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Global Market Report - 12 July

Lewis Jackson  |  12 Jul 2021Text size  Decrease  Increase  |  
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Australia

Australian shares look set to rebound after US markets ended the week higher. Investors returned to energy and financials after Thursday's sell-off over slowing growth.

The Australian SPI 200 futures contract was up 76 points or 1.06 per cent at 7,262 near 7.25 am Sydney time on Monday.

The three major US stock indexes have rallied to record closing highs as financials and other economically focused sectors rebounded from a sell-off sparked by growth worries earlier in the week.

The Dow Jones Industrial Average rose 448.23 points, or 1.3 per cent, to 34,870.16, the S&P 500 gained 48.73 points, or 1.13 per cent, to 4,369.55 and the Nasdaq Composite added 142.13 points, or 0.98 per cent, to 14,701.92.

The Australian dollar was buying 74.85 US cents near 7.45am AEST, up from 74.35 at Friday’s close.

Locally, shares had their second week in the past three of losses on the ASX as investors fret that the coronavirus Delta variant may hamper economic recovery.

The Aussie market fell by as much as 1.4 per cent on Friday before a late climb trimmed losses to less than one per cent.

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Technology shares fared worst and dropped 2.84 per cent after the technology studded US indices pulled back from closing highs overnight.

The benchmark S&P/ASX200 index closed down 68.1 points, or 0.93 per cent, to 7273.3.
The All Ordinaries closed lower by 69.6 points, or 0.91 per cent, to 7545.3.

For the week, the ASX200 lost 0.48 per cent.

The index has shed 1.3 per cent over the past three weeks.

However it remains on a nine-month winning streak and is little more than 100 points from a record close.

AMP Capital head of investment strategy Shane Oliver said global share markets fell during the past week due to the resurgence of the coronavirus.

The Delta variant is proving particularly virulent in Asian nations such as Indonesia, Malaysia and Thailand.

In Australia, people in Sydney and surrounds are about to enter a third week of lockdown.
"Investors are right to be concerned about another coronavirus scare and this could be the trigger for further share market falls," Mr Oliver said.

He said the number of people admitted to hospital, and any deaths, would determine whether longer, costly lockdowns were needed.

Mr Oliver noted bond yields had rallied this week as investors wondered if they had already reached maximum growth.

On the ASX, instalment payment providers were among the hardest hit technology shares.
Sezzle lost 8.49 per cent to $8.95. Zip fell by 5.47 per cent to $8.30 after gaining more than 13 per cent on Thursday.

Afterpay shed 4.97 per cent to $117.51.

Travel stocks also had notable losses as the prospect of flying in and out of Sydney anytime soon diminished.

The virus impact lowered Webjet shares by 5.47 per cent to $4.95.

Flight Centre lost 3.89 per cent to $15.30.

There were losses of more than one per cent for shares in consumer discretionaries, industrials and healthcare.

Market giant CSL lost 1.31 per cent to $275.47.

Viva Energy shares were up after the company reported a jump in first-half earnings.

Boss Scott Wyatt said figures across commercial and retail sales had been encouraging despite coronavirus lockdowns and border closures.

Shares were higher by 5.08 per cent to $2.07.

Audio visual equipment provider Audinate climbed after reporting fourth quarter US sales up 74 per cent.

The company said global supply difficulties for components, as well as COVID-19, remained risks.

Shares were higher by 6.73 per cent to $9.20.

The banks were all lower.

The Commonwealth fared worst of the big four and dropped 0.9 per cent to $98.59.

The big miners were mixed.

Fortescue was better by 0.67 per cent to $23.87.

BHP and Rio Tinto ended down by less than one per cent.

Spot Gold was up 0.3 per cent at $US1808.32 an ounce; Brent crude was up 1.9 per cent at $US75.55 a barrel, Iron ore was down 1.5 per cent at $US214.77 a tonne.

The yield on the Australian 10-year bond closed at 1.36 per cent.

Asia

At the close, China's Shanghai Composite index was down 0.04 per cent at 3,524.09.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed up 0.7 per cent at 27,344.54

Japan's Nikkei 225 Index was down 0.63 per cent at 27,940.42.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 1.34 per cent at 457.67.

The German DAX rose 1.73 per cent to 15,687.93.

North America

The three major US stock indexes have rallied to record closing highs as financials and other economically focused sectors rebounded from a sell-off sparked by growth worries earlier in the week.

The Dow Jones Industrial Average rose 448.23 points, or 1.3 per cent, to 34,870.16, the S&P 500 gained 48.73 points, or 1.13 per cent, to 4,369.55 and the Nasdaq Composite added 142.13 points, or 0.98 per cent, to 14,701.92.

The rally allowed the indexes to notch slight gains for the week, which also featured a sharp rally in US Treasuries as investors worried the US economic recovery might be losing steam as the Delta variant of the coronavirus spread globally.

US 10-year Treasury notes fell on Friday, halting an eight-day price rise, while the S&P 500 financials sector jumped 2.9 per cent in the sector's biggest daily percentage gain since March 1.

Financials led sector advances followed by energy, materials and industrials. Big banks including JPMorgan Chase & Co will kick off the second-quarter earnings season next week when they report results.

"What an about-face from all of the gloom and doom from yesterday," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

"The US is in a bubble compared to the rest of the world, in a break from COVID. How long that's going to last we don't know," he said, but "until that narrative changes, this is a market with a lot of free money and low interest rates."

For the week, the Dow is up 0.2 per cent, and the S&P 500 and Nasdaq each added 0.4 per cent.

A big jump in quarterly earnings is expected to mark a peak for US profit growth in the recovery from last year's pandemic-induced collapse.

Investors are looking to US companies' upcoming quarterly results and forecasts about the recovery in the second half of 2021 as some worry that the recent economic surge is already waning.

Analysts expect earnings growth of 65.8 per cent for companies in the S&P 500 index in the quarter, up from a previous forecast of 54 per cent growth at the start of the period, according to Refinitiv IBES data.

Among individual stocks, Levi Strauss & Co rose 1.4 per cent as it forecast a strong full-year profit after beating quarterly earnings estimates on improving demand across its markets for jeans, tops, and jackets.

US-listed shares of Chinese ride-hailing company Didi Global Inc gained 7.3 per cent after four sessions of losses as it was recently hit by an investigation from China's internet watchdog.

is a reporter and data journalist with Morningstar. Tweet him @lewjackk or get in touch via email at: editorialAU@morningstar.com

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