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Global Market Report - 08 November

Lewis Jackson  |  08 Nov 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to rise after strong US jobs data helped Wall Street higher.

The Australian SPI 200 futures contract was up 22 points or 0.3 per cent higher at 7,459 near 8.00 am AEST on Monday, suggesting a positive start to trading.

US stocks rose to fresh highs Friday and posted weekly gains after Labor Department data showed job growth rebounded in October following a summer slowdown.

The S&P 500 rose 0.4% and added 2% for the week. The Dow Jones Industrial Average climbed 0.6%. The Nasdaq Composite gained 0.2% and added 3.1% for the week -- its best weekly performance since April.

Stocks have climbed to a series of records in recent weeks, bolstered by solid economic data and earnings reports from the biggest US companies. About 82% of S&P 500 companies that have reported results this earnings season have topped analysts' earnings forecasts, according to FactSet data.

The Australian dollar was buying 73.98 US cents near 8.00am AEST, down from the previous close of 74.00. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, fell to 88.51.

Locally, the S&P/ASX 200 closed 0.4% higher at 7456.9. Only the energy and tech sectors lost ground as the benchmark built on momentum from the US, where the S&P 500 and Nasdaq Composite closed at records.

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Gold miners led the materials sector higher; retail stocks were also strong.

Afterpay weighed on the tech sector, falling 5.5% after a UBS survey indicated potential trouble for the buy-now-pay-later provider if it has to abolish its ban on merchant surcharging.

The investment bank says its annual survey of Australian BNPL users suggests that 71% of Afterpay customers wouldn't use the service if they are charged a 4% transaction fee, which merchants currently absorb.

The ASX 200 gained 1.8% for the week.

Gold futures rose 1.3% to $US1816.80 an ounce; Brent crude rose 2.7% to $US82.74 a barrel; Iron ore was down 7% US$93.14.

The yield on the Australian 10-year bond slipped to 1.80%; The US 10-year Treasury note fell to 1.45.

Asia

Chinese stocks ended the session lower, as market concerns began to re-emerge over the financial health of the country's real-estate sector. The benchmark Shanghai Composite Index fell 1.0%, while the Shenzhen Composite Index shed 0.8%.

Hong Kong shares resumed their downtrend after yesterday's recovery from seven straight sessions of losses. HSBC slipped 3.6%, following the Bank of England's decision not to raise interest rates. Among tech stocks, Alibaba Group declined 3.4%, Meituan retreated 3.2% and Tencent Holdings was 2.8% lower. A selloff in Chinese developers continued. The Hang Seng Index fell 1.4%.

The Nikkei Stock Average ends 0.6% lower, amid concerns over chip shortages and higher raw-material costs. Steel and shipping stocks led the losses.

Europe

European stocks close higher as investors cheer stronger-than-expected US jobs data and positive trial results for Pfizer's Covid-19 treatment. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies, rose 0.1%.

In London, the FTSE 100 closed 0.35% higher hitting a fresh 2021 high as investors backtracked on defensive moves made when interest rates were expected to rise.

North America

US stocks rose to fresh highs Friday and posted weekly gains after Labour Department data showed job growth rebounded in October following a summer slowdown.

The S&P 500 rose 0.4% and added 2% for the week. The Dow Jones Industrial Average climbed 0.6%. The Nasdaq Composite gained 0.2% and added 3.1% for the week -- its best weekly performance since April.

Stocks have climbed to a series of records in recent weeks, bolstered by solid economic data and earnings reports from the biggest US companies. About 82% of S&P 500 companies that have reported results this earnings season have topped analysts' earnings forecasts, according to FactSet data.

Data on the labour market have also been reassuring to investors. Friday's employment report showed the US economy added 531,000 jobs in October, more than the 450,000 jobs that economists surveyed by The Wall Street Journal had expected to see. Meanwhile, the unemployment rate fell to 4.6% from 4.8% in September.

Friday's jobs report showed the labour market is solid enough for the Fed to justify tapering its monthly asset purchases, said Jay Pestrichelli, CEO of investment firm ZEGA Financial. Some investors have worried throughout the year about how stocks would fare once the Fed begins rolling back the extraordinary levels of support it extended following the pandemic-fuelled downturn of early 2020.

"The US equity market can continue to surprise," said Remi Olu-Pitan, a fund manager at Schroders. Ms. Olu-Pitan added that she believes stocks will be able to withstand volatility in short-term bonds, but that the market may become bumpy if yields on 10-year Treasury notes rise next year.

Swings in individual stocks illustrated the diverging fortunes of companies as economies emerge from lockdown.

Shares of Peloton Interactive slumped $30.42, or 35%, to $55.64 after the maker of fitness equipment reported a slowdown in subscriber growth.

Airbnb, meanwhile, jumped $23.17, or 13%, to $201.62 after posting record revenue in the third quarter.

Pfizer said preliminary results indicated its experimental Covid-19 pill was highly effective, lifting the pharmaceutical company's stock $4.76, or 11%, to $48.61. Meanwhile, rival drugmaker Moderna slid $47.03, or 17%, to $236.99, extending losses from the prior day. The company's shares began tumbling Thursday after it cut its forecast for Covid-19 vaccine deliveries for the year, citing shipping difficulties.

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

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