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Global Market Report - 06 September

Lewis Jackson  |  06 Sep 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to open lower after Wall Street ended mixed after new data showed the pace of US hiring slowed in August.

The Australian SPI 200 futures contract was down 23 points or 0.3 per cent at 7,483 near 7.50 am Sydney time on Monday, suggesting a negative start to trading.

The US market was relatively quiet this week with major indices sticking to a narrow range most days.

On Friday, the S&P 500 dropped less than 0.1%. Last week, the index rose 0.6%.
The Dow Jones Industrial Average lost 0.2% and edged down 0.2% for the week, while the Nasdaq Composite Index rose 0.2% and added 1.6% for the week.

Earnings season has wound down now that the bulk of S&P 500 companies are done sharing their second-quarter results. Trading typically slows down ahead of the Labor Day weekend since US stock and bond markets are closed Monday in observance of the holiday.

The Labor Department's employment report showed the pace of hiring slowed significantly in August, with the economy adding 235,000 jobs, well below the 720,000 jobs that economists surveyed by The Wall Street Journal had estimated.

The Australian dollar was buying 74.53 US cents near 7.50am AEST, up from the daily low of 73.94. The WSJ Dollar Index, which measures the US dollar relative to 16 foreign currencies, fell to 86.83.

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Locally, the S&P/ASX 200 closed 0.5% higher at 7522.9, finishing o.5% higher for the week amid gains by commodity stocks.

The benchmark followed a positive lead by U.S. stocks, supported by rising iron ore futures and higher oil prices. Materials, the ASX 200's second-largest sector by market capitalization, rose 1.2% as Fortescue, BHP and Rio Tinto gained between 0.7% and 2.5%.

Beach Energy and Woodside Petroleum gained 0.9% and 0.8%, respectively, while Whitehaven Coal led energy gains, rising 6.8% following a round of analyst earnings upgrades.

Tech stocks dropped, led by Afterpay's 2.8% decline.

Among big movers on the ASX Friday were, Ramsay Health Care, up 3.1%, Webjet, up 3.6% and BlueScope Steel, down 3%.

Commonwealth Bank said Friday the risks associated with lending to the thermal coal industry are increasing. Andrew Hinchcliff, Group Executive for Institutional Banking and Markets at CBA, said "the risks are going up, and the associated cost to capital will increase associated with that." He was speaking at an Australian government inquiry into regulation of investment in export industries.

Elsewhere, Westpac radically downgraded its near-term expectations for the Australian economy, saying it now expects 2021 GDP growth to be zero. Westpac Chief Economist Bill Evans says the decision by leaders in key Australian states to abandon the goal of zero Covid-19 cases will extend lockdowns. The national economy is forecast to contract 4.0% in 3Q. In August, Westpac had forecast a 2.6% contraction.

Gold futures rose 1.2% to $US1833.70 an ounce; Brent crude was down 0.6% at $US72.61 a barrel; Iron ore was up 1.2% to $US144.71.

The yield on the Australian 10-year bond was up at 1.22%; The yield on the US 10-year note rose to 1.33%.

Asia

Chinese stocks ended the session lower, with the benchmark Shanghai Composite Index falling 0.4%, snapping a five-day rally which saw it up 1.3% for the week.

Extended weakness in mining companies, which were among the top gainers in earlier sessions, weighed on the market. The sector, especially copper prices, fell under pressure in recent days as Beijing began the bidding process for its latest release of metal reserves, while a patch of weaker economic data from China further raised concerns.

Hong Kong stocks ended lower, retreating after four consecutive days of gains.

The benchmark Hang Seng Index fell 0.7% to settle at 25901.99. It was up 2% for the week. The tech sector, which has been buoying the market this week, weakened as investors took profit following its rebound. Alibaba lost 3.6% after rising nearly 10% the past four sessions. Meituan shed 3.5% and Tencent was down 1.6%.

Japan's Nikkei Stock Average closed 2.0% higher, helped by gains in real estate and pharmaceutical stocks and taking its weekly climb to 4.5%. Political developments were in focus, with Japanese Prime Minister Suga announcing that he would not be seeking re-election as the ruling party leader. Pharmaceutical stocks led the gains.

Europe

London’s FTSE 100 snapped a two day winning streak to end down 0.36% to 7138.35 on Friday, down 0.14% for the week.

The pan-European STOXX Europe 600 index, which tracks the return of the largest listed companies across 17 European countries, closed 0.56% lower to 471.93, ending the week flat.

North America

The S&P 500 drifted lower Friday, but managed to post weekly gains ahead of the holiday weekend.

The stock market was relatively quiet this week with major indices sticking to a narrow range most days. Earnings season has wound down now that the bulk of S&P 500 companies are done sharing their second-quarter results. Trading typically slows down ahead of the Labor Day weekend since U.S. stock and bond markets are closed Monday in observance of the holiday.

On Friday, the Labor Department's employment report showed the pace of hiring slowed significantly in August, with the economy adding 235,000 jobs, well below the 720,000 jobs that economists surveyed by The Wall Street Journal had estimated.

Even that appeared to do little to stir the markets, though.

Ultimately, a soft jobs report puts less pressure on the Federal Reserve to begin its planned reduction of support for the markets, said Jay Pestrichelli, chief executive of investment firm ZEGA Financial. That can be seen as good news for investors, at least in the short term, he added.

The S&P 500 dropped 1.52 points, or less than 0.1%, to 4535.43. For the week, the index rose 0.6%.

The Dow Jones Industrial Average lost 74.73 points, or 0.2%, to 35369.09 on Friday and edged down 0.2% for the week, while the Nasdaq Composite closed at a fresh record, rising 32.34 points, or 0.2%, to 15363.52 on Friday and adding 1.6% for the week.

Among individual stocks, software company MongoDB jumped $105.76, or 26%, to $507.41 after reporting a narrower-than-expected loss for its latest quarter and getting a price target upgrade from analysts at Piper Sandler.

Hewlett Packard Enterprise added 9 cents, or 0.6%, to $15.48 after beating analysts' expectations in its quarterly earnings, but also warning that its supply-chain challenges would likely persist through at least the first half of 2022.

Shares of companies that depend on travel and tourism were among the weaker performers for the week.

American Airlines Group, Delta Air Lines and Norwegian Cruise Line Holdings all posted weekly losses.

Meanwhile, defensive shares—names that investors tend to gravitate toward when they are feeling more uncertain about the economic outlook—outperformed the broader market.

Grocery chain Kroger posted a 2.6% gain for the week, while utility NextEra Energy was up 2.7%.

is a reporter and data journalist with Morningstar. Tweet him @lewjackk or get in touch via email

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