Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

Global Market Report - 7 September

Lex Hall  |  07 Sep 2020Text size  Decrease  Increase  |  
Email to Friend

Australia

Australian shares are set to open the week lower as US tech stocks extended their losses on Friday.

The Australian SPI 200 futures contract was down 36 points, or 0.61 per cent, to 5,875 points at 8.30am Sydney time on Monday, suggesting a negative start to trading.

The Nasdaq closed lower on Friday though well above its session low as selling eased late in the day after investors dumped heavyweight technology stocks due to concerns about high valuations and a patchy economic recovery.

The Dow Jones Industrial Average fell 159.42 points, or 0.56 per cent, to close at 28,133.31, the S&P 500 lost 28.1 points, or 0.81 per cent, to 3,426.96 and the Nasdaq Composite dropped 144.97 points, or 1.27 per cent, to 11,313.13.

On Friday last week, Australia's share market had its worst session since 1 May, and all sectors were punished, as investors followed a big sell-off of technology stocks in the US.

The S&P/ASX200 benchmark index closed lower by 187.1 points, or 3.06 per cent, at 5,925.5 points on Friday. The drop is the steepest since a 5.01 per cent decline on May 1. The loss also meant the index finished lower by 2.44 per cent for the week. The All Ordinaries index closed down by 192.2 points, or 3.05 per cent, to 6,108.8.

CSL says it has signed a heads of agreement with the Australian government for the supply of 51 million doses of the University of Queensland’s COVID-19 vaccine candidate.

US markets will be closed on Monday for Labor Day.

Gold was up 0.2 per cent to $US1,933.94 an ounce; Brent oil was down 3.2 per cent to $US42.66 a barrel; Iron ore was down 0.9 per cent to $US128.80 a tonne.

Meanwhile, the Australian dollar was buying 72.77 US cents at 8.30am, up from 72.68 US cents at Friday’s close.

Asia

China stocks closed lower on Friday after a sharp overnight selloff in Wall Street, with the benchmark Shanghai index posting a weekly loss after a five-week winning streak.

The blue-chip CSI300 index fell 1.0 per cent to 4,770.22, while the Shanghai Composite Index ended 0.9 per cent lower at 3,355.37.

Hong Kong stocks dropped on Friday, following Wall Street's overnight selloff, and posted their steepest weekly fall in more than three months.

At the close of trade, the Hang Seng index was down 312.15 points or 1.25 per cent at 24,695.45. The Hang Seng China Enterprises index fell 0.56 per cent to 9,883.98.

Japanese shares closed lower on Friday, after a sell-off in high-flying US technology stocks pushed Wall Street to its steepest fall in nearly three months, although for the week, Tokyo markets ended in the green.

The benchmark Nikkei share average closed down 1.11 per cent at 23,205.43, away from a more than six-month closing high it hit on Thursday.

Europe

European shares ended lower in a wild trading session on Friday as technology stocks tracked losses on Wall Street, while merger talks between two major Spanish lenders lifted the banking index.

The pan-European STOXX 600 index settled 1.1 per cent lower after flitting between gains and losses, while also shedding about 1.9 per cent for the week on a two-day technology rout.

Wall Street indexes plummeted on losses in the technology sector, which retreated sharply from record highs after leading the rebound from pandemic-driven lows.

The European technology sector fell 2.7 per cent to end at a one-month low, underperforming its peers for the week with a 4.1 per cent drop.

German software developer Nemetschek bottomed out the STOXX 600, shedding 9.4 per cent.

On the other hand, Bankia and Caixabank marked double-digit gains after both Spanish banks said they were considering a merger to create the biggest lender in the country.

Caixabank was among the top percentage gainers in the banking index and the STOXX 600.

Basic resource stocks were also among the few gainers for the day, tracking a rise in base metal prices and an expected uptrend in Chinese demand.

The STOXX 600 has stayed well within a trading range seen since June, as a euro zone economic recovery appeared to be running out of steam.

A batch of middling economic data this week bolstered expectations that the ECB would maintain an accommodative stance to support inflation, in line with the US Federal Reserve.

With European interest rates in negative territory, the ECB has undertaken massive bond-buying programs this year to boost liquidity through the coronavirus crisis.

Real estate stocks sank 3.5 per cent, led by Germany’s Vonovia after it announced a 1 billion euro ($1.63 billion) capital raise.

Curevac rose 3.4 per cent after the German biotech firm won nearly $412 million in government funding to speed up work on its prototype covid-19 vaccine and build capacity to produce it at scale.

North America

The major indexes regained some ground in late afternoon though trading was still volatile.

At its lowest point of the day the tech-heavy Nasdaq fell as much as 9.9 per cent from its record high reached on Wednesday and the S&P 500 dipped briefly below its pre-crisis record, reached in February, although it too closed well off session lows.

Mega-cap companies such as Apple Inc, Microsoft Inc, Amazon.com Inc and Facebook Inc also pared losses though of that group only Apple managed a very tiny gain for the day.

“You had a significant sell-off on Thursday, some follow-through in the morning and then we stabilised. The selling was pretty fierce,” said Michael Antonelli, market strategist at Baird in Milwaukee.

“Corrections like this have been quick and severe lately. We don’t know if it's over,” he said. “The fact we stabilised today could be a good sign.”

While Thursday’s sell-off already reflected investor fears that valuations for the Nasdaq high-flyers had overheated, the worries were exacerbated on Friday by the Financial Times and others reporting that options trading by Japan’s Softbank had inflated these stocks.

“We’ve started to see signs of weakness in the last few days, notably yesterday. Then you get a headline like the FT story. That really adds fuel to the fire on the downside,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab in Boston.

The Nasdaq had powered the stock market’s stellar recovery from the coronavirus-led crash, climbing as much as 82 per cent from March lows. The benchmark S&P 500 and Dow had surged about 60 per cent from their troughs.

Earlier on Friday, the Labor Department’s closely watched employment report showed the jobless rate improved to 8.4 per cent from 10.2 per cent in July, better than analysts had anticipated. Nonfarm payrolls, however, increased less than expected last month.

Kleintop argued that the jobs news did little to help the progress of stalled talks for a fresh coronavirus stimulus package among sharply divided lawmakers in Washington.

“It wasn’t wonderful enough to get the market excited enough that we don’t need any more stimulus. On the other hand it wasn’t weak enough to bring the two sides in Washington together to extend that stimulus package,” he said.

The communication services, consumer discretionary and technology indexes posted Friday’s steepest percentage declines among the 11 major S&P sectors.

Only three S&P sectors ended the day higher including financials which was powered by a 2.2 per cent gain in its bank subsector index.

Also, the S&P 1500 airlines sub index rose 1.85 per cent for the day.

For the week the S&P 500 fell 2.31 per cent after five consecutive weeks of gains. The Dow dropped 1.82 per cent for the week and the Nasdaq lost 3.27 per cent for the week and clocked its biggest two-day drop since March 17 between Thursday and Friday.

Some fund managers have warned that the declines could be a preview of a rocky two months ahead of the November 3 presidential election as institutional investors return from summer vacations and also refocus on potential economic pitfalls.

Wall Street’s fear gauge, after hitting a more than 11-week high in late morning trading, ended the day lower.

Broadcom Inc gained 3 per cent after the Apple Inc supplier forecast fourth-quarter revenue above analysts’ estimates.

is content editor for Morningstar Australia

AAP logo

© 2020 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

Email To Friend