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Global Market Report - 05 May

Lewis Jackson  |  05 May 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to open lower, following a tech-triggered global equities selloff.

The Australian SPI 200 futures contract was down 26 points or 0.4 per cent to 7009 near 7.00 am Sydney time on Wednesday, suggesting a negative start to trading.

The Nasdaq ended sharply lower on Tuesday as investors dumped megacap growth stocks to seek shelter in more defensive parts of the market, amid concerns on rising interest rate and uncertainty over an upcoming jobs report.

The Nasdaq Composite dropped 261.62 points, or 1.88 per cent, to 13,633.50, while the S&P 500 lost 28 points, or 0.67 per cent, to 4,164.66. The Dow Jones Industrial Average pared its earlier losses and closed slightly higher, rising 19.8 points, or 0.06 per cent, to 34,133.03.

Locally, BHP, Rio Tinto and gold miners had sizeable gains as investors rushed back to commodity stocks, while ANZ reported a 126 per cent jump in cash profit earlier today.

The miners' improved performances helped the benchmark S&P/ASX200 index close higher by 39.1 points, or 0.56 per cent, to 7067.9.

The All Ordinaries closed up by 36.7 points, or 0.5 per cent, to 7323.5 points.

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The two heavyweight miners on Tuesday each gained more than 2.5 per cent to help lift the market indices. The other major miner, Fortescue, rose 0.8 per cent to $22.66.

Miners were helped by the price of gold climbing by about one per cent overnight.

Gold miner Northern Star jumped 4.2 per cent to close at $10.92. Rival Evolution climbed 3.28 per cent to $4.73.

Earlier today, ANZ reported a 126 per cent increase in cash profit to $2.9 billion and increased the dividend to 70 cents a share. It closed Tuesday at $28.83.

Energy shares had the next biggest gain after oil prices were higher overnight.

Technology shares fared worst and lost almost two per cent.
Afterpay lost 2.82 per cent to $110.79.

Meanwhile the Reserve Bank upgraded its forecasts for the Australian economy.

The central bank raised its projected growth this year from 3.5 per cent to 4.75 per cent.

Board members left the cash rate and other policy measures at a record low 0.1 per cent.

The central bank will give its statement on monetary policy on Friday.

Jobs directory Seek raised its profit forecast as small to medium businesses across Australia and New Zealand hire more workers than expected.

Furniture trader Nick Scali raised its profit forecast by 90 per cent as Australians continue to splurge on household goods during the pandemic.

Gold was down 0.8 per cent at $US1778.83 an ounce; Brent crude was up 1.4 per cent to $US68.49 a barrel; Iron ore was flat at $US188.85 a tonne.

Meanwhile, the Australian dollar was buying 77.11 US cents around 7:00am, down from 77.61 this time Tuesday.

Asia

Hong Kong shares settled higher on Tuesday, with energy stocks leading the gains on signs of recovery from the coronavirus pandemic as major economies around the world reopen.

Chinese financial and futures markets are closed from May 1-5 for the Labour Day holiday.

The Hang Seng index closed up 199.60 points, or 0.7 per cent, at 28,557.14, snapping two straight sessions of decline. The Hang Seng China Enterprises index rose 0.49 per cent to 10,765.72.

The top gainer on the Hang Seng was China Petroleum & Chemical Corp, which rose 4.08 per cent, while the biggest loser was China Construction Bank Corp, which fell 0.82 per cent.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.16 per cent.

Europe

European shares ended lower on Tuesday, with the technology sector having their worst day since late-October after a sudden drop in big US tech stocks.

The pan-European STOXX 600 index shed 1.4 per cent, with tech stocks losing 3.8 per cent and some analysts attributing the drop to profit taking.

In Europe, Germany’s bourse shed 2.5 per cent, the most in the region, due to its high composition of tech stocks.

Chipmaker Infineon fell 5.9 per cent and was among the top drags on the German index, after CEO Reinhard Ploss said he was expecting supply constraints in the automotive segment to only ease in the second half, with lost volumes likely to be made up in 2022.

Europe’s automakers fell 3.2 per cent.

Miners rose 0.2 per cent, and oil and gas stocks fell the least, supported by strong resource prices as investors bet on a strong global rebound after massive vaccination drives in developed countries and unprecedented stimulus.

German meal-kit delivery company HelloFresh fell 6.7 per cent as worries about consumer behaviour, amid easing lockdowns, overshadowed a surge in first-quarter customer base.

North America

The Nasdaq ended sharply lower on Tuesday as investors dumped megacap growth stocks to seek shelter in more defensive parts of the market, amid concerns on rising interest rate and uncertainty over an upcoming jobs report.

The Nasdaq Composite dropped 261.62 points, or 1.88 per cent, to 13,633.50, while the S&P 500 lost 28 points, or 0.67 per cent, to 4,164.66. The Dow Jones Industrial Average pared its earlier losses and closed slightly higher, rising 19.8 points, or 0.06 per cent, to 34,133.03.

Highly valued technology-related companies including Microsoft Corp, Alphabet, Apple, Amazon.com and Facebook sold off across the board, with Apple falling the most by 3.54 per cent. The Philadelphia Semiconductor Index also dropped by 1.6 per cent.

Materials and financials extended their Monday gains, up by 1 per cent and 0.7 per cent, respectively, as investors continued to rotate money into cyclical sectors.

Comments by Treasury Secretary Janet Yellen on the potential need for interest rate hikes further exacerbated the tech sell-off, as investors worry higher rates would weigh on valuations of growth companies.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat, even though the additional spending is relatively small relative to the size of the economy,” she said in taped comments at a virtual event by The Atlantic.

Among individual stocks, CVS Health Corp gained 4.4 per centafter reporting a first-quarter profit above analysts’ estimates and raising its 2021 forecast.

Gartner was the largest percentage gainer on the S&P 500, jumping 14.2 per cent after better-than-expected first-quarter earnings.

With Reuters

is a reporter/data journalist for Morningstar. You can follow Lewis on Twitter @lewjackk

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