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Global Market Report - 10 August

Lewis Jackson  |  10 Aug 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to rise after a mixed session on Wall Street. Energy fell and US bond yields rose as investors balanced concerns about delta with the strong US jobs report.

The Australian SPI 200 futures contract was up 25 points or 0.34 per cent at 7,463 near 7.00 am Sydney time on Tuesday, suggesting a positive start to trading.

The S&P 500 have dipped as fuel demand worries during a resurgent pandemic sent energy stocks lower but rising US Treasury yields lifted financials stocks, keeping Wall Street's benchmark index near record levels.

The Dow Jones Industrial Average fell 107.91 points, or 0.31 per cent, to 35,100.6, the S&P 500 lost 4.11 points, or 0.09 per cent, to 4,432.41 and the Nasdaq Composite added 24.42 points, or 0.16 per cent, to 14,860.18.

The Australian dollar was buying 73.34 US cents near 7.00am AEST, down from 73.55 US cents at Monday’s close.

Locally, investors have an appetite for financial shares at the start of a busy earnings week after Suncorp's bumper earnings delivered shareholder rewards.

Investors lifted the ASX200 to a record high of 7567 points early in the session on Monday, largely through enthusiasm for financial shares.

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The banks all closed higher but the rest of the market was largely a letdown and the ASX200 closed flat at 7538.4.

The All Ordinaries closed lower by 2.2 points, or 0.03 per cent, to 7804.3.

Suncorp shares were among those in demand after it improved full-year cash earnings by 42 per cent.

Shareholders will receive a special dividend and the option to participate in an on-market buyback.

Investors hiked shares by 7.84 per cent to $12.79.

The Suncorp shareholder rewards were made possible by the release of money set aside from earlier in the pandemic.

Investors are expecting banks such as the Commonwealth, which gives full-year earnings on Wednesday, to be similarly benevolent.

The biggest weight on the market were materials shares.

They dropped 1.06 per cent as the price of iron ore continued to slip.

IG Markets analyst Kyle Rodda said weak commodity prices were the biggest drag on the ASX.

Among the major miners, BHP dropped 0.79 per cent to $51.69. Fortescue lost 1.26 per cent to $22.76. Rio Tinto shed 1.38 per cent to $128.26.

There had been a good lead from the US late last week, where the Dow and the S&P 500 indexes closed at record highs.

US payroll data showed the number of people employed increased by more than expected and there was strong wage growth.

Meanwhile, toll road giant Transurban also gave its full-year earnings to the ASX.

The company revealed the costs of the West Gate tunnel project in Melbourne have blown out by about $3.3 billion.

Transurban had a statutory profit of a similar amount - $3.27 billion.

Lockdowns in Sydney, Brisbane and Melbourne reduced the number of cars on the road and weighed on revenue.

Shares closed lower by almost two per cent to $14.03.

The big banks were making moves.

National Australia Bank is buying Citigroup's consumer business and the two are devising new buy now, pay later products.

NAB said it would gain Citi's Australian lending business including credit cards, home lending portfolio, retail deposits and wealth management arms.

Shares closed up 0.86 per cent to $26.92.

Westpac will sell its Australian life insurance business to TAL Dai-ichi Life Australia, following similar moves by rivals.

The bank will receive $900 million for the sale and continue providing life insurance to customers via TAL.

Shares closed up 0.96 per cent to $25.36.

Brickworks said coronavirus rules in NSW and Queensland had forced it to stop production at some sites.

Both states have had lockdowns, and Brickworks' sales have fallen.

Shares were down 1.51 per cent to $24.79.

Telstra's healthcare division has bought software vendor MedicalDirector for $350 million.

Telstra said it would significantly increase investment in the business, which provides software for general practitioners.

Shares were up 0.53 per cent to $3.82.

Spot Gold was down 2 per cent at $US1728.61 an ounce; Brent crude was down 2.2 per cent at $US69.15 a barrel; Iron ore n/a.

The yield on the Australian 10-year bond closed at 1.20 per cent.

Asia

At the close, China's Shanghai Composite index was up 1.05 per cent at 3,494.63.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed up 0.33 per cent at 27,820.04.

Japan's Nikkei 225 was closed for a public holiday.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up at 470.68.

The German DAX was up at 15,745.41.

North America

The S&P 500 have dipped as fuel demand worries during a resurgent pandemic sent energy stocks lower but rising US Treasury yields lifted financials stocks, keeping Wall Street's benchmark index near record levels.

The Dow Jones Industrial Average fell 107.91 points, or 0.31 per cent, to 35,100.6, the S&P 500 lost 4.11 points, or 0.09 per cent, to 4,432.41 and the Nasdaq Composite added 24.42 points, or 0.16 per cent, to 14,860.18.

Energy shares were the worst performing of the 11 major S&P sectors, down along with crude prices as mounting coronavirus cases and the potential for restrictions, particularly in China, raised worries about the fuel demand outlook.

China reported more COVID-19 infections while US cases and hospitalisations were at a six-month high as the Delta variant spread.

Financial shares gained, buoyed by a climb in the 10-year US Treasury yield back above the 1.30 per cent level as a report on job openings showed further evidence of an improving labour market.

"In general, of the economically sensitive cyclicals, it is the interest-rate sensitives that are going to celebrate this normalisation of yields, even if normal is 1.30 per cent versus where we were a week ago, which was 1.12 per cent. That is driving the action," said Art Hogan, chief market strategist at National Securities in New York.

Investors will watch US inflation readings this week for hints about the path of Federal Reserve policy.

On Monday, Atlanta Fed president Raphael Bostic said the United States should be well past the pandemic crisis before the central bank raises rates.

Richmond Fed President Tom Barkin said high inflation this year may have already met one of the Fed's benchmarks for raising interest rates.

Later this month, a meeting of Fed leaders in Jackson Hole, Wyoming is expected to provide insight into the central bank's potential plan to begin tapering its bond purchases.

A strong earnings season has helped US stocks climb to record highs over the past two weeks as several consensus-beating results from major firms reinforced belief in a post-COVID economic recovery.

As of Friday, analysts expected second-quarter profit growth of 93.1 per cent for S&P 500 companies, according to IBES data from Refinitiv.

Of the 443 companies in the index that have reported earnings so far, 87.4 per cent beat analyst expectations, the highest on record.

Sanderson Farms Inc climbed after it agreed to be bought for $US4.53 billion ($A6.18 billion) by commodities trader Cargill Inc and investment firm Continental Grain Co at a time when meat prices have been soaring.

Tyson Foods Inc advanced after the meat processing company raised its forecast for fiscal 2021 revenue.

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

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