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Global Market Report - 11 August

Lex Hall  |  11 Aug 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to dip at the open after a mixed night on Wall Street in which investors moved further into value stocks.

The Australian SPI 200 futures contract was down 3 points, or 0.05 per cent, to 6,067 points at 8.30am Sydney time on Tuesday, suggesting a flat start to trading.

The Dow jumped 1 per cent, the S&P 500 inched up and the Nasdaq closed lower on Monday as investors extended a rotation into value stocks from heavyweight tech-related names while awaiting news on progress in a US fiscal support bill.

The Dow Jones Industrial Average rose 357.96 points, or 1.3 per cent, to 27,791.44, the S&P 500 gained 9.19 points, or 0.27 per cent, to 3,360.47 and the Nasdaq Composite dropped 42.63 points, or 0.39 per cent, to 10,968.36.

The S&P/ASX200 benchmark index closed higher by 105.4 points, or 1.76 per cent, at 6,110.2 points on Monday. The All Ordinaries index rose by 102.2 points, or 1.66 per cent, at 6,247.1.

In local results, building materials supplier James Hardie Industries said its first-quarter net profit fell by 89 per cent, but it had gained significant market share in North America in spite of the coronavirus pandemic.

Gold was down -0.6 per cent to $US2,023.90 an ounce; Brent oil was up 1.2 per cent to $US44.94 a barrel.

Meanwhile, the Australian dollar buys 71.50 US cents, down from 71.56 US cents at the close on Monday.

Asia

China shares ended higher on Monday, turning around from early losses as data signalling slow factory deflation reinforced hopes of an economic recovery from the pandemic-driven lockdown.

At the close, the Shanghai Composite index was up 0.75 per cent at 3,379.25, after earlier falling as much as 0.57 per cent. 

The blue-chip CSI300 index was up 0.36 per cent, clawing back from a 1.31 per cent fall.

Hong Kong shares ended lower on Monday, weighed down by rising tensions between Beijing and Washington and uncertainty over a possible US stimulus package, even as new data supported hopes of a recovery in China. 

At the close of trade, the Hang Seng index was down 154.19 points or 0.63 per cent at 24,377.43. The Hang Seng China Enterprises index fell 0.72 per cent to 9,990.67.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.12 per cent, while Japan’s Nikkei index closed down 0.39 per cent.

Europe

European shares closed slightly higher on Monday as growth-sensitive cyclical stocks got a boost from improving economic data out of China, but renewed US-China tensions hit technology shares.

With trading volumes dwindling as traders leave for summer holidays, the broader European STOXX 600 index held to tight ranges, ending the session 0.3 per cent higher. The benchmark saw trading volume down to nearly 75 per cent of its 30-day moving average.

Data showed China’s factory deflation eased in July, driven by a rise in global oil prices and as industrial activity climbed back towards pre-coronavirus levels, lifting hopes of an economic rebound in the world’s second-largest economy.

Energy majors BP, Royal Dutch Shell and Total rose between 1.3 per cent and 3 per cent as crude oil prices rose.

Banking sector stocks rose 2.0 per cent, leading sectoral gains, while the travel & leisure index, which was dealt a heavy blow in the wake of the health crisis, rose 0.9 per cent.

Carnival jumped 9.3 per cent as it planned to resume AIDA Cruises sailing operations from German ports at the start of September.

However, equity analysts at JPMorgan Cazenove argued they do not see a case for a sustained rally in the cyclical stocks.

Technology stocks, which have outperformed this year in Europe, slid 1.5 per cent on worries over the heightening US-China rift ahead of scheduled talks on 15 August to review the trade agreement signed in January.

Dutch tech investor Prosus slid for a third day running as the US prepares a ban on two popular Chinese apps, WeChat and TikTok.

Investors were also monitoring the negotiations between White House officials and Democrats over a fifth bill to address the economic impact of the coronavirus pandemic.

US President Donald Trump on Saturday signed executive orders and memorandums aimed at unemployment benefits, evictions, student loans and payroll taxes until the more concrete stimulus bill could be passed.

Among other individual movers, Norwegian energy firm Equinor rose 1.4 per cent after it appointed a company executive Anders Opedal as chief executive officer.

In Britain, fashion retailer Superdry jumped 18.7 per cent after agreeing a new 70 million pounds ($128 million) lending facility, while AA also surged after Sky News reported that Apollo Global Management was weighing a 3 billion pound takeover bid for the roadside recovery group.

North America

The Nasdaq, which has been hitting record highs, was dragged lower by Microsoft Corp, Amazon.com and Facebook.

Value stocks, which tend to outperform growth coming out of a recession, have gotten a lift in recent days. The Russell 1000 value index rose 0.9 per cent on Monday, while the Russell 1000 growth index fell 0.5 per cent.

Bets on a potential coronavirus vaccine, historic fiscal and monetary support, and more recently, a better-than-expected second-quarter earnings season have brought the S&P 500 close to its February record closing high.

Providing some support, US President Donald Trump signed executive orders that partly restored enhanced unemployment benefits after talks between the White House and top Democrats in Congress about fresh stimulus broke down last week.

US Treasury Secretary Steven Mnuchin, in an interview with CNBC on Monday, said the Trump administration and Congress could reach an agreement as soon as this week if Democrats are “reasonable.”

Energy and industrials, among the worst performers this year, gained, while technology and communication services fell.

Among individual movers, Eastman Kodak Co sank 27.9 per cent after its $765-million ($1.07 billion) loan agreement with the US government to produce pharmaceutical ingredients was put on hold due to “recent allegations of wrongdoing.”

Microsoft Corp fell 2 per cent as sources said its bid to carve out parts of TikTok from its Chinese owner ByteDance will be a technically complex endeavour.

is content editor for Morningstar Australia

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