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Global Market Report - 27 April

Lewis Jackson  |  27 Apr 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to edge modestly higher, while the currency surged amid continuing strength in copper and iron ore.

The Australian SPI 200 futures contract was up 6 points or 0.1 per cent to 7,026 at 7am Sydney time on Tuesday, suggesting a positive start to trading.

The S&P 500 and Nasdaq closed at record highs on Monday, fueled by Tesla Inc and other heavyweight growth stocks ahead of a deluge of earnings reports this week.

The Dow Jones Industrial Average fell 0.18% to end at 33,981.57 points, while the S&P 500 gained 0.18 per cent to 4,187.62. The Nasdaq Composite climbed 0.87 per cent to 14,138.78.

Locally, many investors enjoyed a holiday on Monday and Australia's share market eased too, while the surging price of iron ore has analysts wondering about the implications for the Aussie dollar.

The benchmark S&P/ASX200 index closed lower by 15.1 points, or 0.21 per cent, to 7,045.6.

Shares in utilities and consumer staples had the biggest falls and dropped almost one per cent.

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Materials shares had the only gains of note, up 0.36 per cent.

The Aussie dollar climbed within the US 77 cents range, but not as much as some expected.

Westpac senior currency strategist Sean Callow said the Aussie dollar had been flat despite the US dollar falling against major currencies.

He said the Aussie's underperformance seemed at odds with iron ore prices being at 10-year highs.

There was relief in Perth and the neighbouring Peel region as the McGowan government decided not to extend the three-day coronavirus lockdown, due to end tonight.

Damage remained for travel companies, however. Corporate Travel Management shed 3.3 per cent to $19.62. Qantas lost 1.2 per cent to $4.93.

Health insurer NIB jumped 10.2 per cent to $5.94 after investors liked its full-year guidance.

Mining giant Fortescue jumped 4.8 per cent to $22.70 as the iron ore price rose to $185 per tonne.

Coles and Woolworths are due to give third quarter sales reports this week, which could show less panic-buying as Australia better controlled the coronavirus.

Gold was up 0.2 per cent at $US1,780.29 an ounce; Brent crude was down 0.7 per cent to $US65.67 a barrel; Iron ore was up 3.9 per cent to $US193.58 a tonne.

Meanwhile, the Australian dollar was buying 78.00 US cents at 7:00am, up from 77.39 this time Monday.

Asia

China stocks reversed earlier gains to end lower on Monday, as investors pocketed profits following a recent strong rally.

The blue-chip CSI300 index closed down 1.1 per cent at 5,077.24, while the Shanghai Composite Index declined 1 per cent to 3,441.17.

Caution also prevailed as market participants awaited the politburo meeting, the top decision-making body of China’s ruling Communist Party, for comments and guidance on policy deliberations.

Ahead of the meeting at end-April, investors need to focus on the defensive side by sticking to stocks with solid growth and reasonable valuations, Shanghai Securities said in a report.

At the close of trade, the Hang Seng index was down 125.92 points, or 0.43 per cent, at 28,952.83. The Hang Seng China Enterprises index fell 0.78 per cent to 10,981.31.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.45 per cent, while Japan’s Nikkei index closed up 0.36 per cent.

Europe

European stocks ended higher on Monday as strong metals prices boosted miners, while a rise in bond yields supported shares of major banks amid optimism the worst of the COVID-19 pandemic had passed.

The pan-European STOXX 600 index ended 0.3 per cent higher after its first weekly loss in eight last week. Basic resources stocks were among the best performers for the day, rising 1.9 per cent to a 10-year closing high.

The sector was supported by Shanghai copper prices hitting 10-year highs, with prices of other metals also rising as vaccination programmes across major industrial hubs pointed to a recovery in demand.

Travel and leisure stocks rose 1.8 per cent to a record closing high after a top European Union official said Americans who have been vaccinated against COVID-19 should be able to travel to Europe by summer.

Volkswagen AG slipped 2.1 per cent after the Financial Times reported the company had warned managers to prepare for a bigger production hit in the second quarter due to a global chip shortage.

North America

The S&P 500 and Nasdaq closed at record highs on Monday, fueled by Tesla Inc and other heavyweight growth stocks ahead of a deluge of earnings reports this week.

The Dow Jones Industrial Average fell 0.18 per cent to end at 33,981.57 points, while the S&P 500 gained 0.18 per cent to 4,187.62. The Nasdaq Composite climbed 0.87 per cent to 14,138.78.

The Nasdaq’s record high close confirmed the end of an 11 per cent correction in the index that began after its previous record high close on Feb. 12, with the index closing at a low on March 8.

Companies that constitute about 40 per cent of the S&P 500’s market capitalization report from Tuesday through Thursday, including Microsoft Corp, Google parent Alphabet Inc, Apple Inc and Facebook Inc. Shares of those companies also rose.

Investors will monitor a two-day Federal Reserve meeting beginning Tuesday, with the US central bank expected to shine some light on whether the employment landscape has affected its plan to leave interest rates near zero for an extended time and to continue buying $120 billion in bonds each month.

Also on investors’ radar is a reading of first-quarter gross domestic product later this week to gauge the pace of economic recovery in the United States.

Market participants are also watching out for any fresh developments on US President Joe Biden’s tax plan after reports last week said he would seek to nearly double the capital gains tax to 39.6 per cent for wealthy individuals.

Cryptocurrency and blockchain-related firms, including Riot Blockchain and Marathon Patent Group, surged more than 5 per cent as bitcoin snapped five straight days of losses.

With Reuters

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

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