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Global Market Report - 14 September

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

The ASX is set to edge lower after a mixed session on Wall Street with energy stocks helping the S&P 500 higher while the Nasdaq slipped.

The Australian SPI 200 futures contract was down 14 points or 0.2 per cent at 7,421 near 8.00 am Sydney time on Tuesday, suggesting a negative start to trading.

The S&P 500 closed higher Monday even as losses across several sectors offset a rally among energy shares.

The S&P 500 rose about 0.2% while the Nasdaq Composite declined less than 0.1%. The Dow Jones Industrial Average was the strongest performer of the three major US stock indexes, rising 0.8%.

Momentum in US markets has taken a hit lately, with both the S&P 500 and Dow logging their steepest one-week declines since June on Friday.

The Australian dollar was buying 73.66 US cents near 8.00am AEST, down from the previous close of 73.67. The WSJ Dollar Index, which measures the US dollar relative to 16 foreign currencies, rose to 87.27.

Locally, the S&P/ASX 200 closed 0.3% higher at 7425.2. The benchmark slipped at the open but recovered thanks to gains by commodity stocks.

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The materials sector rose 1.0% amid gains by both gold and iron ore miners. The energy sector put on 1.2%, led by Woodside and Santos, which added 1.7% and 1.8%, respectively.

Financials edged 0.1% lower as losses by regional lenders and NAB bank more than offset Zip Co.'s 2.3% rise and small gains by Commonwealth and ANZ.

Sydney Airport’s board announced Monday it intends to recommend an upgraded offer from a consortium of infrastructure investors, pending several conditions. The $8.75/share bid for the airport is the third bid from the consortium after the airport rejected two earlier offers as being too low. The offer is slightly below the all-time high stock price of $8.97. Sydney Airport closed 4.6% higher at $8.37.

Reserve bank Governor Philip Lowe will speak today on the topic of the Delta-variant crisis and monetary policy. Last week the central bank moved to lengthen its taper strategy because of the worsening health crisis in key eastern states.

Gold futures rose 0.1% to $US1794.40 an ounce; Brent crude was up 0.8% at $US73.51 a barrel; Iron ore was down 4.5% to $US123.84.

The yield on the Australian 10-year bond rose to 1.27%; The yield on the US 10-year note fell to 1.32%.

Asia

Chinese stocks ended the session mixed on Monday, with gains led by cyclical sectors, including miners and oil majors. Prices of the commodities continue to rally. Car makers weakened after a regulator called for consolidation in the country's crowded electric-vehicle industry. The Shanghai Composite Index gained 0.3%, extending its rise after Friday's close at the highest in more than six years.

Hong Kong shares slipped on rising concerns about China's regulatory clampdown, with the Hang Seng Index closing 1.5%. Media reported that Chinese regulators on Friday notified the nation's 10 leading internet companies to improve labor-rights protection. The Financial Times reported Monday that Beijing intends to break up Ant Group's Alipay app and create a separate app for its loans business.

The Hang Seng TECH Index ended 2.3% lower at 6595.03. Among the worst performers on the HSI, internet-related names Meituan lost 4.5% and Alibaba Group dropped 4.2%.

Japan's Nikkei Stock Average closed 0.2% higher, its highest level since Feb. 16, led by gains in electronics and bank stocks. While hopes for fiscal stimulus supported stocks, some profit-taking limited gains.

Europe

The FTSE 100 closed Monday up 0.56%, with good showings across UK markets from energy stocks and housebuilders in particular. Coronavirus vaccine manufacturers also enjoyed a brief rally amid speculation that all adults in the UK will be offered a booster shot and a recommendation that 12-to-15-year-olds be offered one dose of the Pfizer vaccine. The rise was short-lived, perhaps due to the lack of clear follow-up today, AJ Bell's financial analyst Danni Hewson says.

Meanwhile on the mainland, the pan-European Stoxx 600 index rose 0.3% to 467.69, rebounding after falls last week. It was led higher by gains for energy stocks as crude-oil prices rise and for financial stocks.

"Investors continue to expect further improvement in the global economy, providing further support for risk assets," says Chris Beauchamp of IG.

Investors are wary, however, ahead of inflation data out of China, the UK and the US, which could intensify concerns about rising prices and slowing growth. Tech stocks, retailers and travel stocks are all mostly lower.

North America

The S&P 500 eked out a modest gain Monday, shaking off earlier losses, thanks to rallying shares of energy companies.

The S&P 500 advanced 10.15 points, or 0.2%, to 4468.73. The Nasdaq Composite fell 9.91 points, or 0.1%, to 15105.58, paring declines toward the end of the trading day. The Dow industrials posted the strongest performance of the three indices, rising 261.91 points, or 0.8%, to 34869.63.

The stock rally has paused lately, with both the S&P 500 and Dow Jones Industrial Average logging their steepest one-week declines since June on Friday.

Money managers are hoping markets will get a fresh boost in the coming days, which will bring about new data on inflation, retail sales and consumer confidence. Investors say they are also closely watching a proposed $3.5 trillion spending plan from Washington that could potentially send more funds toward healthcare, education and climate legislation.

"I do believe that the bulls have a little more ammunition than the bears: fiscal support still remains on tap, activity indicators are strong," said Gregory Perdon, chief investment officer of Arbuthnot Latham. "Risk is still on."

Energy shares were among the strongest performers in the S&P 500 on Monday, rising alongside the price of oil after the Organization of the Petroleum Exporting Countries said it expected global demand to exceed pre-pandemic levels next year.

Marathon Oil, APA and Occidental Petroleum rose at least 6.5% apiece. US crude for October delivery gained 73 cents, or 1%, to $70.45 a barrel.

Meanwhile, shares of Texas-based miner and explorer Uranium Energy jumped 9 cents, or 2.8%, to $3.30 as individual investors sought out bets that would benefit from a recent rise in uranium prices.

Airbnb slipped $4.88, or 3%, to $160.32 after Goldman Sachs Group analysts recommended investors sell the stock.

The current level of yields on US government bonds is signaling that bond investors see higher inflation levels as transitory, according to Georgina Taylor, a multiasset fund manager at Invesco. On Tuesday, traders will get a look at the latest readings on consumer prices.

"There is not enough inflationary pressure to really feel a reassessment of nominal growth over the long term," she said.

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

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