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Global Market Report - 1 May

Lex Hall  |  01 May 2020Text size  Decrease  Increase  |  
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Australia

Share prices are set to decline when trading begins on Friday after the Australian stock market recorded its best month since 1988.

The SPI 200 futures contract was down 123 points, or 2.22 per cent, at 5,417.0 points at 8am Sydney time on Friday.

Overnight, US stocks lost ground after grim economic data and mixed earnings reports.

Unemployment claims topped 30 million and consumer spending has plummeted, while Amazon and American Airlines' earnings disappointed traders.

The S&P 500 fell 0.9 per cent, after its biggest monthly gain of 12.7 per cent since 1987.

In Australia on Friday, property price data for April is due to be published.

The figures may show whether home values were impacted by the social distancing restrictions imposed to slow the coronavirus.

The benchmark S&P/ASX200 index rallied Thursday for its best day in three weeks, closing up 129 points, or 2.39 per cent to close at 5,522.4 points and its best level since 13 March.

The broader All Ordinaries index gained 133.9 points, or 2.45 per cent, at 5,597.7 points, finishing April up 9.5 per cent for its best month since a 13.2 per cent gain in March 1988.

One Australian dollar buys 65.06 US cents at 8am, down from 65.43 US cents at Thursday's close.

The gold price is $US1,684.8, down from $US1,716.01 at the close.

Asia

China stocks rallied on Thursday to post their biggest monthly advance since December, after positive trial results for a drug to treat COVID-19 and downbeat data reinforced hopes of further stimulus to bolster the world's second-largest economy.

The blue-chip CSI300 index ended up 1.2 per cent at 3,912.58, while the Shanghai Composite Index closed 1.3 per cent higher at 2,860.08.

Hong Kong was closed for a public holiday.

In Japan, the benchmark Nikkei average advanced 2.6 per cent to 20,193.69, its highest closing level since 9 March, with trading volume on the main board hitting a one-month peak of 3.06 trillion yen ($28.8 billion).

Europe

European shares fell from seven-week highs on Thursday after the European Central Bank held back on big policy moves despite mounting evidence of the damage being wrought on the euro zone economy by the coronavirus crisis.

Euro zone banks sank 5.5 per cent as the central bank said it would pay more for banks to borrow from it but otherwise kept much of its remaining policy powder dry.

The ECB reaffirmed its already vast bond purchase scheme, disappointing some investors who were expecting it to raise its target and add junk-rated bonds to its shopping list in the coming months.

The banking sector also came under pressure from a 8.6 per cent decline in France’s Societe Generale as it reported a quarterly loss, while Britain’s Lloyds Banking Group became the latest to be hit by provisions against expected bad loans due to the pandemic.

Along with a slide in energy stocks as oil major Royal Dutch Shell slumped 10.8 per cent on cutting its dividend for the first time in 80 years, London's FTSE dived 3.5 per cent. The index logged its steepest one-day loss in one month.

The wider oil & gas sector fell 3.4 per cent

The pan-European STOXX 600 fell 2 per cent after a three-day rally, while euro zone stocks were down 1.9 per cent.

A preliminary reading showed economic activity in the bloc contracted at a record rate in the first quarter and inflation slowed sharply due to coronavirus-induced lockdowns. Economists expect even worse numbers for the second quarter.

However, the STOXX 600 logged its biggest monthly gain since October 2015 as signs of easing restrictions in several major economies, aggressive stimulus actions and more recently, hopes of a coronavirus treatment, helped a recovery from a rout in February

UK’s Reckitt Benckiser rose 3.6 per cent as the consumer giant achieved record sales growth in the first quarter and predicted a stronger than expected performance in 2020 as customers stocked up on essentials.

Shares of BE Semiconductor topped the STOXX 600 after the Dutch company forecast a rise to second quarter revenue.

North America

US stocks lost ground on Thursday as grim economic data and mixed earnings prompted investors to take profits at the close of the S&P 500’s best month in 33 years, a remarkable run driven by expectations the economy will soon start recovering from crushing restrictions enacted to curb the coronavirus pandemic.

While risk-off selling pulled all three major US stock averages into the red, the S&P 500 and the Dow posted their largest monthly percentage gains since January 1987, with the Nasdaq having its best month since June 2000.

The three indexes remain well within 20 per cent of record highs reached in February, having quickly rebounded since shutdown efforts to curb the spread of the coronavirus pandemic brought the economy to a grinding halt.

The five-week tally of unemployment claims topped 30 million and consumer spending has plummeted, according to the latest round of dismal indicators providing another snapshot of the crushing economic effects of the widespread shutdown.

The Federal Reserve announced that it would broaden its “Main Street Lending Program” by lowering the minimum loan size and expanding eligibility.

The Dow Jones Industrial Average fell 288.14 points, or 1.17 per cent, to 24,345.72, the S&P 500 lost 27.08 points, or 0.92 per cent, to 2,912.43 and the Nasdaq Composite dropped 25.16 points, or 0.28 per cent, to 8,889.55.

Of the 11 major sectors in the S&P 500, all but consumer discretionary and communications services closed in negative territory, with materials and financials suffering the largest percentage losses.

Earnings season continues apace, with 236 of the companies in the S&P 500 having reported quarterly results. Of those, two-thirds have surprised consensus estimates to the upside, according to Refinitiv data.

But there have been 90 negative pre-announcements in the first quarter, compared with 40 positive, and analysts see aggregate S&P 500 earnings dropping by a year-on-year rate of 14.4 per cent in the first three months of 2020, per Refinitiv.

Market leaders Apple Inc and Amazon.com reported results after the closing bell. In post-market trading, Apple shares gained more than 2 per cent while Amazon.com was down over 5 per cent.

Facebook climbed 5.2 per cent after the social media company reported better-than-expected quarterly revenue.

American Airlines posted its first quarterly loss since emerging from bankruptcy in 2013, sending its shares down 4.9 per cent.

is content editor for Morningstar Australia

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