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Global Market Report - 11 June

Lewis Jackson  |  11 Jun 2021Text size  Decrease  Increase  |  
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Australia

Australian shares set to open higher as Wall Street shrugs off higher inflation numbers to close up.

The Australian SPI 200 futures contract was up 1 points or 0.01 per cent to 7,307 near 7.30 am Sydney time on Friday, suggesting a positive start to trading.

Wall Street stocks have ended firmer, with the S&P 500 hitting a record closing high, as economic data appeared to support the Federal Reserve's assertion that the current wave of heightened inflation will be temporary.

The Dow Jones Industrial Average rose 19.10 points, or 0.05 per cent, to 34,466.24, the S&P 500 gained 19.63 points, or 0.47 per cent, to 4,239.18 and the Nasdaq Composite added 108.58 points, or 0.78 per cent, to 14,018.61.

The Australian dollar was buying 77.53 US cents near 8.00am AEST, up from 77.31 at Thursday’s close.

Locally, shares climbed to a record closing high on the Australian market.

The ASX200 closed higher than 7300 points for the first time yet investors made modest moves prior to the US consumer price index figures, released on Thursday night.

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The Labor Department's consumer price index (CPI) data came in above consensus and added fodder to the debate over whether current price spikes could morph into long-term inflation, despite the Fed's assurances to the contrary.

But a closer look showed that much of the price surge came from items such as commodities and airfares, and is therefore likely to be temporary.

CommSec market analyst Steven Daghlian said the inflation data could set the tone for the ASX on Friday.

At a European Central Bank meeting, also overnight, policymakers increased their growth and inflation forecasts while maintaining the pace of bond purchases.

Mr Daghlian said the ASX's uncharted territory was another factor in the market gaining less than half a per cent on Thursday.

"We're at record highs and markets have been cautiously heading higher in the past few sessions," he said.

"You've got interest rates at record lows. Trillions in stimulus globally. Vaccines being distributed.

"We don't know how the coronavirus will develop but investors are encouraged by vaccines and central banks don't seem in a rush to raise rates."

The benchmark S&P/ASX200 index closed higher by 32.3 points, or 0.44 per cent, to 7302.5.

The All Ordinaries closed up by 36.8 points, or 0.49 per cent, to 7558.8.

The performance, like most Asian markets, was better than Wall Street where stocks closed lower.

ASX property and technology shares performed best and rose by more than two per cent.

Technology was helped by demand for shares in markets software vendor Iress.

A media report that investment bank Barrenjoey may buy a stake prompted shares to surge by 16.8 per cent to $12.79.

Iress said it had not received an approach.

Most of the major players in banking and mining struggled to make substantial gains.

Energy shares had the only meaningful loss, 1.1 per cent.

Domestically, people in Melbourne are enduring their last day of a two-week coronavirus lockdown before the rules ease across the state on Friday.

Melburnians will have a 25km travel limit for at least a week.

Woolworths' takeover of distributor PFD Food Services will go ahead despite competitors' concerns the retail giant will eventually crush them.

The Australian Competition and Consumer Commission allowed Woolworths to buy 65 per cent of shares in PFD, which delivers food to cafes, restaurants, hotels, clubs and more.

The purchase will cost $552 million.

Woolworths shares were up 0.77 per cent to $42.96.

Mortgage Choice shareholders voted to accept a takeover bid from property advertising group REA.

News Corp-owned REA in March made its $244 million offer, worth $1.95 per share.

Court and other approvals are still required.

Mortgage Choice shares closed higher by 0.26 per cent to $1.94.

REA shares gained 1.62 per cent to $167.70.

ASIC started court action to fine ship-builder Austal and former boss David Singleton for alleged historical breaches of disclosure rules.

ASIC claims Austal could have better informed investors about its Littoral Combat Ship program prior to July 2016.

Shares were down 2.16 per cent to $2.27.

In banking, ANZ was the only one of the big four to close lower and slipped 0.14 per cent to $28.69.

The others gained less than one per cent.

In mining, BHP had the most notable slip and lost 0.76 per cent to $48.30.

Fortescue climbed 0.79 per cent to $22.83 while Rio Tinto gained 0.1 per cent to $124.92.

Spot Gold was up 0.3 per cent at $US1894.97 an ounce; Brent crude was up 0.3 per cent to $US72.45 a barrel. Iron ore was up 2.0 per cent at $US216.84.

The yield on the Australian 10-year bond fell to at 1.49 per cent.

Asia

At the close, China's Shanghai Composite index was up 0.54 per cent at 3,610.86.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, was down 0.01 per cent, to 28,738.88.

Japan's Nikkei 225 Index closed up 0.34 per cent at 28,958.56.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 0.03 per cent at 454.56.

The German DAX fell 0.06 per cent to 15,571.22.

North America

Wall Street stocks have ended firmer, with the S&P 500 hitting a record closing high, as economic data appeared to support the Federal Reserve's assertion that the current wave of heightened inflation will be temporary.

The Dow Jones Industrial Average rose 19.10 points, or 0.05 per cent, to 34,466.24, the S&P 500 gained 19.63 points, or 0.47 per cent, to 4,239.18 and the Nasdaq Composite added 108.58 points, or 0.78 per cent, to 14,018.61.

All three major US stock indexes advanced, with market-leading megacap stocks putting the Nasdaq out in front.

But economically sensitive transports and smallcaps ended the session in negative territory.

The Labor Department's consumer price index (CPI) data came in above consensus and added fodder to the debate over whether current price spikes could morph into long-term inflation, despite the Fed's assurances to the contrary.

But a closer look showed that much of the price surge came from items such as commodities and airfares, and is therefore likely to be temporary.

"Earlier this week we had extremely boring market days as we all had our eyes on the bullseye of this CPI report," Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina, said.

"But once people looked under the surface, the majority of the higher inflation is due to the reopening, and stocks had a relief rally.

"The market is taking it in stride as it realises the whole economy isn't overheating."

A US House of Representatives committee passed a $US547 billion infrastructure spending bill targeting surface transportation, adopting some of President Joe Biden's proposals as part of his broader $2.3 trillion infrastructure package.

Still, industrials and transports, sectors that stand to benefit from infrastructure spending, were in negative territory.

Among the 11 major sectors of the S&P 500, healthcare enjoyed the largest percentage gains.

But the interest rate-sensitive financial sector was the biggest loser, weighed by easing US Treasury yields.

GameStop Corp, the stock most closely associated with the social media-driven 'meme stock' phenomenon, slid after the videogame retailer said it may sell new shares.

Other stocks that have benefited from the retail short-squeeze rally, including Clover Health Investments, AMC Entertainment, Bed Bath & Beyond and GEO Group, also ended the session lower.

Pfizer Inc rose on news that the United States would pay the drugmaker about $US3.5 billion for 500 million COVID-19 vaccine doses that it intends to donate to the world's lowest-income countries.

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

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