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Global Market Report - 10 June

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

Shares are tipped to edge lower, as rising prices in China sent Aussie markets lower yesterday. Overseas, Wall Street ended down, while GameStop beat earnings estimates.

The Australian SPI 200 futures contract was down 3 points or 0.04 per cent to 7,272 near 7.30 am Sydney time on Thursday, suggesting a negative start to trading.

Wall Street stocks have ended lower, reversing earlier gains as institutional investors awaited inflation data for clues as to when the US Federal Reserve might tighten its dovish monetary policy.

The Dow Jones Industrial Average fell 152.68 points, or 0.44 per cent, to 34,447.14, the S&P 500 lost 7.71 points, or 0.18 per cent, to 4,219.55 and the Nasdaq Composite dropped 13.16 points, or 0.09 per cent, to 13,911.75.

The Australian dollar was buying 77.33 US cents near 7.45am AEST, down from 77.50 at Wednesday’s close.

Locally, shares reached record heights for the sixth consecutive trading day on the Australian market before investors saw signs of rampant inflation in China.

The benchmark S&P/ASX200 index hit an all-time high of 7334.90 points in the first hour of trading.

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Yet buying turned to selling after China revealed factory gate prices increased at the fastest pace since September 2008.

The producer price index rose nine per cent from a year earlier in May.

CommSec market analyst James Tao said investors had a negative response to the data.

He said higher inflation could lead central banks to lift interest rates or ease monetary policy, which have been helpful for shares.

"The ASX rally we've seen in the past 12 months is much to do with there being a lot of easy money," Mr Tao said.

China's consumer price index rose 1.3 per cent, which was less than expected.

US futures were little changed in the wake of the China data.

The lack of demand for Australian shares caused the ASX200 to close lower by 22.4 points, or 0.31 per cent, to 7270.2.

The All Ordinaries closed down by 20.3 points, or 0.27 per cent, to 7522.

US inflation data, due on Thursday night, will also test investor nerves.

While experts expect inflation rates well above the Federal Reserve target of two per cent, economists say inflation will ease in coming months.

This would give the US central bank more time to wind back policy settings.

US markets overnight closed little changed or higher.

In Australia, Victorian state leaders said Melbourne's two-week coronavirus lockdown will end on Friday but some rules will remain across the state.

These include a 25km travel limit for Melburnians.

The easing of the lockdown helped shares in travel providers.

Corporate Travel Management rose 2.38 per cent to $21.49, Webjet climbed 1.56 per cent to $5.20, and Flight Centre gained 1.23 per cent to $15.68.

The best share categories were utilities and materials, which rose by 0.37 per cent and 0.25 per cent respectively.

Consumer staples had the biggest loss at 1.44 per cent.

Among individual stocks, airline Regional Express forecast a full-year loss of $15 million due to Victoria's latest coronavirus outbreak.

Also known as Rex, the airline had been on course for earnings to break-even but on Wednesday changed its estimate to a statutory loss before tax of $15 million.

Shares were down 0.4 per cent to $1.25.

Afterpay shares briefly rose higher than $100 but remain well down on the record price of $160.05.

Shares closed up 1.69 per cent to $98.84.

Electronics design software vendor Altium dived 7.5 per cent to $34.30.

Shares on Monday had gained more than 39 per cent after the company rejected a takeover offer from US software group Autodesk.

Miners were a rare bright spot on Wednesday.

BHP gained 0.6 per cent to $48.67, Fortescue climbed 1.03 per cent to $22.65, and Rio Tinto rose 0.52 per cent to $124.80.

A big improver in materials was Brickworks, which rose 11.32 per cent to $23.40.

The company revealed a huge jump in the value of its property trust.

Industrial property sales in western Sydney have boosted the trust's worth.

The big four banks were all lower by less than one per cent.

Spot Gold was down 0.1 per cent at $US1891.51 an ounce; Brent crude was down 0.1 per cent to $US72.12 a barrel. Iron ore was up 1.5 per cent at $US212.67.

The yield on the Australian 10-year bond continued down to 1.57 per cent.

Asia

At the close, China's Shanghai Composite index was up 0.32 per cent at 3,591.40.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, was down 0.13 per cent, to 28,742.63.

Japan's Nikkei 225 Index closed down 0.35 per cent at 28,860.80.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 0.1 per cent at 454.44.

The German DAX fell 0.38 per cent to 15,581.14.

North America

Wall Street stocks have ended lower, reversing earlier gains as institutional investors awaited inflation data for clues as to when the US Federal Reserve might tighten its dovish monetary policy.

The Dow Jones Industrial Average fell 152.68 points, or 0.44 per cent, to 34,447.14, the S&P 500 lost 7.71 points, or 0.18 per cent, to 4,219.55 and the Nasdaq Composite dropped 13.16 points, or 0.09 per cent, to 13,911.75.

The retail "meme stock" craze continued unabated on Wednesday.

The S&P 500 flirted with a record closing high, and all three major US stock indexes lost steam by the closing bell, but remained range-bound in the absence of any clear market catalysts.

"There's a lull period in terms of news," said Chuck Carlson, chief executive at Horizon Investment Services in Hammond, Indiana. "We're through earnings period and people are waiting for inflation numbers tomorrow, so you have a mixed market where the major averages aren't doing much of anything."

Heavily shorted meme stocks extended their social media-driven rally, with Aethlon Medical soaring over 300 per cent.

Reddit chatter also helped to lift shares of prison operator GEO Group, and World Wrestling Entertainment.

However, other meme stocks such as Clover Health, AMC Entertainment and Bed Bath & Beyond reversed course to close lower.

Retail volume has returned to its January peak, according to Vanda Research, as social media forums scramble to identify the next GameStop Corp, the stock that kicked off the phenomenon.

"It feels like alternative stock market," Carlson added. It's an indication of speculation. You can be successful if you get in at the right moment but it's very difficult to play successfully over time."

"I don't think you should read too much regarding the broader market."

GameStop reported fiscal first-quarter results that beat estimates for revenue and narrowed losses.

The original memestock reported $US1.28 billion in Q1 revenue versus $1.17 expected, and an adjusted loss per share of 45 cents.

US President Joe Biden changed course in ongoing negotiations to reach a bipartisan agreement on infrastructure spending after one-on-one talks with Senator Shelley Capito broke down.

Industrial stocks, which stand to benefit from an infrastructure deal, weighed on the blue-chip Dow.

Washington lawmakers passed a sweeping bill designed to boost the United States' ability to compete against Chinese technology, providing funds for research and semiconductor production amid an ongoing chip supply drought. The bill now heads to the House of Representatives.

Even so, the Philadelphia SE Semiconductor index lost ground.

The Labor Department's consumer price index report due out Thursday will provide another take on inflation amid the recovery's demand/supply imbalance as investors determine whether inflationary pressures, as the Fed asserts, will be transitory.

Benchmark Treasury yields dropped below 1.5 per cent for the first time since May, weighing on interest-sensitive financials .

Campbell Soup Co missed quarterly profit expectations and slashed its full-year earnings forecast, sending its shares lower.

Pfizer Inc advanced after the Biden administration unveiled plans to donate 500 million COVID-19 doses to about 100 countries over the next two years, according to a Washington Post report.

Drugmaker Merck & Co shares gained on the heels of its announcement the US government had agreed to buy about 1.7 million courses of the company's experimental COVID-19 treatment, molnupiravir, for about $US1.2 billion ($A1.55 billion), if the drug meets regulatory approval.

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

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