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Global Market Report - 01 September

Lewis Jackson  |  01 Sep 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to fall after Wall Street closed lower. All three indexes in New York held onto monthly gains.

The Australian SPI 200 futures contract was down 33 points or 0.4 per cent at 7,444 near 7.45 am Sydney time on Wednesday, suggesting a negative start to trading.

US stocks eased for the day but ended the month higher as major indexes wrapped up trading for August.

The S&P 500 lost 0.1%. The Dow Jones Industrial Average fell by about 0.1%. The technology-heavy Nasdaq Composite traded down less than 0.1%. All three indexes held onto monthly gains.

The S&P 500 was up about 2.9% for August, its seventh-consecutive monthly rise.

The Australian dollar was buying 73.12 US cents near 7.50am AEST, up from the previous close of 73.12. The WSJ Dollar Index, which measures the US dollar relative to 16 foreign currencies, fell to 87.32.

Locally, the S&P/ASX 200 closed 0.4% higher at 7534.9, led by rebounding tech and consumer stocks.

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The benchmark added to its week-opening 0.2% rise, with the tech sector adding 1.9%. Appen jumped 7.0%, recouping some of the 27% it lost over the prior three sessions, while NEXTDC rose 3.5% to reverse some of its losses last week and WiseTech Global rose 5.7%.

Retail giants Woolworths, Coles and Endeavour rose between 0.7% and 4.4% as a survey showed consumer confidence edging higher.

The financial and materials sectors, which together account for about 50% of the ASX 200 by market capitalization, both closed flat.

Fortescue Metals Group founder Andrew Forrest has talked up plans for turning the iron ore firm into a global leader in renewables and so-called green commodities but stockbroker Morgans has doubts.

"Besides simply having capital it can throw at it, FMG is moving into a space far outside its established core competencies, while the global energy supermajors it will compete against have an immediate knowledge and experience advantage, as well as deeper pockets," says Morgans.

Gold futures rose 0.3% to $US1818.10 an ounce; Brent crude was down 0.5% at $US71.59 a barrel; Iron ore was down 1.9% at $US153.67.

The yield on the Australian 10-year bond was down at 1.15 per cent; The yield on the US 10-year note rose to 1.303 per cent.

Asia

Chinese stocks ended the session mixed, as the market weakened slightly from an upturn since late last week.

The benchmark Shanghai Composite Index rose 0.4%, marking its third consecutive trading day of gains. The mining industry continued to outperform as hopes for higher metal prices persisted. But that was offset by weakness in consumer companies such as food and beverage retailers and cinema operators.

Hong Kong stocks ended higher for the second straight day, driven by sharp gains in the tech sector.

The benchmark Hang Seng Index rose 1.3% to settle at 25878.99. Meiuan was the index's top gainer, surging 9.0%, after the Chinese food delivery firm posted better-than-expected 2Q earnings. The upbeat sentiment spread to other Chinese tech firms, as Alibaba Health soared 7.0% and Alibaba rose 4.6%.

Japan's Nikkei Stock Average closed 1.1% higher, helped by gains in shipping and precision-instrument stocks. Coronavirus-related developments should remain in focus, following Japan's confirmation of a new type of Delta variant in the country.

Europe

London’s FTSE 100 was down 0.4% to 7119.70 on Wednesday. It is up 1.24% for the month.

The pan-European STOXX 50 index, which tracks the return of the largest listed companies across 19 European countries, closed Tuesday down 0.06% to 4196.41. It is up 2.62% this month.

North America

US stocks slipped Tuesday but posted gains for the month, buoyed by continued investor optimism even amid uncertainty surrounding the Delta variant of the coronavirus.

All three major US indexes logged strong advances for August, despite a largely quiet trading month. The S&P 500 finished the month up 2.9%, marking its largest monthly rise since April. That helped the benchmark index notch a seventh consecutive month of gains—its longest winning streak since January 2018, when the index rose for 10 straight months.

The Dow Jones Industrial Average also finished the month higher, gaining 1.2% for August and notching its second consecutive monthly gain. The Nasdaq Composite added 4% for August, its third consecutive monthly win.

Stocks spent most of August largely drifting higher, lifted by strong second-quarter earnings results and thin trading volumes. Throughout the month, all three indexes notched multiple records. Most recently, investors emerged with fresh optimism after Federal Reserve Chairman Jerome Powell emphasized again that the central bank shouldn't overreact to this year's inflation surge.

Concerns about pricing pressures have percolated throughout the market for much of this year, as prices of items ranging from used cars to lumber have surged. But Mr. Powell, speaking Friday, argued that signs of inflation still appear likely to reverse on their own. He also reaffirmed the Fed's emerging plan to begin scaling back the central bank's bond buying later this year, emphasizing that officials have set a "different and substantially more stringent test" for raising rates than they have for the "coming reduction in asset purchases."

"The fact that the Fed is willing to start to taper in the face of this Delta variant coming through does suggest they have confidence that the economy is going to stand on its own two feet," said Peter Langas, chief portfolio strategist at Bessemer Trust.

For the Tuesday session, the S&P 500 fell 6.11 points, or 0.1%, to finish at 4522.68. The Dow lost 39.11 points, or 0.1%, to end at 35360.73. The Nasdaq Composite edged down 6.65 points, or less than 0.1%, to 15259.24. All three indexes are hovering within striking distance of their August records.

In the days and weeks ahead, investors will be monitoring rising coronavirus cases and hospitalizations due to the highly contagious Delta variant. Money managers say the variant presents a potential headwind for stocks, particularly if consumer spending retreats or if new restrictions that could weigh on the economic recovery are imposed. Fresh data from The Conference Board Tuesday showed that consumer confidence in the US deteriorated in August, retreating to its lowest level since February.

"You have seen people canceling vacations or not going out to restaurants" due to the Delta variant, said Mr. Langas. "There is this concern on the margin that we are seeing people pull back a bit. All of that comes into play in regards to where consumer confidence is going in the short term," he said.

Later this week, investors will be parsing the latest jobs report to better understand the state of the labor-market recovery. A survey compiled by The Wall Street Journal shows that economists expect employers in August to have added 720,000 jobs. Nonfarm payrolls rose by a seasonally adjusted 943,000 in July, marking the best gain in 11 months.

Among the S&P 500's 11 sectors, only four -- the real estate, consumer discretionary, consumer staples and communication services groups -- traded higher Tuesday. Shares of many technology companies pulled back, one day after the group helped power the market higher. Chip-makers including NXP Semiconductors NV, Nvidia and Advanced Micro Devices fell. Apple lost $1.29, or 0.8%, to end at $151.83.

Zoom Video Communications tumbled by $58, or 17%, to close at $289.50, its largest percentage decrease since November after the video conferencing company's adjusted earnings guidance came in lower-than-expected. Though on Monday the company reported that its second-quarter revenue surpassed $1 billion for the first time, Zoom officials said some metrics boosted by the pandemic had begun to normalize.

Robinhood Markets ticked up 68 cents, or 1.6%, to $44.32. On Monday, the stock tumbled after Securities and Exchange Commission Chairman Gary Gensler signaled he was open to banning payment for order flow, a practice that accounts for most of the company's revenues.

is a reporter and data journalist with Morningstar. Tweet him @lewjackk or get in touch via email

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