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Global Market Report - 19 November

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

Australian shares are set to rise despite a choppy night on Wall Street in which positive vaccine news was offset by shutdown threats.

The Australian SPI 200 futures contract was up 28 points, or 0.4 per cent, to 6,553 points at 8.30am Sydney time on Thursday, suggesting a positive start to trading.

Wall Street see-sawed on Wednesday, with economically sensitive sectors outperforming as investors weighed heartening vaccine development progress against surging covid-19 infections.

The Dow Jones Industrial Average fell 33.74 points, or 0.11 per cent, to 29,749.61, the S&P 500 lost 5.78 points, or 0.16 per cent, to 3,603.75 and the Nasdaq Composite dropped 7.75 points, or 0.07 per cent, to 11,891.59.

Pfizer Inc and its German partner BioNTech revealed a 95 per cent success rate at the conclusion of their covid-19 vaccine trial, just days after Moderna Inc announced a similar rate of success in preliminary data from its vaccine candidate.

The S&P/ASX200 benchmark index closed up 32.9 points, or 0.51 per cent, to 6531.1 on Wednesday and remains at levels last reached in February. The All Ordinaries closed higher by 28.7 points, or 0.43 per cent, to 6726.5.

Gold was down 0.4 per cent at $US1,873.76 an ounce; Brent oil was up 2.1 per cent to $US44.65 a barrel; Iron ore was up 0.7 per cent to $US126.34 a tonne.

Meanwhile, the Australian dollar was buying 73.22 US cents at 8.30am, up from 72.94 US cents at Wednesday’s close.

Asia

China stocks shed some of their early gains, with the benchmark Shanghai Composite index ending the session higher on Wednesday, lifted by the government’s pledge to implement additional policy measures to prop up a coronavirus-ravaged broad economy.

At the close, the Shanghai Composite index was up 0.22 per cent at 3,347.30, while the blue-chip CSI300 index ended 0.06 per cent lower.

Hong Kong stocks ended higher for a third straight session on Wednesday, with the automotive sector leading gains, as investors continued to cheer news of covid-19 vaccine breakthroughs.

Moderna Inc said this week its experimental vaccine was 94.5 per cent effective in preventing covid-19 based on interim data from a late-stage clinical trial, becoming the second US company in a week to report results that far exceeded expectations.

At the close of trade, the Hang Seng index was up 129.20 points, or 0.49 per cent, at 26,544.29, while the Hang Seng China Enterprises index rose 0.85 per cent to 10,640.05.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.09 per cent, while Japan’s Nikkei index closed down 1.1 per cent.

Europe

European stocks closed higher on Wednesday as more positive updates on covid-19 vaccine and merger activity in the region helped offset worries about the fast-spreading virus.

The pan-European STOXX 600 index rose 0.4 per cent, returning to a more than eight-month high hit earlier this week.

Economically sensitive stocks such as automakers, banks, miners and retailers rose more than 1 per cent, leading sectoral gains.

After a sluggish start, European bourses got a boost from news that final results from Pfizer Inc's covid-19 vaccine trial showed its shot had a 95 per cent success rate and two months of safety data, paving the way for it to apply for an emergency US authorisation.

However, the market response was measured as investors expect any vaccine rollout to take time, while more US and European restrictions in the absence of fresh stimulus could weigh on economic activity.

“If a vaccine were somehow to be available even by December, that would be great. But the impact is going to be very marginal,” said Chris Beauchamp, chief market analyst at IG.

“Investors are aware that a vaccine will be here eventually and some (stimulus) needs to come in fairly soon to provide that bridge through the difficult period.”

“That will provide the catalyst for a big move higher.”

The number of reported global daily deaths from the novel coronavirus stood at the highest ever on Tuesday, according to a Reuters tally. Britain reported the highest number of deaths in Europe.

Despite shutdown worries, the STOXX 600 remains on track for its best month on record as investors bet on a global economic recovery, supported by trillions of dollars in stimulus and hopes of a vaccine.

M&A also drove big swings in stocks, with Britain's RSA Insurance gaining 4.6 per cent after it backed a 7.2 billion pound ($9.86 billion) cash offer from Canada's Intact Financial and Denmark's Tryg in one of Europe's biggest financial takeover bids this year.

Deutsche Boerse rose 2.4 per cent after the German stock exchange operator said it would acquire an 80 per cent stake in corporate governance adviser Institutional Shareholder Services for about $1.8 billion.

Among decliners, German automotive supplier Schaeffler fell 5.3 per cent after it set mid-term sales targets that disappointed investors.

Shipping group Maersk slipped 1.0 per cent after it reported quarterly sales and operating profit in line with the previous forecast and maintained its earnings forecast.

North America

Wall Street see-sawed on Wednesday, with economically sensitive sectors outperforming as investors weighed heartening vaccine development progress against surging covid-19 infections.

All three major US indexes oscillated between red and green through much of the session but were last moderately lower, while small caps, industrials and transportation stocks advanced.

S&P Industrials and the Dow Transportation index, both of which stand to benefit from economies reopening after the global health crisis winds down, were on course for all-time closing highs.

“The market is showing a willingness to support the reopening plays, you see it in the Dow Transports and the Russell 2000,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “It’s a closing of the performance gap between value and growth.”

“It’s not dooming growth stocks, it’s broadening out the strength of the market,” Carlson added. “I think that’s going to continue over the short term.”

Pfizer Inc and its German partner BioNTech revealed a 95 per cent success rate at the conclusion of their covid-19 vaccine trial, just days after Moderna Inc announced a similar rate of success in preliminary data from its vaccine candidate.

Market participants have been greeting vaccine developments with guarded optimism as global new infections soar to record levels, raising the possibility of increased restrictions as the economy struggles to recover from recession. The US remains the country worst affected by the pandemic.

The Dow Jones Industrial Average fell 33.74 points, or 0.11 per cent, to 29,749.61, the S&P 500 lost 5.78 points, or 0.16 per cent, to 3,603.75 and the Nasdaq Composite dropped 7.75 points, or 0.07 per cent, to 11,891.59.

Among the 11 major sectors in the S&P 500, industrials enjoyed the largest percentage gains while healthcare suffered the biggest loss.

Third-quarter reporting season has reached the final inning, with 468 of the companies in the S&P 500 having reported. Of those, 84.4 per cent have surprised consensus to the upside, according to Refinitiv.

Boeing Co initially provided the biggest lift to the Dow after the Federal Aviation Commission green-lighted the planemaker's grounded 737 MAX aircraft to resume flights, but its shares have since reversed course.

Target Corp handily beat quarterly profit and sales estimates, boosted by a 155 per cent jump in comparable digital sales. The retailer's stock rose 4.7 per cent.

Lowe's Companies Inc dropped 6.4 per cent after the home improvement retailer forecast lower-than-expected holiday quarter earnings as it beefs up its online business and doles out employee bonuses to ease pandemic-related hardship.

is content editor for Morningstar Australia

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