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Global Market Report - 11 December

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

Australian shares are set to rise despite a mixed night on Wall Street following a rise in US unemployment.

The Australian SPI 200 futures contract was up 28 points, or 0.4 per cent, to 6,654 points at 8.30am Sydney time on Friday, suggesting a positive start to trading.

The Dow and S&P 500 dipped while the Nasdaq was modestly higher on Thursday as investors looked for signs of progress in fiscal stimulus talks to buttress the economy after labor market data showed a jump in jobless claims.

The Dow Jones Industrial Average fell 116.47 points, or 0.39 per cent, to 29,952.34, the S&P 500 lost 9.5 points, or 0.26 per cent, to 3,663.32 and the Nasdaq Composite added 43.15 points, or 0.35 per cent, to 12,382.10.

Locally, AustralianSuper plans to become a $300bn super fund, a move that would consolidate its position as the nation’s biggest investor, The Australian reports.

The S&P/ASX200 benchmark index closed lower by 45.4 points, or 0.67 per cent, to 6,683.1 on Thursday.

The All Ordinaries closed lower by 48.3 points, or 0.69 per cent, to 6,917.1.

Gold was down 0.2 per cent at $US1,836.70 an ounce; Brent oil was up 3.4 per cent to $US50.53 a barrel; US oil was up 3.5 per cent to $US47.10a barrel; Iron ore was up 4.3 per cent to $US156.58 a tonne.

Meanwhile, the Australian dollar was buying 75.31 US cents at 8.30am, up from 74.67 US cents at Thursday’s close.

Asia

Chinese shares closed flat on Thursday as better-than-expected bank lending data countered a decision by S&P Dow Jones Indices to remove some Chinese companies including Hikvision from its products.

The blue-chip CSI300 index was unchanged at 4,940.52, while the Shanghai Composite Index ended flat at 3,373.28.

In Hong Kong, the Hang Seng Index dropped 0.4 per cent to 26,410.59 at the close on Thursday, taking the week’s decline to 1.6 per cent.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.42 per cent, while Japan's Nikkei index closed down 0.23 per cent.

Europe

Euro zone stocks hit a two-week low on Thursday, with banks taking a knock after the European Central Bank forecast a slower rebound in growth next year even as it rolled out more stimulus measures to support the bloc’s pandemic-hit economy.

The STOXX euro zone index and Germany’s DAX both fell as much as 1 per cent before paring losses to close 0.2 per cent and 0.3 per cent lower respectively, with oil stocks jumping on a surge in crude prices.

An index of euro zone banks ended down 2.1 per cent despite the ECB agreeing to provide lenders with even more ultra-cheap liquidity

Spain’s lender-heavy IBEX index led declines in the region, down 0.6 per cent.

The ECB increased the overall size of its Pandemic Emergency Purchase Programme (PEPP) by 500 billion euros, in line with market expectations and also extended the scheme by nine months to March 2022.

At a press conference following the decision, ECB President Christine Lagarde said the bank expects euro zone GDP to expand by 3.9 per cent next year, slower than its September forecast of 5 per cent. But growth is seen at 4.2 per cent in 2022, above a previous projection of 3.2 per cent.

“Central bankers have flooded bank balance sheets, but those funds are not flowing through the economy normally. In other words, the quantity of money is up but velocity is way down, muting the economic impact,” said Aaron Anderson, SVP of Research at Fisher Investments.

The European STOXX 600 index was down 0.4 per cent.

Rising prices of copper and iron ore lifted Europe’s materials index 0.3 per cent to near 8-month highs.

London’s blue-chip index, heavy with oil and commodity-linked stocks, closed up 0.5 per cent, further helped by a pound hammered by Brexit trade deal uncertainty.

A meeting between British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen on Wednesday yielded no breakthrough with the leaders giving themselves until the end of the weekend to seal a new trade pact after failing to overcome persistent rifts.

Around US$1 trillion ($1.6 trillion) in annual trade, currently free from tariffs and quotas, is at stake if there is no agreement by the end of the month when Britain leaves the bloc.

Meanwhile, the European Union summit began on Thursday with leaders likely to unblock a stalled 1.8 trillion euro ($2.9 trillion) package as Poland and Hungary appeared to be edging toward an agreement on the EU budget.

North America

The Dow and S&P 500 dipped while the Nasdaq was modestly higher on Thursday as investors looked for signs of progress in fiscal stimulus talks to buttress the economy after labor market data showed a jump in jobless claims.

Major averages opened lower on the heels of weekly initial jobless claims data that spiked by 137,000 to a seasonally adjusted 853,000, well above expectations for 725,000 and the highest level since mid-September, underscoring the need for fresh stimulus measures to support a flagging economy.

But stocks moved well off their earlier lows after US Treasury Secretary Steven Mnuchin said talks between Republican and Democratic senators on covid-19 relief were making “a lot of progress” with more discussions expected in the day.

“We are in a bit of a trough, we’ve hit a valley right now and it’s all based on accelerating through this,” said Phil Blancato, CEO of Ladenburg Thalmann Asset Management in New York.

“We need that announcement, without that announcement we are going to have volatility through the end of the year, without a doubt.”

The Dow Jones Industrial Average fell 116.47 points, or 0.39 per cent, to 29,952.34, the S&P 500 lost 9.5 points, or 0.26 per cent, to 3,663.32 and the Nasdaq Composite added 43.15 points, or 0.35 per cent, to 12,382.10.

Airbnb Inc’s shares opened at US$146 in their debut, far above the initial public offering (IPO) price of US$68 apiece, raising US$3.5 billion for the home rental firm. The offering comes on the heels of a blowout debut for Wednesday’s high profile IPO DoorDash.

The S&P energy index hit a six-month high as Brent crude prices surged above $50 a barrel for the first time since early March. The group has surged about 35 per cent this quarter, the best performing of the 11 major S&P sectors, as investors have looked to names that could benefit from an economic reopening.

The faltering labor market recovery and the recent surge in covid-19 infections have piled pressure on policymakers to come up with another rescue package, as most of the government financial aid for Americans and businesses has dried up.

The US Senate was expected as early as Thursday to extend government funding by one week to give lawmakers time to work out a larger spending package and coronavirus relief, but House Speaker Nancy Pelosi raised the possibility talks could drag on through Christmas.

Also in focus was a meeting of outside advisers to the US Food and Drug Administration (FDA) later in the day, to decide whether to recommend that the agency authorise Pfizer Inc’s covid-19 vaccine for emergency use.

Some officials said vaccinations could begin as soon as this weekend if the FDA consented.

is content editor for Morningstar Australia

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