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Global Market Report - 08 July

Lewis Jackson  |  08 Jul 2021Text size  Decrease  Increase  |  
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The ASX is set to edge open as Wall Street closed up. Bond yields fell on the release of the US Federal Reserve’s June minutes with markets comfortable about stimulus and inflation.

The Australian SPI 200 futures contract was up 11 points or 0.15 per cent at 7,256 near 7.25 am Sydney time on Thursday.

US stocks have ended higher after minutes from the last Federal Reserve meeting showed officials were divided on economic signals.

The Dow Jones Industrial Average rose 104.42 points, or 0.3 per cent, to 34,681.79, the S&P 500 gained 14.81 points, or 0.34 per cent, to 4,358.35 and the Nasdaq Composite added 1.42 points, or 0.01 per cent, to 14,665.06.

The Australian dollar was buying 74.83 US cents near 7.45am AEST, down from 74.97 at Wednesday’s close.

Locally, investors enjoyed the biggest gains on the ASX in more than two weeks before further clues tonight on whether the US Federal Reserve might pare back its support for the economy.

Information technology and consumer staples shares were the standouts, up 2.82 per cent and 1.86 per cent respectively.

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Afterpay climbed 4.55 per cent to $120.01.

In consumer staples, Woolworths improved by 1.94 per cent to $37.89.

The benchmark S&P/ASX200 index closed up 65.1 points, or 0.9 per cent, to 7326.9 on Wednesday.

The index was about 60 points from its record close.

The All Ordinaries closed higher by 67.9 points, or 0.9 per cent, to 7599.3.

The ASX more than recovered its losses from Tuesday. Investors sold shares after the Reserve Bank began easing its support for Australia's strong economic recovery.

Yet Burman Invest chief investment officer Julia Lee still found plenty to like about the central bank's revised approach.

She said the tapering of support was relatively mild, and noted commitments to keep the record low cash rate of 0.1 per cent remained.

Some analysts highlighted the RBA reducing its bond buying from $5 billion per week to $4 billion per week from September to November.

Yet Ms Lee said this was also an extension.

"We are still looking at a stimulatory environment for the market," she said.

In the US tonight, investors will look to the minutes of the Federal Reserve's June meeting for clarity on similar policy.

The US economy's resurgence from the pandemic has pushed inflation higher, and investors want to know when rates might rise.

US markets provided little clear direction to ASX investors on Wednesday.

The Nasdaq closed higher while the S&P 500 and Dow Jones closed lower.

Domestically, the coronavirus lockdown for Sydney and surrounds has been extended to a third week.

Health officials reported 27 new COVID-19 infections across the state.

Travel to and from Sydney remain restricted.

On the ASX, energy shares were down 1.91 per cent after oil producers cancelled talks about supply.

Differences between Saudi Arabia, the biggest OPEC producer, and the United Arab Emirates were the main reason.

The breakdown of talks initially sent oil prices higher.

However some analysts said major exporters may supply more oil to gain market share.

Oil Search was among the hardest hit. Its shares dropped 2.45 per cent to $3.98.

Beach shed 2.31 per cent to $1.27.

Shares in investment firm Challenger climbed 8.78 per cent to $5.95 after US retirement services provider Athene bought a 15 per cent stake.

Athene is paying $720 million to Caledonia Investments for the stake.

The big four banks were all higher.

The Commonwealth fared best and rose 1.11 per cent to $99.71.

BetMakers Technology Group, which was until recently pursuing Tabcorp's wagering arm, will stream British and Irish horseracing to Australia.

The company will provide the vision to bookmakers across Australia following the deal with Sports Information Services and Racecourse Media Group.

Shares were up 4.52 per cent to $1.15.

In mining, Fortescue was best of the big iron ore miners and gained 0.81 per cent to $23.55.
Its wider category of materials shares rose about half a per cent.

Buy now, pay later provider Splitit will offer its service to shoppers in store at participating retailers.

Splitit, which is aimed at larger value purchases, will provide the service from August.

Shoppers will be able to use ApplePay and GooglePay with Splitit InStore.

Shares were higher by 1.71 per cent to 59 cents.

Spot Gold was up 0.5 per cent at $US1806.47 an ounce; Brent crude was down 1.4 per cent at $US73.48 a barrel, Iron ore was flat at $US222.39 a tonne.

The yield on the Australian 10-year bond closed at 1.39 per cent.


At the close, China's Shanghai Composite index was up 0.66 per cent at 3,553.72.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed down 0.40 per cent at 27,960.62

Japan's Nikkei 225 Index was down 0.96 per cent at 28,366.95.


The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 0.78 per cent at 459.53.

The German DAX rose 1.17 per cent to 15,692.71.

North America

US stocks have ended higher after minutes from the last Federal Reserve meeting showed officials were divided on economic signals.

The Dow Jones Industrial Average rose 104.42 points, or 0.3 per cent, to 34,681.79, the S&P 500 gained 14.81 points, or 0.34 per cent, to 4,358.35 and the Nasdaq Composite added 1.42 points, or 0.01 per cent, to 14,665.06.

According to minutes of the US central bank's June policy meeting, Fed officials felt substantial further progress on the economic recovery "was generally seen as not having yet been met" but agreed they should be poised to act if inflation or other risks materialised.

"I read this as effectively a dovish set of notes simply because they don't feel as a group that they have enough certainty around the situation to make any changes at all," said Brad McMillan, chief investment officer at Commonwealth Financial Network in Waltham, Massachusetts.

Wall Street has been concerned about inflation, with investors moving between economy-linked value stocks and growth names in the past few sessions.

Industrials led S&P 500 sector gains on Wednesday.

China's market regulator said it has fined a number of internet companies including Didi Global, Tencent and Alibaba for failing to report earlier merger and acquisition deals for approval.

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

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