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Global Market Report - 10 May

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

Australian shares are set to start the week lower, despite record-breaking closes in the US and Europe and a new high for iron ore.

The Australian SPI 200 futures contract was down 4 points or 0.1 per cent to 7055 near 7.00 am Sydney time on Monday, suggesting a negative start to trading.

The S&P 500 and the Dow hit record highs on Friday, while megacap growth stocks drove a recovery on Nasdaq after US jobs data eased concerns over prospects for rising rates.

The Dow Jones Industrial Average rose 229.23 points, or 0.66 per cent, to 34,777.76, the S&P 500 gained 30.98 points, or 0.74 per cent, to 4,232.60 and the Nasdaq Composite added 119.39 points, or 0.88 per cent, to 13,752.24.

Locally, major technology providers Afterpay and Appen have lost about 20 per cent of their share price as a terrible week for IT shares continued on Friday.

Afterpay lost 4.14 per cent, and 18.93 per cent for the week, as investors abandoned technology stocks for those expected to do better in a post-pandemic economy.

Artificial intelligence provider Appen fared worse. Appen gained 5.67 per cent on Friday but lost 21.52 per cent for the week.

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Resources shares were the best performer and helped the S&P/ASX200 index close higher by 19.1 points, or 0.27 per cent, to 7080.8.

The All Ordinaries closed up 19.2 points, or 0.26 per cent, to 7325.2 points.

Fortescue Metals and Rio Tinto gained about one per cent after iron ore prices topped $US200 per tonne in futures trading.

Chinese steelmakers continue to demand iron ore as their economy expands.

BHP rose by 0.58 per cent to $50.09 and was just shy of its record, $50.93.

Gold miners helped the strength of materials shares after the price of the precious metal rose.

Evolution jumped 3.9 per cent to $4.80. Newcrest Mining surged by 3.84 per cent to $27.33. Northern Star rose by 1.87 per cent to $10.88.

Investment group Macquarie capped an eventful week for the financial sector and reported a 10 per cent rise in full-year profit. Net profit after tax was $3.01 billion for the 12 months to March 31.

Three of the big four banks reported first-half earnings this week which showed profits bouncing back from the pandemic.

The only bank which did not report was the Commonwealth. It was best and rose 1.05 per cent to $93.92.

The Commonwealth is due on Wednesday to give a third-quarter trading update.

The RBA upgraded its economic growth forecast to 4.75 per cent over 2021 and 3.5 per cent over 2022, tracking below pre-pandemic forecasts mostly due to lower population growth.

Next week, the federal budget will generate plenty of discussion once it is delivered on Tuesday.

Pundits have tipped the budget to have bigger spending than average, as it will likely be the last before the next election.

Gold was up 0.9 per cent at $US1831.24 an ounce; Brent crude was up 0.3 per cent to $US68.28 a barrel; Iron ore was up 5.1 per cent at $US212.25 a tonne.

Meanwhile, the Australian dollar was buying 78.44 US cents around 7:00am, up from 77.82 this time Friday.

Asia

China stocks fell on Friday to end the week lower, as worries over lofty valuations and Sino-West tensions offset optimism surrounding data and survey pointing to a continued recovery in the world’s second-largest economy.

The blue-chip CSI300 index fell 1.3 per cent to 4,996.05, while the Shanghai Composite Index slipped 0.6 per cent to 3,418.87 points.

The tech-heavy start-up board ChiNext dropped 3.5 per cent, having lost 5.9 per cent for the week.

AVIC Securities noted in a report that valuations of equities are under pressure as China is tightening its monetary, credit and fiscal policies.

The brokerage added that China would continue to maintain policy stability as the latest Politburo meeting refrained from mentioning stabilizing leverage and commodities prices.

Tensions between China and the West have become another point of concern for investors.

Bucking the broad retreat, banking and materials stocks gained ground due to data pointing to China’s solid economic recovery.

The CSI300 banks index and the CSI300 materials index rose 1.1 per cent and 1.8 per cent on Friday.

China’s export growth unexpectedly accelerated in April as the brisk US recovery and stalled factory production in other countries hit by the coronavirus propped up demand for goods made in the world’s second-largest economy.

At the close of trade, the Hang Seng index was down 26.81 points or 0.09 per cent at 28,610.65. The Hang Seng China Enterprises index fell 0.53 per cent to 10,699.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.32 per cent, while Japan’s Nikkei index ended up 0.09 per cent.

Europe

European stocks closed at a record high on Friday, marking strong weekly gains as positive economic data and upbeat earnings underpinned hopes of a swift economic recovery from the COVID-19 pandemic.

The pan-European STOXX 600 index rose 0.9 per cent per cent to a record high of 444.93 points. It added 1.7 per cent this week- its best performance since mid-March.

Global stocks rallied to record highs as investors scaled back expectations of policy tapering by the US Federal Reserve, after data showed the US labour market had a long road to recovery from the pandemic.

European technology stocks were the best performers for the day, rising 2.2 per cent as they recovered from a rout seen earlier in the week. The sector ended the week largely unchanged.

Basic resource stocks were the best weekly performers, adding 7.2 per cent for the week and ending at over a decade-high as optimism over recovering global demand pushed up base metal and iron ore prices.

The German DAX rose 1.3 per cent, inching closer to its lifetime high, while France’s CAC 40 ended at its highest level since November 2000 and UK’s FTSE 100 breached the 7,100 mark for the first time since February 2020.

Data showed German companies increased their exports for the eleventh month in a row in March, with growth coming in at 1.2 per cent, twice the rate economists had forecast.

On the earnings front, German sportswear company Adidas surged 8.4 per cent after it raised its 2021 sales outlook.

Jewellery maker Pandora gained 3.0 per cent after reporting 214 per cent sales growth in April.

North America

The S&P 500 and the Dow hit record highs on Friday, while megacap growth stocks drove a recovery on Nasdaq after US jobs data eased concerns over prospects for rising rates.

The Dow Jones Industrial Average rose 229.23 points, or 0.66 per cent, to 34,777.76, the S&P 500 gained 30.98 points, or 0.74 per cent, to 4,232.60 and the Nasdaq Composite added 119.39 points, or 0.88 per cent, to 13,752.24.

US job growth unexpectedly slowed in April, likely restrained by shortages of workers, the Labor Department report on Friday showed.

The report alleviated some concerns about rising inflation and potentially higher US interest rates, which some investors worry would hurt growth companies with high valuations.

Heavily-weighted growth stocks such as Microsoft Corp, Apple Inc, and Alphabet all rose, but all major S&P 500 sectors also ended in green, with energy and real estate leading the advance. Energy and materials hit fresh highs earlier.

A raft of upbeat earnings also helped stocks, and S&P 500 earnings are now estimated to have increased 50.4 per cent in the first quarter from a year ago, which would be the highest growth rate since the first quarter of 2010, according to Refinitiv data.

Payments firm Square rose after reporting a better-than-expected quarterly profit, as surging demand for bitcoin fueled a jump in cryptocurrency transactions on its application. read more

Streaming device maker Roku jumped following an upbeat revenue outlook, while fitness equipment maker Peloton Interactive gained as it laid out steps to improve the safety of its equipment.

Expedia Group shares rose as analysts raised price targets following the company's upbeat results.

With Reuters

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

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