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Global Market Report - 10 July

Lex Hall  |  10 Jul 2020Text size  Decrease  Increase  |  
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Australia

Shares look like falling early on the Australian market in line with the US, where another round of business shutdowns to contain a surge in coronavirus cases has spooked investors.

The Australian SPI 200 futures contract was lower by 24.0 points, or 0.41 per cent, to 5,896.0 points at 8am Sydney time on Friday.

The US recorded more than 60,000 new COVID-19 infections on Wednesday, setting a single-day global record while Florida and Texas reported a record one-day increase in deaths.

Investors also began to turn their focus to the second-quarter earnings season, which shifts into high gear next week.

S&P 500 companies are expected to post a more than 40 per cent decline in year-over-year earnings, which would be the biggest quarterly profit drop since the 2008 financial crisis, based on IBES data from Refinitiv.

The Dow Jones Industrial Average fell 361.19 points, or 1.39 per cent, to 25,706.09, the S&P 500 lost 17.89 points, or 0.56 per cent, to 3,152.05 and the Nasdaq Composite added 55.25 points, or 0.53 per cent, to 10,547.75 on Thursday.

Oil prices fell 94 US cents to $US42.35 a barrel as investors worried renewed restrictions in some US states would reduce demand.

In Australia, where Melbourne has entered six weeks of lockdown due to a virus resurgence, national cabinet will meet again on Friday.

State and territory leaders will consider a proposal from Prime Minister Scott Morrison to cap overseas plane arrivals to ease the pressure on managing these people in quarantine.

The Australian dollar was buying 69.61 US cents at 8am, lower from 69.86 US cents at the close of local trade on Thursday.

Asia

China shares on Thursday extended their rally into an eighth day, fuelled by liquidity, policy support and retail investor enthusiasm, even as regulators cracked down on margin financing and as state media warned of market risks.

The Shanghai Composite index was up 1.39 per cent at 3,450.59, its highest close since February 2018. The index gained for eight consecutive sessions, its longest winning streak since January 2018. The blue-chip CSI300 index was up 1.4 per cent at its highest close since June 2015.

Hong Kong’s benchmark share index ended higher on Thursday, as an officially endorsed bull run in mainland China markets extended into an eighth day, lifting stocks across the region.

At the close of trade, the Hang Seng index was up 80.98 points or 0.31 per cent at 26,210.16. The Hang Seng China Enterprises index rose 0.31 per cent to 10,781.89.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.72 per cent, while Japan’s Nikkei index closed up 0.4 per cent.

Europe

European stocks closed sharply lower on Thursday as Wall Street tumbled after another record surge in US coronavirus cases that raised fears of fresh lockdowns.

London stocks were among the biggest casualties in Europe, sliding 1.7 per cent, with energy firms BP and Royal Dutch Shell down about 4 per cent as oil prices plunged on worries about fuel demand.

The main indexes in Paris, Milan and Madrid fell between 1.2 per cent and 2 per cent, while Frankfurt-listed shares closed flat as software giant SAP jumped 4.6 per cent after confirming its full-year outlook.

After hovering in positive territory until afternoon trading, the broader European index lost ground and closed down 0.8 per cent to hit a one-week low.

The US reported more than 60,000 new COVID-19 infections on Wednesday, setting a single-day global record, while government data showed another 1.3 million Americans filed for jobless benefits.

A US official told Reuters the Trump administration planned to finalise regulations that will bar the government from buying goods or services from any company that uses products from China’s Huawei and others.

Technology stocks registered the only sector rise in Europe, up 0.9 per cent, while banks and utilities fell nearly 2 per cent.

Investors are also awaiting the onset of second-quarter earnings season, with analysts predicting companies listed on the STOXX 600 will record a near 54 per cent drop in profits, according to Refinitiv data.

Merck KGaA and Roche rose 1.7 per cent and 0.7 per cent respectively after Reuters reported the European Commission has struck deals with the drugmakers to secure supplies of experimental treatments for COVID-19.

National Grid slid 5.5 per cent after British energy regulator Ofgem said energy network operators should invest 25 billion pounds ($45bn) from 2021 to 2026 to deliver emissions-free energy and proposed cutting returns the companies can make.

North America

The S&P 500 and Dow dropped on Thursday as investors worried about another round of business shutdowns to contain a surge in coronavirus cases and began to shift their focus to earnings, while the Nasdaq hit another record closing high.

The US saw more than 60,000 new COVID-19 infections on Wednesday, setting a single-day global record while Florida and Texas reported a record one-day increase in deaths.

Investors also began to turn their focus to the second-quarter earnings season, which shifts into higher gear next week. S&P 500 companies are expected to post a more than 40 per cent decline in year-over-year earnings, which would be the biggest quarterly profit drop since the 2008 financial crisis, based on IBES data from Refinitiv.

Walgreens Boots Alliance Inc shares dropped after it reported a quarterly loss compared with a profit a year earlier, hurt by non-cash impairment charges of $2 billion as COVID-19 disrupted business at its Boots UK division. Its stock closed 7.8 per cent lower.

The Nasdaq registered its fifth record closing high in six days, helped by gains in Amazon.com, Microsoft Corp, Nvidia, Apple. Also, Tesla extended recent gains, ending up 2.1 per cent.

The Dow Jones Industrial Average fell 361.19 points, or 1.39 per cent, to 25,706.09, the S&P 500 lost 17.89 points, or 0.56 per cent, to 3,152.05 and the Nasdaq Composite added 55.25 points, or 0.53 per cent, to 10,547.75.

The benchmark S&P 500 is still up more than 40 per cent from its 23 March closing low.

Helping stocks early in the day was data showing the number of Americans filing for jobless benefits dropped to a near four-month low last week. A record 32.9 million people though were collecting unemployment checks in the third week of June.

A batch of upbeat economic data including the record pace of job additions in June has underscored that the stimulus-fuelled domestic economy was on the path to recovery.

In a bullish signal for near-term momentum, the benchmark S&P 500’s chart formed a “golden cross” pattern, in which its 50-day moving average vaulted above the 200-day moving average.

is content editor for Morningstar Australia

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