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Global Market Report - 07 May

Lewis Jackson  |  07 May 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise at the open, buoyed by positive job market numbers out of the US and a new high for iron ore.

The Australian SPI 200 futures contract was up 20 points or 0.3 per cent to 7043 near 7.00 am Sydney time on Friday, suggesting a positive start to trading.

The Dow Jones Industrial Average closed at a record high on Thursday, bolstered by an upbeat weekly jobless claims report, while vaccine makers dipped after US President Joe Biden backed plans to waive patents on COVID-19 shots.

The Dow Jones Industrial Average rose 0.93 per cent to end at 34,548.53 points, while the S&P 500 gained 0.82 per cent to 4,201.62. The Nasdaq Composite climbed 0.37 per cent to 13,632.84.

Locally, Afterpay shares fell to be worth less than $100 in a technology crash that contributed to a lower Australian market.

Shares in the buy now, pay later provider dropped almost seven per cent to $99.50 due to concerns in the US about interest rate rises.

The ASX200 index closed lower by 34.1 points, or 0.48 per cent, to 7061.7 on Thursday.

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The All Ordinaries closed down by 38.2 points, or 0.52 per cent, to 7306 points.

Tech shares were the worst performers and dropped 3.6 per cent.

Investors have continued to dump the stock since US Treasury Secretary Janet Yellen suggested that interest rates might need to rise in an economy rapidly recovering from the pandemic.

She later clarified that a near-term interest rate hike was not something she was "predicting or recommending".

Investors also fretted after China suspended economic talks with Australia, blaming a Cold War mindset among Morrison government officials.

Materials shares were the only ones with gains of note, up by 0.79 per cent.

Rio Tinto’s shares were higher by 0.98 per cent to $125.76. BHP continued a good week and climbed 2.13 per cent to $49.80. Fortescue was better by 0.13 per cent to $22.75.

Earlier in the day, National Australia Bank said it nearly doubled first-half profit. Cash earnings climbed by 94 per cent to $3.3 billion.

But Investors thought the bank should have made more and sent shares lower by 2.96 per cent to $26.56.

Qantas' plans to coordinate flights with Japan Airlines face opposition from the Australian Competition and Consumer Commission.

A COVID-19 outbreak in Sydney, so far limited to two members of the same family, also hampered trade in travel stocks.

Qantas shares were down 1.46 per cent to $4.74.

TPG Telecom told its annual general meeting that chief financial officer Stephen Banfield was leaving. His departure follows founder David Teoh leaving in March.

Shares were down 5.59 per cent to $5.24.

On Friday, the Reserve Bank will give its quarterly, detailed analysis of financial conditions in its statement on monetary policy.

Macquarie Group will give its full-year earnings.

Gold was up 1.5 per cent at $US1813.74 an ounce; Brent crude was down 1.2 per cent to $US68.13 a barrel; Iron ore was up 4.9 per cent at $US201.88 a tonne.

Meanwhile, the Australian dollar was buying 77.82 US cents around 7:00am, up from 77.46 this time Thursday.

Asia

China stocks fell on Thursday on Sino-West tensions and as healthcare firms declined following investors’ return after the Labour Day break.

The blue-chip CSI300 index fell 1.2 per cent to 5,061.12, while the Shanghai Composite Index eased 0.2 per cent to 3,441.28 points.

The CSI300 healthcare index fell the most, down 4.1 per cent, as vaccine makers retreated after US President Joe Biden threw his support behind waiving intellectual property rights for COVID-19 vaccines.

US Trade Representative Katherine Tai said on Wednesday she expects to engage “in the near term” with Chinese officials to assess their implementation of the “Phase 1” trade deal between the two countries, with the outcome to influence the fate of Washington’s punitive tariffs on Beijing.

Tensions between China and other western countries also soured sentiment.

The European Union took steps on Wednesday to guard against economic competition from China that it deems unfair, a sign of growing distrust after Western sanctions over rights abuses and Chinese retaliation.

China “indefinitely” suspended on Thursday all activity under a China-Australia Strategic Economic Dialogue, its state economic planner said, the latest setback for their strained relations.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.26 per cent, while Japan’s Nikkei index closed up 1.8 per cent.

Europe

European stocks edged lower on Thursday, with the travel sector leading declines on weak results from Britain’s Trainline, while food and beverage stocks hit a 14-month high on a batch of strong earnings.

The pan-European STOXX 600 index closed 0.1 per cent lower. The travel and leisure sector was the worst performer, falling 1.7 per cent after UK rail operator Trainline reported an annual loss.

Heavyweight oil stocks were among the top drags on the STOXX 600 as oil prices slipped, while technology shares fell in tandem with their US peers.

Investors also appeared to be spooked by the Bank of England slowing the pace of its trillion dollar bond-purchasing programme, although it stressed that the decision was not a change in the stance of monetary policy.

Still, the prospect of policy tightening by major central banks has rattled markets this year, on fears that a bigger-than-expected rise in inflation could push up interest rates sooner than expected.

Still, the bank’s optimistic view on a British economic recovery pushed the FTSE 100 0.5 per cent higher to a more than 14-month peak.

Food and beverage stocks were the best performers for the day, pushed up by a 5.2 per cent rise in Anheuser-Busch InBev after it reported first-quarter earnings ahead of expectations.

Italy’s No.2 bank UniCredit gained 5 per cent and French lender Societe Generale rose 5.5 per cent after reporting higher-than-expected quarterly earnings.

Telecom Italia slid 5.5 per cent after a report suggesting the government is set to drop a plan to create a single broadband network.

Healthcare stocks fell 0.1 per cent, with Frankfurt-listed shares of US drugmakers Novavax and Moderna falling around 10 per cent after US President Joe Biden supported waiving intellectual property rights for COVID-19 vaccines.

North America

The Dow Jones Industrial Average closed at a record high on Thursday, bolstered by an upbeat weekly jobless claims report, while vaccine makers dipped after US President Joe Biden backed plans to waive patents on COVID-19 shots.

The Dow Jones Industrial Average rose 0.93 per cent to end at 34,548.53 points, while the S&P 500 gained 0.82 per cent to 4,201.62. The Nasdaq Composite climbed 0.37 per cent to 13,632.84.

Lifted by Apple Inc, the S&P 500 rose after a Labor Department report showed initial claims for state unemployment benefits totaled a seasonally adjusted 498,000 for the week ended May 1, compared with 590,000 in the prior week.

Pharmaceutical companies dropped after the White House said Biden made the decision to back a proposed waiver for COVID-19 vaccine intellectual property rights.

Shares in Pfizer Inc and Moderna Inc fell 1 per cent or more. Johnson & Johnson and Novavax Inc ended higher after spending much of the day in negative territory.

The S&P 500 financials index was the top performer among the 11 sectors, gaining 1.4 per cent.

Microsoft Corp, Apple, Facebook and Amazon.com Inc rose more than 1 per cent.

In extended trade, Square rose 3 per cent after the mobile payments company announced a 266 per cent jump in quarterly total net revenue.

During the trading session, Costco Wholesale jumped 2.75 per cent after the retailer said late on Wednesday that its April sales surged 33.5 per cent. That rally helped push the S&P 500 consumers staple index higher.

Uber Technologies Inc tumbled 8.85 per cent after it signaled it would pay drivers more to get cars back on the road as the pandemic recedes, and disclosed a $600 million charge to provide UK drivers with benefits.

With Reuters

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

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