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Global Market Report - 11 February

Lex Hall  |  11 Feb 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to weaken following mixed results on Wall Street, including meagre gains for tech stocks. 

The Australian SPI 200 futures contract was down 30 points, or 0.4 per cent, at 6,769 points at 8.30am Sydney time on Thursday, suggesting a negative start to trading.

The S&P 500 and the Nasdaq edged slightly lower from record levels on Wednesday as energy and financials rose but some big tech stocks limited gains amid an ongoing rotation of portfolio holdings.

The Dow Jones Industrial Average rose 62.57 points, or 0.2 per cent, to 31,438.4, the S&P 500 lost 1.31 points, or 0.03 per cent, to 3,909.92 and the Nasdaq Composite dropped 35.16 points, or 0.25 per cent, to 13,972.53.

Locally, Australia’s covid-19 economic recovery has moved more than 553,000 unemployed Australians back into work in five months, with more than twice as many jobseekers exiting the government’s employment services programs as there are entering it, The Australian reports.  

Investors suffered broad-based losses on the Australian share market, despite most Asian markets trading higher and a good US lead.

The S&P/ASX200 benchmark index closed higher by 35.7 points, or 0.52 per cent, to 6,856.9 on Wednesday.

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The All Ordinaries closed up by 31.7 points, or 0.45 per cent, at 7,133.8.

The Commonwealth Bank reported a cash profit of $3.8 billion for the first six months of 2020/21, and shares closed lower by 1.49 per cent.

The financial sector was higher despite the setback, as were most sectors.

Gold was up 0.3 per cent at $US1,843.29 an ounce; Brent oil was up 0.6 per cent to $US61.43 a barrel; Iron ore was up 1.7 per cent to $US166.90 a tonne.

Meanwhile, the Australian dollar was buying 77.25 US cents at 8.30am, down from 77.29 US cents at Wednesday's close.

Asia

China stocks ended higher in the last trading session before the Lunar New Year holiday, with blue-chip stocks scaling an over 13-year high on Wednesday as strong inflation data underscored a recovery in the world's second-largest economy.

The blue-chip CSI300 index rose 2.1 per cent to 5,807.72, the highest since Oct. 17, 2007, while the Shanghai Composite Index added 1.4 per cent to 3,655.09.

In Hong Kong, stocks rose on to end at a three-week high, after upbeat data pointed to a continued recovery in China's economy.

The Hang Seng index rose 1.9 per cent, to 30,038.72

Japanese stocks ended higher in choppy trading on Wednesday after positive earnings from market bellwethers Toyota and Honda highlighted the improving outlook for the global economy.

The Nikkei index ended up 0.19 per cent at 29,562.93, with consumer cyclical and technology shares leading gains. The broader Topix rose 0.27 per cent to 1,930.82.

Europe

European shares rose on Wednesday as upbeat earnings reports from firms including SocGen helped boost optimism around a broader economic rebound, while shipping company Maersk slumped after its quarterly profit missed estimates.

France’s Societe Generale jumped 3.3 per cent after beating profit forecasts for the fourth quarter due to lower-than-expected charges related to the covid-19 pandemic.

Maersk, the world’s largest container shipping line, slumped 7.1 per cent as it missed analysts’ lofty forecasts for the end of last year and gave a more cautious outlook for 2021.

The pan-European STOXX 600 index rose 0.3 per cent, with commodity-linked shares and utility stocks leading the gains.

Most European indices climbed in morning trading, while Asian stocks scaled record highs earlier in the session as investors also looked to signs of progress around the proposed $1.9 trillion  US stimulus bill.

“There is optimism that there will be some sort of  US stimulus plan, while company results are hinting towards a good corporate story as we go ahead with the earnings season,” said Michael Hewson, an analyst at CMC Markets UK.

Historic monetary and fiscal stimulus has helped the STOXX 600 rally about 45 per cent since crashing to multi-year lows in March 2020, and the index is now just 5 per cent below its all-time high as hopes build of a faster economic recovery this year.

Data on Wednesday showed an annual rise in China’s factory gate prices in January for the first time in a year, as months of strong manufacturing growth in the world’s second-largest economy pushed raw material costs higher.

Export-laden German shares were flat by 0937 GMT after rising as much as 0.4 per cent.

German conglomerate Thyssenkrupp added 4.8 per cent after it raised its full-year outlook on improved demand, while online takeaway food company Delivery Hero was flat after reporting a 95 per cent surge in annual revenue.

Dutch Bank ABN Amro dropped 3.3 per cent even as it posted a better-than-expected fourth-quarter net profit.

Shares of state-controlled French power group EDF gained 0.8 per cent after its head defended a planned restructuring of the company, dubbed “Project Hercules”, even as a spat grows between France and the European Union over the future of the company.

North America

The S&P 500 and the Nasdaq edged slightly lower from record levels on Wednesday as energy and financials rose but some big tech stocks limited gains amid an ongoing rotation of portfolio holdings.

Remarks by Federal Reserve Chairman Jerome Powell, who reassured investors interest rates will remain low for some time to spur the economy and jobs growth, provided no new insights on the US central bank’s stance on monetary policy.

Powell is reiterating the Fed’s stance on staying with interest rates where they are until you see sustained inflation, said Jason Pride, chief investment officer for Private Wealth at Glenmede in Philadelphia. “I don’t think anything coming out there is surprising.”

A wave of selling in high-riding Tesla Inc’s and lesser declines in Amazon.com Inc’s, Microsoft Corp and Apple Inc pulled the Nasdaq down and weighed the most on the S&P 500.

The consumer discretionary index was the biggest drag on the S&P, with information technology another drag. On the upside, energy and financials rose.

A broadening of market leadership is underway with the focus on big tech easing off and sectors such as energy and financials gaining traction, said David Bahnsen, chief investment officer at The Bahnsen Group in Newport Beach, California.

“Is the whole market still reliant on big tech as it clearly was last summer? I think the answer is increasingly becoming ‘no,’ you’re seeing a broadening of market leadership,” Bahnsen said. “You have over 75 per cent of the S&P 500 trading above its 200-day moving average. That’s remarkable breadth.”

The Russell 1000 value index, which is heavily weighted towards cyclical sectors, rose while its growth index, comprising large tech companies, fell.

Shares of cannabis companies soared as the Reddit forum that pushed GameStop to record levels late last month extended a months-long rally on bets of decriminalisation under the administration of  US President Joe Biden.

Wall Street’s fear gauge spiked to a one-week high of 23.85 points before paring some gains.

Twitter Inc rallied after it forecast a strong start to 2021 as ad spending rebounds from a rock bottom.

The social media platform has thought about whether to hold bitcoin on its balance sheet, but it has not made any changes yet, chief financial officer Ned Segal told CNBC.

“The big question is sensitivity to valuation,” said Bahnsen, adding that at 23 to 25 times forward earnings there’s no question certain stocks are highly valued.

The Dow Jones Industrial Average rose 62.57 points, or 0.2 per cent, to 31,438.4, the S&P 500 lost 1.31 points, or 0.03 per cent, to 3,909.92 and the Nasdaq Composite dropped 35.16 points, or 0.25 per cent, to 13,972.53.

Data on Wednesday showed  US consumer prices rose moderately in January but underlying inflation remained benign amid a pandemic that has fractured the labor market and services industry.

Fourth-quarter earnings have so far also exceeded expectations, supporting sentiment.

Lyft Inc jumped after the ride-hailing firm said it is chopping costs and now expects to be profitable in the third quarter.

With Reuters

is senior editor for Morningstar Australia

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