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Global Market Report - 11 November

Emma Rapaport  |  11 Nov 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to extend their rally, and while there have been further overall gains overseas, the pace of the rotation toward the previous market losers has eased.

The Australian SPI 200 futures contract was up 64 points, or 1 per cent, to 6,405 points at 7am Sydney time on Wednesday, suggesting a positive start to trading.

The Nasdaq closed lower on Tuesday as investors sold off technology stocks that benefited from virus lockdowns and favored the sectors that suffered most during the pandemic on optimism that a covid-19 vaccine would turn around the economy.

The Dow Jones Industrial Average rose 234.51 points, or 0.8 per cent, to 29,392.48, the S&P 500 lost 7.25 points, or 0.20 per cent, to 3,543.25 and the Nasdaq Composite dropped 164.62 points, or 1.41 per cent, to 11,549.16.

Locally, the S&P/ASX200 benchmark index closed up 41.7 points, or 0.66 per cent, to 6,340.5 on Tuesday after Pfizer said its coronavirus vaccine was 90 per cent effective.

The ASX200 reached a session high of 6,438.2 in the first 20 minutes of trade.

The index closed at an eight-month high for a second consecutive session.

On the ASX, energy providers were just some of the big winners after world oil prices climbed about eight per cent on the vaccine news. Travel stocks also soared.

Property group Unibail-Rodamco-Westfield had the biggest gains of large capitalisation companies after it said the vaccine could have a significant impact on retail property.

Gold was down 4.99 per cent at $US1,854.40 an ounce; Brent oil surged 7.48 per cent per cent to $US42.40 a barrel; Iron ore was up 0.47 per cent at $US120.83 a tonne.

Meanwhile, the Australian dollar was buying 72.8 US cents at 8.30am, up from 72.78 US cents on Wednesday's open.

Asia

Hong Kong stocks rose on Tuesday, in line with gains in other parts of Asian markets, as investors cheered progress in the development of a covid-19 vaccine.

At the close of trade, the Hang Seng index was up 285.31 points, or 1.1 per cent, at 26,301.48. The Hang Seng China Enterprises index fell 0.43 per cent to 10,586.89.

The sub-index of the Hang Seng tracking energy shares rose 9.3 per cent, while the IT sector dipped 5.98 per cent, the financial sector ended 3.31 per cent higher and the property sector rose 4.8 per cent.

The top gainer on the Hang Seng was CNOOC Ltd, which gained 13.96 per cent, while the biggest loser was Techtronic Industries Co Ltd, which fell 9.79 per cent.

Pfizer Inc’s experimental covid-19 vaccine is more than 90 per cent effective based on initial trial results, the drugmaker said on Monday, a major victory in the war against a virus that has killed over a million people and battered the global economy.

But tech shares tracked overnight weakness on the Nasdaq Composite, as companies that outperformed during the pandemic fell on news of Pfizer’s vaccine progress.

The Hang Seng tech index tumbled 5.2 per cent, posting its worst day since July 16.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.92 per cent, while Japan’s Nikkei index closed up 0.26 per cent.

Europe

European shares held near eight-month highs on Tuesday, riding a wave of optimism about a covid-19 vaccine breakthrough, although concerns about the pandemic’s economic damage capped gains.

The pan-European STOXX 600, which rallied 4 per cent on Monday after positive news from US drugmaker Pfizer about its covid-19 vaccine candidate, rose 0.9 per cent.

The European Commission said it will approve on Wednesday a contract for the supply of Pfizer and its partner BioNTech's potential coronavirus vaccine.

“European equity markets are consolidating following yesterday’s impressive rally,” Milan Cutkovic, market analyst at Axi, said of European shares, which have surged 12 per cent this month.

While President-elect Joe Biden is expected to restore a calmer US trade and foreign policy, strict coronavirus lockdowns have threatened a nascent European recovery.

London's FTSE 100 rose 1.8 per cent, despite data showing that British employers made a record number of staff redundant in the third quarter and the jobless rate jumped.

Italy's bourse added 0.4 per cent a day after posting its best day since March. The country is ramping up business restrictions in Tuscany and four other regions to rein in the second wave of the pandemic.

In Amsterdam, shopping mall owner Unibail-Rodamco-Westfield shares surged 21 per cent to the top of the STOXX 600 after its shareholders voted against a planned 3.5 billion euro ($4.15 billion) rights issue.

North America

The S&P 500 posted a modest loss and the Nasdaq closed sharply lower on Tuesday as promising news regarding an effective covid-19 vaccine led investors away from market leaders and toward cyclical stocks associated with economic recovery.

The blue-chip Dow, buoyed by industrial shares, gained ground and crude oil prices extended the previous session’s surge as investors bet on a demand rebound.

Pfizer Inc announced on Monday that its covid-19 vaccine candidate, developed with German partner BioNTech, showed in trials it had a 90 per cent success rate in preventing infection.

The development led to investors taking profits from market-leading tech stocks that have thrived amid the pandemic recession, a sell-off which pulled the tech-heavy Nasdaq deep into red territory.

Uncertainties from Washington still simmer in the background as President Donald Trump continued to press for investigations of election fraud following his defeat by Democrat challenger Joe Biden.

The Dow Jones Industrial Average rose 262.95 points, or 0.9 per cent, to 29,420.92, the S&P 500 lost 4.97 points, or 0.14 per cent, to 3,545.53 and the Nasdaq Composite dropped 159.93 points, or 1.37 per cent, to 11,553.86.

is an editor for Morningstar.com.au

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