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Global Market Report - 19 June

Lex Hall  |  19 Jun 2020Text size  Decrease  Increase  |  
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Australia

Shares are poised for a flat start to trade on the Australian market after rising coronavirus cases in some US states and Beijing hindered movement on US markets.

The Australian SPI 200 futures contract was lower by 5.0 points, or 0.08 per cent, to 5,922.0 at 8.30am Sydney time on Friday.

In the US overnight, all three major US stock indexes oscillated through much of the day but the S&P ended the session in the black along with the tech-heavy Nasdaq. The blue-chip Dow lost ground.

While several US states have reported surges in new COVID-19 cases after re-opening their economies, President Donald Trump insisted the US would not enact a new round of restrictions to curb the pandemic's spread.

Gold prices eased a bit after a Chinese medical expert said Beijing has brought a recent outbreak under control.

China has found the trading sections for meat and seafood in Beijing's wholesale food market to be severely contaminated with the coronavirus.

The country's capital has tackled a resurgence of COVID-19 cases over the past week linked to the massive Xinfadi food center, which houses warehouses and trading halls in an area the size of nearly 160 soccer pitches.

Senior market strategist for Allianz Investment Management in Minneapolis, Charlie Ripley, said: "investors are in wait-and-see mode".

"The consensus is we're on the road to the recovery but there could be bumps along the way and these increasing virus numbers could be one of those bumps."

The Australian dollar was buying 68.57 US cents at 8.30am, lower from 68.72 US cents at the close of trade on Thursday.

Asia

China stocks ended firmer on Thursday, as policymakers assured investors that the economy is gradually recovering from the coronavirus crisis, while pledging more reforms and liquidity to bolster capital markets.

At the close, the Shanghai Composite index was up 0.12 per cent at 2,939.32, while the blue-chip CSI300 index was up 0.67 per cent.

Hong Kong stocks recovered most of their earlier losses to end basically flat, helped by Beijing’s pledge for more reforms and liquidity to boost the world’s second largest economy.

At the close of trade, the Hang Seng index was down 16.47 points or 0.07 per cent at 24,464.94, while the Hang Seng China Enterprises index rose 0.07 per cent to 9,916.45.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.01 per cent, while Japan’s Nikkei index closed down 0.45 per cent.

Europe

European shares closed lower on Thursday as a spike in COVID-19 cases in China and some US states triggered fears of a second wave of infections, while a 60 per cent plunge in Wirecard shares over missing cash balances weighed on the STOXX 600 index.

Investors scaled back on risk as the daily count of cases hit new highs in California and Texas, two of the United States’ most populous states, while Beijing ramped up movement curbs.

The pan-European STOXX 600 index fell 0.7 per cent after two straight days of gains, as hopes of a swift recovery from the pandemic-led economic slump were knocked back.

Dragging down the index was Wirecard, which plummeted 61.8 per cent after the German payments company’s auditor refused to sign off its 2019 accounts over a missing $2.1 billion as the firm warned the delay could cause billions in loans to be called in as early as Friday.

Aggressive monetary and fiscal stimulus and less-than-dire economic data have helped European indexes regain about 36 per cent from their March lows, but analysts say another wave of infections could lead to worries of more restrictions and weigh on consumer behaviour.

Madrid-listed shares of Siemens Gamesa tumbled 7.6 per cent after the wind turbine maker replaced chief executive Markus Tacke with Andreas Nauen and warned of an operating loss in the third quarter late on Wednesday.

German online fashion retailer Zalando rose 7.1 per cent to the top of STOXX 600, after forecasting a bigger increase in sales and operating profit in the second quarter than analysts’ expectations as the pandemic prompts more people to shop online.

Cyclical stocks led declines, including miners which fell 1.9 per cent.

The European Council is in focus as it meets on Friday to discuss a recovery proposal by the bloc’s executive arm to raise 750 billion euros worth of debt to top up spending from joint coffers to be worth 1.1 trillion euros in 2021–27.

North America

The S&P 500 closed nominally higher on Thursday as investors weighed a resurgence in coronavirus infections and the possibility of a new round of shutdowns as well as data that suggested the US economy might not bounce back with quick, V-shaped recovery.

All three major US stock indexes were range-bound and oscillated through much of the day, but the S&P ended the session in the black along with the tech-heavy Nasdaq.

The blue-chip Dow lost ground.

While several US states have reported surges in new COVID-19 cases after re-opening their economies, President Donald Trump insisted the US would not enact a new round of restrictions to curb the pandemic’s spread.

Initial jobless claims declined slightly last week to a still-bruising 1.51 million, according to the Labor Department. The number was worse than consensus, and continuing claims remain stubbornly high at 20.54 million, suggesting the labour market has a long road to recovery.

The Dow Jones Industrial Average fell 39.51 points, or 0.15 per cent, to 26,080.1, the S&P 500 gained 1.85 points, or 0.06 per cent, to 3,115.34 and the Nasdaq Composite added 32.52 points, or 0.33 per cent, to 9,943.05.

The S&P 500’s modest gains were concentrated in four of the composite’s 11 major sectors. Energy shares enjoyed the largest percentage gain, while real estate was the clear laggard.

Grocery chain Kroger Co beat quarterly earnings estimates and said it expects to exceed its 2020 same-store sales outlook. But the company did not reaffirm or provide new 2020 forecasts, and its shares fell 3.0 per cent.

Shares of Spotify Technology jumped 12.7 per cent after the music streaming company inked a deal with AT&T’s Warner Brothers and DC Entertainment to add popular DC Comics character podcasts to its library.

Cruise operator Carnival Corp fell 1.4 per cent after reporting a record $4.4 billion quarterly loss after pandemic-related write-downs.

Biogen Inc dropped 7.5 per cent after a US district court ruled in favour of generic drugmaker Mylan NV in a patent dispute. Mylan NV rose 2.3 per cent.

Industrial services provider Team Inc plunged 16.9 per cent after missing quarterly earnings estimates amid falling demand.

is content editor for Morningstar Australia

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