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Global Market Report - 15 September

Lex Hall  |  15 Sep 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to slip despite a rally on Wall Street, which was prompted by several big deals and optimism over a vaccine.

The Australian SPI 200 futures contract was down 9 points, or 0.2 per cent, to 5,897 points at 8.30am Sydney time on Tuesday, suggesting a slightly negative start to trading.

US stocks ended sharply higher on Monday as signs of progress in developing a covid-19 vaccine and a spurt of multibillion-dollar deals lifted investor optimism.

The Dow Jones Industrial Average rose 327.69 points, or 1.18 per cent, to 27,993.33, the S&P 500 gained 42.57 points, or 1.27 per cent, to 3,383.54 and the Nasdaq Composite added 203.11 points, or 1.87 per cent, to 11,056.65.

The S&P/ASX200 benchmark index finished in positive territory by 40.1 points, or 0.68 per cent, to 5,899.5 points on Monday. In the final minutes of trade, the index came within a few points of its session high of 5,903.2 recorded in the first hour. The All Ordinaries index closed up by 39.6 points, or 0.66 per cent, to 6,078.5.

Gold was up 1.0 per cent to $US1,958.99 an ounce; Brent oil was down 0.5 per cent to $US39.65 a barrel; Iron ore was up 1.4 per cent to $US130.17 a tonne.

Meanwhile, the Australian dollar was buying 72.97 US cents at 8.30am, up from 72.83 US cents at Monday’s close.

Asia

China stocks finished higher on Monday with Shanghai’s Nasdaq-style STAR Market leading gains after the securities regulator approved the first batch of exchange-traded funds, which are expected to draw fresh funds towards the market.

China's main Shanghai Composite index closed up 0.57 per cent at 3,278.81 points, while the blue-chip CSI300 index ended up 0.51 per cent.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.47 per cent, while Japan’s Nikkei index closed up 0.65 per cent.

Hong Kong stocks ended higher on Monday tracking a global rally on fresh coronavirus vaccine hopes, while investors also awaited the US Federal Reserve’s policy meeting later this week for monetary policy outlook cues in the world’s largest economy.

AstraZeneca said on the weekend it has resumed British clinical trials of its covid-19 vaccine, one of the most advanced in development, after getting the green light from safety watchdogs.

Governments around the world are desperate for a vaccine to help end the pandemic, which has caused more than 900,000 deaths and a global economic turmoil. The World Health Organization had flagged AstraZeneca’s vaccine candidate as the most promising.

At the close of trade, the Hang Seng index was up 136.97 points or 0.56 per cent at 24,640.28. The Hang Seng China Enterprises index rose 0.56 per cent to 9,806.64.

Europe

Europe’s STOXX 600 inched higher on Monday as surging travel and technology stocks helped counter losses in the energy sector, with investors focused on Brexit-related developments and central bank actions later this week.

The pan-European STOXX 600 index closed 0.2 per cent higher after rising as much as 0.8 per cent earlier in the session.

Much of those gains were lost as oil majors Total, BP and Royal Dutch Shell dropped after major industry figures said damage to the global economy from the coronavirus pandemic will hollow out demand for oil more than previously thought.

Markets had rallied earlier on news that AstraZeneca had resumed clinical trials of its covid-19 vaccine after being suspended last week.

The British drugmaker's shares slipped amid losses for the healthcare sector, but battered travel and leisure stocks led the gains in Europe, with British Airways-owner IAG jumping 4.4 per cent, and easyJet and Lufthansa rising nearly 2 per cent.

Europe's tech sector rose 0.9 per cent, with chipmakers STMicroelectronics, AMS and ASM International up between 0.9 per cent and 3.7 per cent.

US chipmaker Nvidia Corp said it would buy UK-based chip designer Arm from Japan's SoftBank Group for as much as US$40 billion ($55 billion) in a deal set to reshape the global semiconductor landscape.

Still, euro zone stocks were up just 0.1 per cent and UK's FTSE 100 down 0.1 per cent, with gains for both the euro and sterling hurting the exporters.

Investors waited for UK lawmakers to vote on a bill which the European Union has told London to scrap, raising pessimism over the chances of a Brexit deal being reached before the December 2020 deadline.

Focus was also on this week’s US Federal Reserve meeting, its first since Chairman Jerome Powell unveiled a policy shift toward greater tolerance of inflation.

Britain's G4S soared 25.1 per cent after saying that it had rejected a 2.95 billion pound ($4 billion) offer from Canadian security firm GardaWorld, saying it was "highly opportunistic".

Exchange operators were caught in a bidding war, with France's Euronext and Deutsche Boerse down 2.5 per cent and 1.3 per cent after sources told Reuters that Switzerland's Six made the highest bid in the battle for Borsa Italiana.

North America

Gains were broad-based, with all of the S&P 500 sectors ending in positive territory and real estate and technology leading gains.

Drugmaker AstraZeneca resumed its British clinical trials of its covid-19 vaccine, one of the most advanced in development.

Also, Pfizer Inc rose 2.6 per cent after the drugmaker and German biotech firm BioNTech SE proposed to expand their Phase 3 pivotal covid-19 vaccine trial to about 44,000 participants.

Merger-related news also lifted the market, and tech shares performed well but value-related sectors did as well, he said. That suggests investors may continue buying into value.

Nvidia Corp jumped 5.8 per cent and was among the biggest boosts for the S&P 500 and Nasdaq following plans to buy UK-based chip designer Arm from Japan’s SoftBank Group Corp for as much as $40 billion, in a deal set to reshape the global semiconductor landscape. The Philadelphia SE chip index rose 2.1 per cent.

Oracle gained 4.3 per cent as the cloud services company said it would team up with China’s ByteDance to keep TikTok operating in the US, beating Microsoft Corp in a deal structured as a partnership rather than an outright sale.

US stocks are coming off of two straight weeks of losses as investors sold heavyweight technology shares that had powered the benchmark index to record highs in a dramatic recovery from its March lows.

Seattle Genetics gained 14.5 per cent after Merck & Co Inc said it would buy a $1 billion stake in the smaller drugmaker to co-develop and sell its cancer therapy.

Tesla Inc’s shares rebounded 12.6 per cent after losses last week.

Later this week, investors will focus on the Federal Reserve’s final policy meeting before the 3 November US presidential elections.

In other deal news, Immunomedics’s shares surged after Gilead Sciences US$21 billion buyout deal.

is content editor for Morningstar Australia

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