortescue fell 2.41 per cent to $16.21.

Earlier in the US, the number of Americans in hospital with COVID-19 jumped to a two-month high.

The virus rates, and uncertainty about next week's election outcome, led investors to sell ,and the main indices finished lower.

On Wednesday, Australian inflation figures for the September quarter will be released.

The Aussie dollar was buying 71.39 US cents at 1728 AEDT, higher from 71.18 US cents at the close of trade on Monday.

ON THE ASX

* The S&P/ASX200 benchmark index finished lower by 104.6 points, or 1.7 per cent, to 6051 on Tuesday.

* The All Ordinaries closed down by 110.1 points, or 1.73 per cent, to 6247.2.

* At 1728 AEDT, the SPI200 futures index was up 12 points, or 0.2 per cent, to 6056.

The NZX 50 Lost -6.72 points (-0.05%) to 12245.19

Annual General Meetings today (ASX 300)

  • Medical Developments International Limited
  • St Barbara Limited
  • Vocus Group Limited

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