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Global Market Report - 21 May

Lex Hall  |  21 May 2020Text size  Decrease  Increase  |  
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Australia

The Australian share market is set to rise in early trade after US investors continued to look to a swift recovery from the coronavirus pandemic.

The SPI 200 futures contract was higher by 36 points, or 0.65 per cent, to 5,604.0 at 8am Sydney time on Thursday.

The three major Wall Street indices finished higher overnight as investors bet on a swift economic recovery from coronavirus-driven lockdowns and the potential for more stimulus measures from the Federal Reserve.

The Dow Jones Industrial Average rose 1.52 per cent to end at 24,575.9 points, while the S&P 500 gained 1.67 per cent, to 2,971.61. The Nasdaq Composite climbed 2.08 per cent to 9,375.78.

In Australia on Thursday, the heads of APRA, ASIC and the Reserve Bank will discuss their COVID-19 response in an online forum held by the Financial Services Institute of Australasia.

The S&P/ASX200 benchmark index finished Wednesday up 13.5 points, or 0.24 per cent, at 5,573 points. The All Ordinaries index gained 21.3 points, or 0.38 per cent, to 5,680.1.

The Australian dollar was buying 65.96 US cents at 8am, up from 65.43 US cents at the close of trade on Wednesday.

Asia

China shares closed down on Wednesday as cautious investors held back, waiting to hear the government’s economic plans to be made during the country’s annual political meetings.

At the close, the Shanghai Composite index was down 0.51 per cent at 2,883.74.

At the close of trade, the Hang Seng index was up 11.82 points or 0.05 per cent at 24,399.95. The Hang Seng China Enterprises index rose 0.15 per cent to 9,898.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.09 per cent, while Japan’s Nikkei index closed up 0.79 per cent.

Europe

European shares swung higher on Wednesday as hopes of a rebound from a coronavirus-led economic slump charged Wall Street and technology stocks rose on both sides of the Atlantic.

The pan-European STOXX 600 finished 1 per cent higher after falling as much as 0.8 per cent at the open. The euro zone's leading stocks index gained 1.4 per cent.

An upbeat start for Wall Street after record gains for Facebook and Amazon.com sent European stocks to their strongest close in three weeks.

Technology stocks led the European gains with a 2.2 per cent jump, while chemicals and oil & gas rose 1.7 per cent each, helping reverse early losses on recurrent doubts over a potential coronavirus vaccine.

Another boost to the STOXX 600 was AstraZeneca, which gained 2.4 per cent after US regulators approved Merck and its Lynparza as a prostate cancer treatment.

British retailer Marks & Spencer jumped 10.8 per cent after saying it would accelerate its latest turnaround programme.

A stock market recovery from March lows has stalled, with the STOXX 600 up 0.8 per cent this month after a 6 per cent jump in April.

European markets have cheered a Franco-German proposal for a 500 billion-euro Recovery Fund that would bind all 27 European Union states to raise debt jointly to offer grants to regions hit hardest.

However, Austrian Chancellor Sebastian Kurz said on Tuesday a group of EU states will propose loans, not grants.

The world’s biggest credit data company Experian gained 7.4 per cent as it said its executive directors would take a 25 per cent salary cut for six months and forecast first-quarter organic revenue to decline by 5 per cent to 10 per cent.

German business software group SAP rose 2 per cent after a company executive said it expects to stick to its dividend policy.

North America

The three major averages on Wall Street notched their fourth gain in five sessions on Wednesday as investors again bet on a swift economic recovery from coronavirus-driven lockdowns and the potential for more stimulus measures from the Federal Reserve.

The S&P 500 stands at a two-month high and was briefly above its 100-day moving average, a closely watched technical indicator that has acted as a resistance level. The Nasdaq finished at its highest close in three months and was 4.5 per cent below its 19 February record close, as shares of Facebook and Amazon.com Inc surged to all-time highs.

Gains were broad-based, with each of the 11 major S&P sectors turning higher. The small-cap Russell 2000 index, which usually leads gains out of a recession, outperformed the large-cap indexes.

Minutes from the Federal Reserve’s most recent policy meeting showed the central bank pledged to act as appropriate to support the economy until it is on track to recovery, a sentiment that Fed Chair Jerome Powell has voiced in recent days.

Still, with economic data likely to be dismal in the coming weeks, there is concern that stocks may have gotten ahead of themselves, with the S&P up nearly 33 per cent from its March 23 closing low.

The Dow Jones Industrial Average rose 369.04 points, or 1.52 per cent, to 24,575.9, the S&P 500 gained 48.67 points, or 1.67 per cent, to 2,971.61 and the Nasdaq Composite added 190.67 points, or 2.08 per cent, to 9,375.78.

Lawmakers in the US House of Representatives plan to vote next week on giving small businesses more time to utilise their coronavirus aid under the Paycheck Protection Program, House Speaker Nancy Pelosi said on Wednesday.

As states across the country begin to loosen restrictions, hopes for an economic rebound have grown. The NYSE Arca airlines index jumped 5.35 per cent as Delta Air Lines’s chief executive officer said he was confident travel will return in the next 12 to 18 months.

Target Corp shares declined 2.87 per cent after the big box retailer reported a 64 per cent plunge in quarterly profit, as costs related to the coronavirus outbreak outweighed a surge in online sales.

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