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Global Market Report - 08 October

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

The ASX is set to move up after a temporary deal on the US debt ceiling sent Wall Street higher and US 10-year bond yields reached their highest point since June.

The Australian SPI 200 futures contract was up 33 points or 0.45 per cent at 7,261 near 8.00 am AEST on Friday, suggesting a positive start to trading.

Major US stock indexes ripped higher after lawmakers reached a deal on a short-term debt-limit extension, which would put off a possible government default for several months.

The Dow Jones Industrial Average rallied 1%. The S&P 500 added 0.8%. The Nasdaq Composite rose as technology stocks recouped recent losses, lifting the benchmark 1%.

The session's gains put stocks on firm footing for the week. All three major benchmarks are up at least 1.2% over the past four trading days. That marks a full recovery from Monday losses, when a selloff in Facebook stock and other big technology companies rippled through the market.

The Australian dollar was buying 73.07 US cents near 8.00am AEST, up from the last close of 72.72. The WSJ Dollar Index, which measures the US dollar relative to 16 foreign currencies, fell to 88.56.

Locally, the S&P/ASX 200 closed 0.7% higher at 7256.7, bouncing from consecutive declines with gains in nearly every sector. The benchmark built on late momentum from US stocks, led by shares of financial and tech companies.

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ANZ, Westpac and NAB put on between 1.0% and 1.6%, rebounding as analysts suggested tighter loan-serviceability requirements were unlikely to stymie mortgage-lending growth.

Xero, WiseTech and Afterpay added between 2.9% and 3.1% amid a widespread tech-sector jump.

Energy was the only sector to lose ground, with explorers Santos and Oil Search slipping 2.15% and 1.8%, respectively, amid lower oil prices.

Wesfarmers Ltd. said Thursday it acquired a 19.3% stake in Australian Pharmaceutical Industries Ltd. and remained committed to an attempted takeover in the face of a rival approach from Sigma Healthcare.

Gold futures fell 0.1% to $US1759.20 an ounce; Brent crude rose 1.1% to $US81.95 a barrel; Iron ore was up 0.3 cents US$117.02.

The yield on the Australian 10-year bond fell to 1.58%; The yield on the US 10-year note moved up to 1.58%.

Asia

Chinese markets were closed Thursday for a week-long national holiday.

Hong Kong's Hang Seng Index advanced 3.1%, led by gains in technology stocks. Tech stocks rose on positive investor sentiment following news that US President Biden will hold a virtual meeting with Chinese President Xi Jinping by the year-end, KGI Securities said. The Hang Seng TECH Index rose 5.2%.

The Nikkei Stock Average climbed 0.5%, supported by shipping and machinery-related stocks. The strong performance by US markets overnight helped lift spirits in the Japanese market, which has been showing a high correlation to Wall Street lately, Oanda said. Shipping companies were among the notable gainers.

Europe

European stocks rose Thursday. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies, was up 1.6%, with gains in basic resources and auto sectors.

In London, the FTSE 100 closed 1.2% higher.

North America

Major US stock indexes rose Thursday after Senate Majority Leader Chuck Schumer said lawmakers had reached a deal on a short-term debt-limit extension, potentially putting off a government default standoff for a couple of months.

Stocks rallied following Sen. Schumer's remarks from the Senate floor before closing below their session highs. While the Senate must still vote on the deal, investors appeared ready to remove the debt ceiling as an obstacle to further gains. Shares of technology companies, energy firms and others were up.

"Right now, there are loads of fears out there. It just takes a couple of positive developments and suddenly that picture changes," said Lewis Grant, an equities portfolio manager at Federated Hermes.

Fresh figures showed that 326,000 Americans applied for first-time unemployment benefits in the week ended Oct. 2, down from 364,000 the week prior, further boosting investor sentiment.

The Dow Jones Industrial Average rallied 337.95 points, or 1%, to 34754.94. The S&P 500 added 36.21 points, or 0.8%, to 4399.76. The Nasdaq Composite rose even higher as technology stocks recouped recent losses, lifting the benchmark up 152.10 points, or 1%, to 14654.02

Thursday's gains put stocks on firm footing for the week. All three major benchmarks are up at least 0.6% over the past four trading days. That marks a full recovery from Monday losses, when a selloff in Facebook stock and shares of other big technology companies rippled through the market.

"A temporary deal should help reduce debt-ceiling related market volatility over the next few weeks as attention shifts toward December," said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a note to clients.

On Thursday, technology and other growth stocks rallied. Shares of Apple added $1.29, or 0.9%, to $143.29, while Google parent Alphabet rose $33.20, or 1.2%, to $2,784.50. Twitter rose even higher, adding $2.68, or 4.4%, to $63.97. The company said Wednesday it would sell mobile ad firm MoPub to Applovin for $1.05 billion.

Cyclical stocks also moved higher, showing investors' willingness to snap up stocks at large. General Motors advanced $2.51, or 4.7%, to $56.44, while Ford Motor rose 77 cents, or about 5.4%, to $14.89.

Energy stocks also posted decent gains, coinciding with a brief slide in commodity prices. US stockpiles grew more than expected and Russian President Vladimir Putin said Wednesday that Moscow was ready to work on stabilizing the global energy market. Schlumberger rose $1.08, or 3.6%, to $31.02, while Marathon Oil added 27 cents, or 1.8%, to $15.36.

Financial stocks rose 0.6%, and bond yields continued to creep up. The yield on the benchmark 10-year Treasury note rose to 1.570% Thursday from 1.524% a day earlier. Yields and prices move inversely.

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

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