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Global Market Report - 11 August

Lewis Jackson  |  11 Aug 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to move higher after the Dow hit a record high and the US senate passed a $US1 trillion infrastructure package.

The Australian SPI 200 futures contract was up 19 points or 0.25 per cent at 7,482 near 7.00 am Sydney time on Wednesday, suggesting a positive start to trading.

Wall Street has risen, with both the blue-chip Dow and benchmark S&P 500 closing at record highs, as economically sensitive value stocks gained with the US Senate's passage of a $US1 trillion ($A1.4 trillion) bipartisan infrastructure package.

The Dow Jones Industrial Average rose 162.82 points, or 0.46 per cent, to 35,264.67, the S&P 500 gained 4.4 points, or 0.10 per cent, to 4,436.75 and the Nasdaq Composite dropped 72.09 points, or 0.49 per cent, to 14,788.09.

The Australian dollar was buying 73.49 US cents near 7.00am AEST, up from 73.42 US cents at Tuesday’s close.

Locally, investors raised the ASX to a record high despite a bleaker outlook for commodities as the coronavirus' Delta strain spreads in China and the US.

The ASX200 on Tuesday hit a record 7576.3 points in the first 20 minutes of trade, helped by shares in technology, consumer discretionaries and financials.

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However, commodity-based shares lost value or had limited gains and kept the market to modest growth.

Energy shares were one of the worst performing categories and lost 0.77 per cent.

Oil prices fell to a three-week low overnight due to COVID-19 surging in economically powerful nations.

China has reported more infections in the latest outbreak of the disease than was detected in the country at the end of 2019.

In the US, infections and the number of people in hospital were at a six-month high.

Tribeca Investment Partners portfolio manager Jun Bei Liu said the China coronavirus situation could ultimately limit purchases of iron ore from Australia.

ASX materials shares, influenced by demand for iron ore, gained 0.14 per cent.

Ms Liu said the spread of Delta had suspended concerns about inflation eroding the value of investments.

"A few months ago, people were very worried about inflation," she said.

"Delta has certainly slowed that expectation.

"The road to economic recovery is on track, but there are a couple of bumps here and there."

US inflation data for July will soon be published and ANZ Bank analysts forecast core inflation of 0.5 per cent for the month. This would be 4.5 per cent for the year.

ANZ analyst Tom Kenny said this was unlikely to convince US officials that strong inflation was anything other than temporary.

Looking to the ASX on Wednesday, the Commonwealth Bank will deliver its full-year earnings.

On Tuesday, the benchmark S&P/ASX200 index closed higher by 24.2 points, or 0.32 per cent, to 7562.6.

The All Ordinaries closed up 26.1 points, or 0.33 per cent, to 7830.4.

Investors had reason for optimism in the early stages of earnings season.

James Hardie lifted its earnings forecast for the financial year after booming first-quarter sales.

The fibre cement provider increased its full-year forecast to between $US550 million ($750 million) and $US590 million in adjusted net income.

The previous forecast for the 12 months to March 31 next year was as high as $US570 million.

James Hardie shares hit an all-time high of $50.72.

Shares closed higher by 2.9 per cent to $49.32.

The big players in the iron ore trade had a forgettable trading day.

BHP rose 0.14 per cent to $51.76. Fortescue dropped 1.1 per cent to $22.51. Rio Tinto slipped 0.59 per cent to $127.50.

In banking, the Commonwealth Bank was best of the big four ahead of its eventful Wednesday.

Shares closed better by 1.54 per cent to $106.56, one cent below its record trade.

The boss of investment group Challenger will leave the company next year.

Richard Howes revealed his decision on the same day full-year earnings met the forecast range. Net profit after tax was $592 million.

Investors will receive a fully franked final dividend of 10.5 cents per share. There was no final payout last year.

Shares closed up 1.9 per cent to $5.89.

In the best moving category, technology, Afterpay had a handy gain. Shares were up 3.24 per cent to $134.27.

Spot Gold was flat at $US1729.91 an ounce; Brent crude was up 2.6 per cent at $US70.84 a barrel; Iron ore was down 5.8 per cent to $US162.44.

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 1.01 per cent at 3,529.93.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed up 1.23 per cent at 26,605.62.

Japan's Nikkei 225 was up 0.24 per cent at 27,888.15.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up at 472.32.

The German DAX was up at 15,770.71.

North America

Wall Street has risen, with both the blue-chip Dow and benchmark S&P 500 closing at record highs, as economically sensitive value stocks gained with the US Senate's passage of a $US1 trillion ($A1.4 trillion) bipartisan infrastructure package.

The Dow Jones Industrial Average rose 162.82 points, or 0.46 per cent, to 35,264.67, the S&P 500 gained 4.4 points, or 0.10 per cent, to 4,436.75 and the Nasdaq Composite dropped 72.09 points, or 0.49 per cent, to 14,788.09.

The bill, which now heads to the House of Representatives, could provide the country's biggest investment in decades in roads, bridges, airports and waterways.

Senators also began voting on a follow-up $US3.5 trillion spending package that Democrats plan to pass without Republican votes.

"The market is looking at it as part one is a done deal, the market is OK with that," said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.

"I do not believe the market is going to be OK with $US3.5 trillion but there is still the possibility they are able to block it, or slow it, and have more conversation so the market isn't focusing on that one yet."

Energy, industrials and materials, which stand to benefit from an economic recovery, were among the top performing S&P sectors while names such as Caterpillar, Deere and Vulcan Materials each rose about 2.0 per cent as they are poised to reap the gains of infrastructure projects.

The iShares US Infrastructure ETF rose 1.45 per cent and the Global X US Infrastructure Development ETF advanced 2.19 per cent.

Energy shares were buoyed as recently beaten down crude prices jumped nearly 3.0 per cent.

With new coronavirus cases rising in the United States, progress on the infrastructure package should support the recovery in the world's largest economy.

The rapid spread of the Delta variant has pushed COVID-19 cases and hospitalisations to a six-month high, with cases averaging 100,000 for three days in a row - up 35 per cent over the past week.

Investors will also watch inflation numbers this week for more insight into the Federal Reserve's monetary policy plans after comments from two Fed officials on Monday that inflation was already at a level that could satisfy one portion of the requirement for the beginning of rate hikes.

AMC Entertainment gave up early gains and ended the session 6.07 per cent lower even after beating second-quarter revenue estimates as movie-goers returned to its theatres after a year of closures and restrictions.

Kansas City Southern gained 7.47 per cent after Canadian Pacific Railway Ltd raised its offer for the US railway operator by about $US2 billion to $US27.29 billion.

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

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