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Global Market Report - 19 July

Lewis Jackson  |  19 Jul 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to open lower after global markets dipped on Friday as the Delta variant continues to spread.

The Australian SPI 200 futures contract was down 37 points or 0.51 per cent at 7,232 near 7.10 am Sydney time on Monday.

Wall Street ended lower Friday, weighed down by declines in Amazon, Apple and other heavyweight technology stocks while investors worried about a rise in coronavirus cases tied to the highly contagious Delta variant.

The Dow Jones Industrial Average fell 0.86 per cent to end at 34,686.08 points while the S&P 500 lost 0.75 per cent to 4,327.19 and the Nasdaq Composite dropped 0.78 per cent to 14,429.43.

The Australian dollar was buying 74.03 US cents near 7.40am AEST, down from 74.31 at Friday’s close.

Locally, Australia's share market had its best week in the past six while a spate of takeover bids and coronavirus lockdowns will keep investors alert for more.

The ASX gained 1.03 per cent in a week in which local and overseas investment groups tried to swoop on stocks they considered cheap.

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Sydney Airport and Spark Infrastructure have so far resisted offers, while Seven Group gained majority ownership of Boral.

ThinkMarkets analyst Carl Capolingua said the takeover action was his highlight of the week.
"It shows a stock you may have thought was down and out may not be as bad as you think," he said.

The Aussie dollar has been falling against the US and Mr Capolingua said this may encourage acquisitions.

"Aussie stocks are starting to look pretty from a global perspective," he said.

"Investors can take confidence from that in the new financial year."

Meanwhile, US second-quarter earnings season will continue to attract attention next week.

The four largest US lenders reported this week and posted a combined $US33 billion in profits.

However they also highlighted the industry's sensitivity to low interest rates.

Investors will be looking for companies to provide strong forecasts to justify sky-high valuations.

The benchmark S&P/ASX200 index on Friday closed up 12.2 points, or 0.17 per cent, to 7348.1.

The index was just short of its record close, 7386.17.

The All Ordinaries closed higher by 14.1 points, or 0.19 per cent, to 7630.7.

The major categories of materials and financials were little changed.

Consumer discretionaries proved the best category, up 0.72 per cent.

This was despite more than six million Victorians joining many of their NSW counterparts under stay-at-home orders.

Victorian leaders reported six new virus infections on the first day of a five-day lockdown.

People in Sydney and surrounds remain in lockdown until at least July 30.

On the ASX, BHP shares notched a record high of $51.91.

They closed higher by 0.66 per cent to $51.87.

The market's biggest miner fared much better than Rio Tinto, which reported lower than expected iron ore production and shipments for its second quarter.

Heavy rain in Western Australia's Pilbara region, and coronavirus measures, limited efforts.
Shares were lower by 0.41 per cent to $130.60.

AMP will not face criminal prosecution three years after a banking royal commission found it had charged customers fees for no service.

Corporate regulator ASIC has ended its investigation into customers wrongly being charged for financial advice.

AMP has paid more than $153 million in compensation.

Shares were down 0.9 per cent to $1.10.

The big four banks, along with the Bank of Queensland, all shed less than half a per cent.

Casino operator Crown Resorts temporarily closed its Melbourne casino and dining areas in line with the five day lockdown for the state.

The company's Perth casino this week resumed regular trading after all virus restrictions were lifted.

The Sydney casino remains temporarily closed until at least July 30.

Shares were down 0.55 per cent to $10.94.

Spot Gold was down 1 per cent at $US1812.05 an ounce; Brent crude was down 0.3 per cent at $US73.22 a barrel, Iron ore was down 0.3 per cent at $US221.43 a tonne.

The yield on the Australian 10-year bond closed at 1.28 per cent.

Asia

At the close, China's Shanghai Composite index was down 0.71 per cent at 3,539.30.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed up 0.03 per cent at 28,004.68.

Japan's Nikkei 225 Index was down 0.98 per cent at 28,003.08.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was down 0.32 per cent at 454.74.

The German DAX was down at 15,530.31.

North America

Wall Street has ended lower, weighed down by declines in Amazon, Apple and other heavyweight technology stocks while investors worried about a rise in coronavirus cases tied to the highly contagious Delta variant.

The Dow Jones Industrial Average fell 0.86 per cent to end at 34,686.08 points while the S&P 500 lost 0.75 per cent to 4,327.19 and the Nasdaq Composite dropped 0.78 per cent to 14,429.43.

On Thursday, Los Angeles County said it would reimpose its mask mandate this weekend.

On Friday, public health officials said US coronavirus cases were up 70 per cent over the previous week, with deaths up 26 per cent.

Cruise lines Carnival Corp and Norwegian Cruise Line both fell sharply.

"COVID is starting to affect the market, ironically, for the first time since last summer, when the reopening trade began," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

Amazon, Apple and Nvidia all fell and were among the stocks that contributed most to the S&P 500 and Nasdaq's declines.

The S&P 500 technology sector index dipped for a second session after hitting a record on Wednesday.

The utilities index rallied while the real estate index rose to a record high.

This week, investors have balanced worries about a recent inflation spike with reassurances from Fed Chair Jerome Powell that the surge in prices is temporary.

Second-quarter earnings season picks up next week, with reports from companies including Netflix, Johnson & Johnson, Verizon Communications, AT&T and Intel.

Analysts on average expect 72 per cent growth in earnings per share for S&P 500 companies, according to IBES estimate data from Refinitiv.

With the S&P 500 up about 15 per cent so far this year, investors will look for strong company forecasts to justify sky-high valuations.

"It's been hard for the market to gain here from these already elevated prices," said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

The S&P 500 energy sector index sank, with investors worried about expectations for more supply and a rise in coronavirus cases that raised demand concerns.

Data from the Commerce Department showed retail sales rebounded 0.6 per cent last month as spending is shifting back to services, bolstering expectations that economic growth accelerated in the second quarter.

Moderna Inc jumped to a record high after S&P Dow Jones Indices said the drug maker will join the S&P 500 index as of the start of trading on July 21, replacing Alexion Pharmaceuticals.

Cintas Corp surged after brokerages raised price targets on the business service provider's stock following its fourth-quarter results.

Didi Global Inc fell after China sent state officials from at least seven departments to the ride-hailing giant for a cybersecurity review.

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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