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Global Market Report - 20 November

Lex Hall  |  20 Nov 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to fall following a mixed night on Wall Street as shutdowns and infections forced investors into growth stocks.

The Australian SPI 200 futures contract was down 14 points, or 0.2 per cent, to 6,552 points at 8.30am Sydney time on Friday, suggesting a negative start to trading.

The S&P 500 and the Nasdaq advanced on Thursday but the Dow lost ground as mounting shutdowns and layoffs linked to spiraling covid-19 infection rates turned investors toward market-leading growth stocks that have shown resilience to the pandemic.

The Dow Jones Industrial Average fell 47.27 points, or 0.16 per cent, to 29,391.15, the S&P 500 gained 1.57 points, or 0.04 per cent, to 3,569.36 and the Nasdaq Composite added 66.93 points, or 0.57 per cent, to 11,868.54.

Locally, the Retirement Income Review claims average workers would lose money to subsidise the well-off if compulsory super contributions were raised to 12 per cent, The Australian reports.

The S&P/ASX200 benchmark index closed up 16.1 points, or 0.25 per cent, to 6,547.2 on Thursday. The All Ordinaries closed higher by 16.2 points, or 0.24 per cent, to 6,742.7.

While the ASX opened lower on US coronavirus worries, Deep Data Analytics chief executive Mathan Somasundaram said global investors had bought into Aussie banks due to a weaker US dollar.

Gold was down 0.5 per cent at $US1,863.67 an ounce; Brent oil was down 1.1 per cent to $US43.86 a barrel; Iron ore was up 0.7 per cent to $US126.34 a tonne.

Meanwhile, the Australian dollar was buying 72.78 US cents at 8.30am, down from 72.95 US cents at Thursday's close.

Asia

Chinese stocks ended higher on Thursday, led by consumer shares, as investors cheered news of Beijing’s pledge to boost domestic consumption and promote an innovation-driven growth model to salvage a pandemic-ravaged economy.

The blue-chip CSI300 index ended 0.7 per cent higher at 4,927.99, while the Shanghai Composite Index climbed 0.5 per cent to 3,363.09 points.

Hong Kong stocks ended lower on Thursday, pressured by the materials and property sectors, but stronger consumer firms capped losses after news of Beijing’s pledge to boost domestic consumption to salvage a pandemic-ravaged economy.

At the close of trade, the Hang Seng index was down 187.32 points, or 0.71 per cent, at 26,356.97. The Hang Seng China Enterprises index fell 0.8 per cent to 10,555.36.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.51 per cent, while Japan’s Nikkei index closed down 0.36 per cent.

Europe

European stocks fell on Thursday following sharp losses on Wall Street as investors feared another round of shutdowns due to soaring coronavirus cases in the United States.

The pan-European STOXX 600 was down 0.9 per cent in the morning session, with growth-sensitive oil and gas, banking, mining and travel sectors falling the most.

The sectors have rallied strongly in November, helped by encouraging news on covid-19 vaccine that pushed the STOXX 600 to eight-month highs this week.

Defensive healthcare and utilities posted small losses.

US stocks came off all-time highs as the death toll in the country from covid-19 approached 250,000 on Wednesday and New York City’s public schools called a halt to in-classroom instruction in the latest major restriction to curb the spread of the virus.

“Rising coronavirus infection numbers and new restriction measures implemented in the US are weighing on appetite for risk,” UniCredit analysts said in a note.

Investors have been weighing the consequences of tighter restrictions globally on economic growth against hopes of a covid-19 vaccine supporting a recovery.

European Central Bank President Christine Lagarde called on EU leaders to end a potentially damaging budget impasse and repeated a promise to keep monetary policy super easy.

A Reuters poll showed economists expect the euro zone economy to shrink 2.5 per cent this quarter after expanding a record 12.6 per cent in the previous quarter.

Ailing German conglomerate Thyssenkrupp fell 6.7 per cent after it said it would need to cut a further 5,000 jobs to ease the impact of the coronavirus crisis on its businesses.

Norwegian Air slumped 14.8 per cent after it filed for bankruptcy protection as it seeks to stave off collapse amid the pandemic.

Swiss engineering company ABB was down 3 per cent on disclosing plans to offload three business units that generate US$1.75 billion ($2.4 billion) in sales.

Britain’s Royal Mail jumped 6.3 per cent after it raised its full-year revenue forecast as a surge in online shopping drove demand for its delivery service.

Germany’s HelloFresh rose 3.3 per cent after its CEO said the meal-kit delivery firm would expand its capacity to supply US diners by 50 per cent by mid-2021.

North America

The S&P 500 and the Nasdaq advanced on Thursday but the Dow lost ground as mounting shutdowns and layoffs linked to spiraling covid-19 infection rates turned investors toward market-leading growth stocks that have shown resilience to the pandemic.

Bleak jobless claims data helped cap gains, days after news of progress toward a coronavirus vaccine sent the S&P 500 to an all-time closing high.

“Investors are still heavily influenced by short-term outlook for the coronavirus,” said Oliver Pursche, president of Bronson Meadows Capital Management in Fairfield, Connecticut.

“Earlier this week we saw jump on good news about the vaccine, but now we have record new cases around the country and that’s changing investor sentiment and the rotation that you’ve seen out of growth stocks.”

The number of US workers filing new claims for unemployment benefits unexpectedly rose last week, the data painting a grim picture of increasingly elevated layoffs as spiking coronavirus cases and subsequent shutdowns continue to hobble the labor market.

“There’s a feeling that the economic recovery will be slower than many thought based on the data,” Pursche added.

Record infection numbers have prompted schools and businesses to close their shutters once again, thwarting the world’s largest economy’s recovery from the deepest recession since the Great Depression.

With additional fiscal relief now simmering on the congressional back burner, some market participants are looking to the US Federal Reserve for signs it could step in with more monetary stimulus.

The Dow Jones Industrial Average fell 47.27 points, or 0.16 per cent, to 29,391.15, the S&P 500 gained 1.57 points, or 0.04 per cent, to 3,569.36 and the Nasdaq Composite added 66.93 points, or 0.57 per cent, to 11,868.54.

Of the 11 major sectors in the S&P 500, energy shares were up the most, while economically-sensitive stocks such as utilities and financials suffered the largest declines.

Third-quarter reporting season is nearing the finish line, with 472 of the companies in the S&P 500 having reported. Of those, 84.5 per cent have beaten consensus, according to Refinitiv data.

Macy's reported a 20 per cent plunge in quarterly same-store sales and the department store forecast a tough holiday season.

Chipmaker Nvidia Corp forecast a slight dip in data center chip sales but the company beat quarterly revenue expectations.

L Brands surged 15.8 per cent after posting better-than-expected quarterly results and a 56 per cent jump in same-store sales.

Tesla shares rose for the third straight session to touch a record high, riding the wave of its pending inclusion in the S&P 500, announced on Monday.

is content editor for Morningstar Australia

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