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Global Market Report - 14 July

Lewis Jackson  |  14 Jul 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to edge higher as Wall Street closed lower overnight and new data showed US inflation accelerated in June.

The Australian SPI 200 futures contract was up 4 points or 0.06 per cent at 7,255 near 7.35 am Sydney time on Wednesday.

The S&P 500 and Nasdaq have ended lower after hitting record highs earlier in the session, with investors digesting a jump in consumer prices in June and earnings from JPMorgan and Goldman Sachs that kicked off the quarterly reporting season.

The Dow Jones Industrial Average fell 0.31 per cent to end at 34,888.79 points while the S&P 500 lost 0.35 per cent to 4,369.21 and the Nasdaq Composite dropped 0.38 per cent to 14,677.65.

The Australian dollar was buying 74.46 US cents near 7.53am AEST, down from 74.90 at Tuesday's close.

Locally, investors were staring at gains on Tuesday for just about the whole trading day on the Australian market but have nothing to show for it.

The ASX200 was up by about half a per cent after the first two hours of trade, helped by record closing levels on Wall Street.

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The Aussie market then slowly eased although it was not until the final minutes that the indices dropped to close little changed.

Industrials shares were the top performers and rose 0.86 per cent.

The gains were offset by a slump in financial shares, which lost 0.43 per cent.

Property shares were the worst performer and shed 0.86 per cent.

The benchmark S&P/ASX200 index closed lower by 1.4 points, or 0.02 per cent, to 7332.1 on Tuesday.

The All Ordinaries closed higher by 7.3 points, or 0.1 per cent, to 7612.2.

The ASX was one of the poorest performers across Asian markets. Most had gains of less than one per cent.

China reported exports grew much faster than expected in June, as global demand was helped by easing coronavirus lockdown measures and vaccination drives.

However trade growth may slow in the second half of 2021, a customs official warned, partly reflecting the pandemic uncertainties as the Delta variant wreaks havoc.

China last week eased conditions on bank lending to help stimulate the economy.

Investors on Monday piled into materials stocks, anticipating renewed demand will lead to a commodities boom.

The rush did not continue on Tuesday.

Materials shares, the biggest part of the market after financials, closed up only 0.16 per cent.

BHP closed lower by 0.69 per cent to $50.70. Fortescue still prospered and rose 2.11 per cent to $25.18. Rio Tinto climbed 0.6 per cent to $128.36.

Meanwhile investors will give plenty of attention to second-quarter earnings season in the US this week.

They will want clues on how long the US economic recovery from the pandemic may last.
The banks will be the first sizeable group to report.

Economic reports are also due on US inflation data and retail sales.

Federal Reserve Chair Jerome Powell is due to appear before Congress over two days and give his views on inflation.

In Australia, a federal support package has been agreed for NSW businesses hit by Sydney's coronavirus outbreak.

JobKeeper-style payments that go beyond arrangements during Victoria's most recent lockdown will be made to affected traders.

These will also apply to other states and territories struck by subsequent outbreaks.

On the ASX, one of the best performers was aerial imagery provider Nearmap.

Its shares closed better by 14.36 per cent to $2.27 after reporting strong sales in North America.

This helped group full-year sales to about $133.8 million, higher than the forecast maximum of $132 million.

Shareholders of waste management provider Bingo Industries voted for a Macquarie takeover.

The investors are reaping the rewards already and will be paid a special dividend of 0.117 cents per share.

Bingo shares were up 0.29 per cent to $3.44.

Kerry Stokes' Seven Group continues buying shares in takeover target Boral and has gained almost 45 per cent.

Shares in Seven closed up 1.28 per cent to $22.08.

Shares in Boral closed even to $7.39.

The big banks were mostly lower. NAB was the only of the big four to close better and rose 0.08 per cent to $26.24.

Spot Gold was up 1 per cent at $US1807.24 an ounce; Brent crude was up 1.8 per cent at $US76.48 a barrel, Iron ore was up 0.6 per cent at $US218.48 a tonne.

The yield on the Australian 10-year bond closed at 1.32 per cent.

Asia

At the close, China's Shanghai Composite index was up 0.53 per cent at 3,566.52.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed up 1.63 per cent at 27,963.41.

Japan's Nikkei 225 Index was up 0.52 per cent at 28,718.24.

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 460.96.

The German DAX was flat at 15,789.64.

North America

The S&P 500 and Nasdaq have ended lower after hitting record highs earlier in the session, with investors digesting a jump in consumer prices in June and earnings from JPMorgan and Goldman Sachs that kicked off the quarterly reporting season.

The Dow Jones Industrial Average fell 0.31 per cent to end at 34,888.79 points while the S&P 500 lost 0.35 per cent to 4,369.21 and the Nasdaq Composite dropped 0.38 per cent to 14,677.65.

The S&P 500 and Nasdaq reached fresh record highs but quickly fell into negative territory after an auction of 30-year Treasuries showed less demand than some investors expected and pushed yields higher.

Data indicated US consumer prices rose by the most in 13 years last month, while so-called core consumer prices surged 4.5 per cent year over year, the largest rise since November 1991.

Economists viewed the price surge, driven by travel-rated services and used cars, as mostly temporary, aligning with Federal Reserve Chair Jerome Powell's long-standing views.

"Any time you get an uptick in interest rates the stock market is going to get nervous, especially on a day like today," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

The S&P 500 growth index dipped 0.05 per cent while the value index fell 0.70 per cent.

"With growth outperforming value, the takeaway is clearly that inflation from a market perspective is not a real threat in the long term," said Keith Buchanan, a portfolio manager at GLOBALT Investments in Atlanta, Georgia.

Ten of the 11 major S&P 500 sector indexes ended lower, with real estate, consumer discretionary and financials each down more than 1.0 per cent.

JPMorgan Chase & Co stock fell 1.5 per cent after the company reported blockbuster quarterly profit growth but warned that the sunny outlook would not make for blockbuster revenues in the short term due to low interest rates.

Goldman Sachs Group Inc dipped 1.2 per cent after its quarterly earnings exceeded forecasts.

Citigroup, Wells Fargo & Co and Bank of America were due to report their quarterly results early on Wednesday.

PepsiCo Inc gained 2.3 per cent after raising its full-year earnings forecast, betting on accellerating demand as COVID-19 restrictions continue to ease.

June-quarter earnings per share for S&P 500 companies are expected to rise 66 per cent, according to Refinitiv data, with investors questioning how long Wall Street's rally would last after a 16 per cent rise in the benchmark index so far this year.

All eyes now turn to Fed Chair Jerome Powell's congressional testimony on Wednesday and Thursday for his comments about rising price pressures and monetary support going forward.

Conagra Brands Inc dropped 5.4 per cent after the packaged foods company warned that higher raw material and ingredient costs would take a bigger bite out of its profit this year than previously estimated.

Boeing Co fell 4.2 per cent after the US Federal Aviation Administration said late on Monday some undelivered 787 Dreamliners have a new manufacturing quality issue.

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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