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Global Market Report - 21 April

Lewis Jackson  |  21 Apr 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are poised to drop at the open, amid a global retreat in equities amid concerns about renewed covid-19 infections.

The Australian SPI 200 futures contract tumbled 86 points or 1.2 per cent to 6,911 near 7am Sydney-time on Wednesday, suggesting a negative start to trading.

Stocks on Wall Street fell for a second straight day on Tuesday as a global spike in coronavirus cases hit travel-related shares and investors had second thoughts about big US banks’ apparently stellar earnings last week.

The Dow Jones Industrial Average fell 0.75 per cent to 33,821.3. The S&P 500 shed 0.68 per cent to 4,134.94 and the Nasdaq Composite dropped 0.92 per cent to 13,786.27.

Locally, Australia's share market has pulled back from near-record heights, and the Aussie dollar climbed against the US after the Reserve Bank flagged winding up cheap credit for banks.

The benchmark S&P/ASX200 index closed Tuesday down 47.8 points, or 0.68 per cent, to 7,017.8.

The All Ordinaries closed lower by 45.9 points, or 0.63 per cent, to 7,282.1 points.

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The losses were the biggest for April and ended a run of five sessions of gains.

The indices' steady decline during the session contrasted with a consistent rise in the Aussie dollar. After the ASX closed, the dollar was buying more than 78 US cents.

Deep Data Analytics chief executive Mathan Somasundaram said worries about inflation from the pandemic recovery were hampering the US dollar.

Meanwhile, the Reserve Bank's minutes of its April meetings may also have motivated traders to buy the Aussie dollar.

The RBA said its term funding facility, which provides cheap credit to banks, still had $95 billion to be drawn down until the end of June.

The central bank said it would consider extending the facility if there was a deterioration in credit conditions, but there were no such signs.

On the ASX, most shares were down. Health and information technology lost more than one per cent.

Rio Tinto's iron ore production in Australia's Pilbara region has fallen after wet weather and labour shortages impacted output.

Afterpay confirmed it is closer to listing on a US market after North America overtook Australia and New Zealand as the biggest region for sales.

Investment manager Challenger plunged 15.76 per cent to $5.56 after it said full-year profit was expected to be lower.

On Wednesday, economic data will include job vacancies and retail spending for March.
Gold was up 0.4 per cent at $US1,777.92 an ounce; Brent crude was down 0.8 per cent to $US66.50 a barrel; Iron ore was up 4.2 per cent to $US189.61 a tonne.

Meanwhile, the Australian dollar was buying 77.25 US cents at 7:00am, down from 77.56 this time Tuesday.

Asia

China shares edged lower on Tuesday as investors took profits following the previous day’s strong gains, but losses were limited after the country kept its benchmark lending rate steady, easing worries over policy tightening.

China kept its benchmark lending rate for corporate and household loans steady for the 12th straight month at its April fixing on Tuesday, matching market expectations.

At the close, the Shanghai Composite index was down 0.13 per cent at 3,472.94. The blue-chip CSI300 index was down 0.07 per cent after posting its best session in more than five weeks on Monday.

Chinese regulators are closely monitoring flows of foreign capital in and out of the country, government officials said on Monday, as overseas interest in Chinese equities grows.
At the close of trade, the Hang Seng index was up 29.58 points or 0.1 per cent at 29,135.73, its highest close since March 18. The Hang Seng China Enterprises index fell 0.06 per cent to 11,085.87.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.29 per cent, while Japan’s Nikkei index closed down 1.97 per cent.

Europe

European shares lost nearly 2 per cent on Tuesday, after hitting record highs a day earlier, as tobacco companies weighed on London stocks and many regional indexes edged off pre-pandemic highs.

British American Tobacco and Imperial Brands fell more than 7 per cent each following a report the Biden administration was considering requiring tobacco companies to lower the nicotine levels in all cigarettes sold in the United States.

Britain’s blue-chip FTSE 100 fell 2 per cent and logged its sharpest percentage decline in two months, while Germany’s DAX was down 1.6 per cent. Spain’s IBEX dropped 2.9 per cent for its worst session since December. The pan-regional STOXX 600 index dropped 1.9 per cent in its biggest one-day decline this year, accelerating losses after a lower opening on Wall Street.

All major indexes in Europe ended the day in the red. Travel & leisure, banks and insurers fell after strong gains this year.

Danske Bank lost 7.6 per cent after the United States and the Federal Retirement Thrift Investment Board filed a claim for compensation against the Danish bank and its former chief executive Thomas Borgen.

Austrian sensor specialist AMS slumped almost 13 per cent after traders cite a media report that the company has lost some Apple business.

North America

Stocks on Wall Street fell for a second straight day on Tuesday as a global spike in coronavirus cases hit travel-related shares and investors had second thoughts about big US banks’ apparently stellar earnings last week.

The Dow Jones Industrial Average fell 0.75 per cent to 33,821.3. The S&P 500 shed 0.68 per cent to 4,134.94 and the Nasdaq Composite dropped 0.92 per cent to 13,786.27.

Investors piled into defensive sectors considered relatively safe during times of economic uncertainty, lifting real estate, utilities, consumer staples and healthcare as financials and energy shares fell hard.
Shares of airline operators and cruiseliners including JetBlue Airways, American Airlines, Norwegian Cruise Line and Carnival Corp, which were hammered last year during lockdowns but have climbed recently on the reopening hopes, fell more than 4 per cent.

Some of the recent optimism about the leisure industry has waned as the reopening might take a bit longer than initially thought, said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

“We’re not out of the woods yet when it comes to the COVID virus and getting to where global economies are reopening,” he said. “Some of that enthusiasm has diminished.”

Boeing Co slid 4.1 per cent on the unexpected departure of its finance chief, the latest shock to hit the planemaker as it fights to recover from the pandemic and 737 MAX crisis.

With Reuters

is a reporter/data journalist for Morningstar. You can follow Lewis on Twitter @lewjackk

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