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Global Market Report - 04 May

Lewis Jackson  |  04 May 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are poised to open higher, lifted by overseas gains and on expectations that the RBA will not announce any changes after its policy meeting today.

The Australian SPI 200 futures contract was up 11 points or 0.4 per cent to 7015 near 6.15am Sydney time on Tuesday, suggesting a positive start to trading.

The S&P 500 and the Dow indexes ended higher on Monday amid a largely upbeat earnings season, while the Nasdaq came under pressure from declines in some high-flying growth stocks, as the rotation into cyclical and “economy reopening” stocks continued.

The Dow Jones Industrial Average rose 0.7 per cent to close at 34,113.23 points, while the S&P 500 gained 0.27 per cent to 4,192.66. The Nasdaq Composite dropped 0.48 per cent, to 13,895.12.

Locally, Westpac's rebound in earnings has made investors optimistic that other banks due to report this week will produce a similar bounce from the COVID doldrums.

Westpac on Monday reported first-half cash earnings more than trebled to $3.5 billion. Shares closed higher by five per cent to $26.23.

The benchmark S&P/ASX200 index closed Monday higher by just three points, or 0.04 per cent, to 7028.8.

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The All Ordinaries closed down by 3.9 points, or 0.05 per cent, to 7286.8 points.

Information technology shares lost 1.94 per cent and there were losses of more than one per cent for energy and materials, but the weight of financial shares kept the market stable.

ANZ will give its first-half earnings on Wednesday, while NAB is due Thursday.
The Commonwealth will give a third-quarter update next week.

Meanwhile the federal government gave Australians over 50 access to coronavirus vaccines through general practice respiratory clinics and vaccination hubs.

Elsewhere on the ASX, Premier Investments will pay back $15.6 million in JobKeeper wage subsidies after a surprising shift on the taxpayer funds.

Seven West Media said Google and Facebook had agreed to publishing deals.

Miners disappointed. BHP dropped 1.4 per cent to $47.03, Fortescue shed 0.49 per cent to $22.48 and Rio Tinto lost 0.87 per cent to $120.09.

On Tuesday, the Reserve Bank of Australia will hold its monthly board meeting.

The board is expected to keep the cash rate, and other key measures, at a record low 0.1 per cent.

Gold was up 1.3 per cent at $US1791.57 an ounce; Brent crude was up 1.2 per cent to $US67.56 a barrel; Iron ore was flat at $US188.85 a tonne.

Meanwhile, the Australian dollar was buying 77.61 US cents around 7:00am, up from 77.16 this time Monday.

Asia

Hong Kong stocks fell on Monday, due to profit-booking after a recent rally in subdued trading as the Chinese markets were closed for holidays, while rising COVID-19 cases in the region raised concerns of more measures and deeper economic pain.

China’s stock and bond markets, as well as its foreign exchange and commodity futures markets are closed on May 1-5 for the Labour Day holiday.

“Investors were not even interested in hunting for bargain when markets like Japan and China were on holiday,” said Steven Leung, a sales director at UOB Kay Hian, adding, concern over further measures from China’s regulators aiming at new economy stocks also kept investors away.

The Hang Seng index closed down 367.34 points, or 1.28 per cent, at 28,357.54, its lowest closing since March 29. The Hang Seng China Enterprises index fell 1.04 per cent to 10,713.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.73 per cent.

Europe

European stocks ended higher on Monday after the European Commission outlined plans to loosen COVID-19 restrictions on tourism, while strong factory and retails sales data and a robust corporate earnings season added to the optimism.

The euro zone stocks index, which consists of markets in continental Europe, ended 0.6 per cent higher, while the pan-European STOXX 600 index added 0.6 per cent.

European travel and leisure stocks rose 0.2 per cent after the European Commission recommended letting foreign travellers from more countries enter the bloc, hoping to boost the stricken tourism industry this summer.

Bourses in Italy, Germany and Spain marked strong gains after a survey showed euro zone factory activity growth reached a record high last month, while German retail sales posted their biggest year-on-year increase in March since the start of the COVID-19 pandemic.

German airlines Lufthansa rose 2.6 per cent following plans to offer flights to more than 100 holiday destination, Chief Executive Carsten Spohr told a German newspaper.

North America

The S&P 500 and the Dow indexes ended higher on Monday amid a largely upbeat earnings season, while the Nasdaq came under pressure from declines in some high-flying growth stocks, as the rotation into cyclical and “economy reopening” stocks continued.

The Dow Jones Industrial Average rose 0.7 per cent to close at 34,113.23 points, while the S&P 500 gained 0.27 per cent to 4,192.66. The Nasdaq Composite dropped 0.48 per cent, to 13,895.12.

Economy-sensitive cyclical S&P 500 sectors such as consumer staples, energy, and materials outperformed sectors housing growth stocks, including technology and communication services.

The largest percentage gainer on the S&P 500 was oil field services firm Baker Hughes, which rose 8 per cent. Apparel retailers also finished strong, with Gap Inc shares jumping 7.1 per cent and Foot Locker Inc up 4.1 per cent.

The Nasdaq index fell as megacap technology stocks, including Amazon.com Inc, Alphabet Inc, Facebook Inc and Microsoft Corp, traded lower despite largely upbeat results.

The stocks have struggled to maintain the upward trajectory coming into reporting season.

With more than half of S&P 500 companies having reported so far, profits are now seen rising 46 per cent in the first quarter, compared with forecasts of 24 per cent growth at the start of April, according to IBES data from Refinitiv. About 87 per cent of the companies have come also reported earnings per share ahead of analysts’ estimates.

US manufacturing activity grew at a slower pace in April, likely constrained by shortages of inputs amid pent-up demand due to rising vaccinations and massive fiscal stimulus.

The Labor Department’s non-farm payrolls data, slated to be released on Friday, is expected to show a rise in job additions in April.

T-Mobile, Uber, Lyft, Square, Peloton and Pfizer are poised to report results later this week.

With Reuters

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

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