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Global Market Report - 11 October

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

The ASX is set to edge lower after Wall Street slipped Friday and data showed the US added fewer jobs in September than expected.

The Australian SPI 200 futures contract was down 4 points or 0.01 per cent at 7,273 near 7.45 am AEST on Monday, suggesting a negative start to trading.

US stocks hugged the flatline for the session but ended a volatile week with modest gains.

The S&P 500 edged lower by 0.2%. The broad index had risen for three straight sessions. The Nasdaq Composite fell 0.5% while the Dow Jones Industrial Average edged less than 0.1% lower.

All three indexes held on to weekly gains. The S&P 500 and Dow advanced around 0.8% and 1.2%, respectively, this week. The Nasdaq Composite added 0.1%.

Volatility has returned to markets in recent sessions, with the S&P 500 swinging at least 1% for three out of four days and other assets from bonds to commodities recording giant moves.

The Australian dollar was buying 73.06 US cents near 7.45am AEST, down from the last close of 73.12. The WSJ Dollar Index, which measures the US dollar relative to 16 foreign currencies, fell to 88.57.

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Locally, the S&P/ASX 200 closed 0.9% higher at 7320.1, broad-based gains helping end the benchmark's run of four weekly losses.

Every sector finished higher following a positive lead from US stocks, with materials and tech stocks leading gains. Iron ore mining companies Fortescue, BHP and Rio climbed between 2.4% and 4.0% amid higher base-metal prices, while pricier oil helped the energy sector add 1.0%.

The tech sector rose 1.3% as gains by Afterpay, Nearmap and Iress more than offset EML's 15% decline on regulatory issues in Ireland.

The ASX 200 rose 1.9% for the week to sit 4.0% below its mid-August record of 7628.9.

Record low interest rates have contributed to higher house prices, creating the potential for excessive borrowing, the Reserve Bank said Friday in a report card on the stability of the financial sector.

Iron-ore prices might be retreating, but for BHP, a surge in coal prices has given the world's No. 1 miner a new earnings driver, says Macquarie bank. Metallurgical coal prices have more than doubled since midyear.

Gold futures fell 0.1% to $US1757.40 an ounce; Brent crude rose 0.5% to $US82.39 a barrel; Iron ore was up 5.4 cents US$123.38.

The yield on the Australian 10-year bond rose to 1.63%; The yield on the US 10-year note moved up to 1.61%.

Asia

On Friday, Chinese stocks finished mixed as mainland markets reopened after a weeklong holiday, with insurers and oil majors higher, while property developers and electricity providers dragged. Elevated energy prices boosted sentiment in oil majors, while electric power generators retreated after an earlier surge amid China's power crunch. The Shanghai Composite Index rose 0.7%, the Shenzhen Composite Index gained 0.8% and the ChiNext Price Index was flat.

Hong Kong's benchmark Hang Seng Index rose 0.6%, advancing for a second day to reach its highest close since mid-September. Alibaba led gains on continued positive sentiment after a company led by Charlie Munger said it has significantly increased its holding of the Chinese tech giant's ADRs.

Japan's Nikkei Stock Average closed 1.3% higher, led by gains in energy and auto stocks, as US debt ceiling concerns eased. Investors will be watching for any economic initiatives from new Japanese Prime Minister Fumio Kishida.

Europe

European markets were mostly lower Friday as traders awaited US job data. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies, was down 0.3%.

"European markets are struggling to maintain the positive momentum seen yesterday, with stocks largely treading water ahead of the latest US jobs report," IG analyst Joshua Mahony says,

In London, the FTSE 100 closed 0.25% higher.

North America

US stocks hugged the flatline on Friday but ended a volatile week with modest gains.

The S&P 500 edged lower 0.2% as of the 4 p.m. ET close of trading. The broad index had risen for three straight sessions, closing up 0.8% Thursday. The Nasdaq Composite fell 0.5% while the Dow Jones Industrial Average eased down 8 points, less than 0.1%.

All three indexes held on to weekly gains. The S&P 500 and Dow advanced around 0.8% and 1.2%, respectively, this week. The Nasdaq Composite added 0.1%.

Volatility has returned to markets in recent sessions, with the S&P 500 swinging at least 1% for three out of four days and other assets from bonds to commodities recording giant moves.

Throughout the week, investors remained focused on surging energy prices, concerns about inflation and negotiations on the debt ceiling. Lawmakers struck a deal for a short-term extension to the debt limit in the Senate on Thursday, stoking a rally in the stock market after several days of uncertainty.

The yield on the 10-year Treasury note jumped above 1.6% in trading Friday, continuing a recent rise that has triggered turbulence across markets. Oil prices jumped to a seven-year high this week, while cotton prices have been trading at their highest levels in about a decade. Bitcoin prices have been rallying again, hovering around $54,000 on Friday.

On Friday, energy stocks continued their historic rally—gaining 3.2% and soaring past the broader benchmark—while tech continued to stumble. The S&P 500's energy sector was heading toward its highest close since early 2020 in trading Friday, according to Dow Jones Market Data.

The US added 194,000 jobs in September, data showed Friday, substantially less than expected and down from August. Economists had forecast a gain of 500,000 jobs. Some workers exited the labor force and the unemployment rate fell to 4.8%.

"We've got some conflicting signals in there," said Jason Pride, chief investment officer of private wealth at Glenmede. But, he said, "we're more likely than not to continue to see acceptable growth in the economy."

Still, the latest jobs report highlighted how the economic recovery remains uneven. The end of federal Covid-related jobless benefits and reopened schools drove some workers back into the labor force, but the Delta variant and persistent staffing shortages are restraining the recovery.

"I was surprised at how bad the miss was," said Shana Sissel, chief investment officer at Spotlight Asset Group.

The bond market is closed on Monday for Columbus Day, while the stock market will be open.

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

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