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Global Market Report - 26 June

Lex Hall  |  26 Jun 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are likely to start higher after Wall Street posted gains following easing of restrictions by regulators on US banks, boosting investor sentiment.

The Australian SPI 200 futures contract was up 70.0 points, or 1.21 per cent, to 5,835.0 at 8am Sydney time on Friday.

IG Markets analyst Kyle Rodda said while there would be gains, they would not recover all the losses from Thursday, when the ASX200 closed 2.48 per cent lower.

In the US, Wall Street's main indexes closed higher after bank stocks soared ahead of annual stress test results, offsetting investor jitters over increases in new coronavirus cases.

After the markets closed, the Federal Reserve ordered banks to cap dividends and and stop buybacks.

The virus' impact was still evident on the market. Stocks wobbled late in the session after Apple said it would close 14 stores in Florida again due to rising COVID-19 cases after re-closures in several other US states.

In Australia this morning, SkyCity Entertainment said it will re-open its Adelaide casino on Monday. The casino closed on 23 March following government orders on COVID-19.

The Australian share market on Thursday suffered its worst loss in two weeks due to rises in coronavirus cases in the US and Victoria.

The benchmark S&P/ASX200 benchmark index finished down 148 points, or 2.48 per cent, to 5,817.7, while the broader All Ordinaries index closed down 153.6 points, or 2.53 per cent, at 5,928.

The Australian dollar was buying 68.88 US cents at 8am, higher from 68.65 US cents at the close of trade on Thursday.

Asia

The China and Hong Kong stock market are closed for the Dragon Boat Festival.

Japanese stocks ended at a more than one-week low on Thursday, tracking losses on Wall Street, as rising coronavirus cases in the US and many other countries dented hopes of a quick global economic recovery.

The benchmark Nikkei average fell 1.2 per cent to 22,259.79, its lowest closing level since 15 June.

Europe

European stocks closed higher on Thursday, as improving economic data and more support from the European Central Bank helped lift sentiment, while shares in Germany’s Lufthansa jumped after a top shareholder backed a government bailout.

The pan-European STOXX 600 closed up 0.7 per cent after a choppy session with automakers, financial services, banks and insurers the top gainers, rising between 1.6 per cent and 2.4 per cent.

Stocks picked up steam after the ECB said it would offer euro loans against collateral to central banks outside the euro area to backstop funding markets amid the coronavirus pandemic.

Lufthansa jumped 7.1 per cent after billionaire investor Heinz Hermann Thiele dropped his objections to a 9 billion euro ($14.6 billion) government bailout of the airline.

Meanwhile, in a first for a constituent of Germany's prestigious DAX, payments firm Wirecard collapsed owing creditors almost $5.8 billion after disclosing a gaping hole in its books. Its shares slumped 71.3 per cent.

The auto-heavy German index gained 0.7 per cent overall, boosted by Daimler, Volkswagen and BMW.

After upbeat euro zone business activity readings for June earlier this week, a gauge of German consumer morale improved heading into July, raising hopes for a steady recovery from the coronavirus crisis.

However, surging COVID-19 cases in the US, prospects of a fresh EU-US trade tussle and a worrying forecast for the global economy put the STOXX 600 on track for weekly losses.

Budget airline easyJet was down 9.5 per cent after raising about 419 million pounds ($755 million) through a share placement to help bolster its finances.

Sanofi edged up 0.9 per cent after Reuters reported the drugmaker is considering cutting hundreds of jobs.

Bayer AG ended down 2.9 per cent, reversing earlier gains, after agreeing to pay as much as $10.9 billion to settle US lawsuits claiming that its widely used weedkiller Roundup caused cancer.

North America

Wall Street’s main indexes closed higher in choppy trading on Thursday, with bank stocks soaring ahead of annual stress test results and helping to offset investor jitters over alarming increases in new coronavirus cases.

The recently battered S&P 500 banks sub-index led the gainers for the session after US banking regulators eased rules and investors waited for results of the sector’s annual stress test, which helps determine dividend policies.

The bank index had fallen 19 percent from its recent high on 5 June to Wednesday’s lowest point. It closed up 3.6 per cent on Thursday.

But investors remained nervous throughout the day as the number of new virus cases in US states grew, especially in the West and South.

Texas Governor Greg Abbott said he was halting his state’s phased economic reopening in response to a jump in COVID-19 infections and hospitalisations.

And stocks wobbled temporarily late in the session after Apple Inc said it would close 14 stores in Florida again due to rising COVID-19 cases after other re-closures in Houston, Arizona, South Carolina, and North Carolina.

A flare-up in virus cases in recent days has taken some wind out of a Wall Street rally powered by hopes of a quick economic recovery and massive government stimulus efforts. However, the benchmark S&P 500 still closed less than 9 per cent below its 19 February record.

While bank stocks provided one of the biggest boosts on Thursday, Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, said investors were buying the dip after a pullback in stocks on Wednesday.

The Dow Jones Industrial Average rose 299.66 points, or 1.18 per cent, to 25,745.6, the S&P 500 gained 33.43 points, or 1.10 per cent, to 3,083.76 and the Nasdaq Composite added 107.84 points, or 1.09 per cent, to 10,017.00.

All the three major indexes had opened Thursday’s session lower after data showed the number of Americans filing claims for unemployment benefits fell less than expected last week. This is probably because hiring by reopening businesses is being partly offset by a second wave of layoffs.

But the S&P’s financial sector, up 2.7 per cent, stayed strong for the session and was the S&P’s top percentage gainer. Earlier, regulators had unveiled two rules easing restrictions covering large banks with complex trading and investment portfolios.

The Federal Reserve was due to release results of annual bank stress tests after the markets close, potentially indicating how much flexibility banks will have to return capital to shareholders.

The energy sector gained 1.9 per cent as oil prices rose 2 per cent on the day. Defensive utilities was the weakest S&P sector with a 1.2 per cent decline.

Walt Disney Co, down 0.63 per cent, pared losses but still closed down for the second day in a row after it delayed the reopening of theme parks due to the health crisis. A report also said it was considering postponing the 24 July release of “Mulan.”

Boeing Co fell 1 per cent as rival Airbus reached a crucial jetliner production target and smoothed recent industrial problems.

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