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Global Market Report - 12 April

Lex Hall  |  12 Apr 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to follow Wall Street higher as growth stocks again pushed US indices to record highs.

The Australian SPI 200 futures contract was up 6 points, or 0.1  per cent, at 6,980 points at 8.30am Sydney time on Monday, suggesting a positive start to trading.

The S&P 500 and the Dow rose on Friday to close at record highs, posting a third straight weekly rise partly on a lift from growth stocks, with a late-day rally building gains ahead of quarterly earnings season next week.

The Dow Jones Industrial Average rose 297.03 points, or 0.89 per cent, to 33,800.6, the S&P 500 gained 31.63 points, or 0.77 per cent, to 4,128.8 and the Nasdaq Composite added 70.88 points, or 0.51 per cent, to 13,900.19.

Locally, the big four bank bosses will face scrutiny over their future acquisition ambitions, with Suncorp’s banking arm widely seen as being in the sights of a major lender but any move likely to seriously erode competition, The Australian reports

Australia's share market closed little changed but has posted its best week in the past nine.

The benchmark S&P/ASX200 index closed down 3.6 points, or 0.05 per cent, to 6,995.2 on Friday.

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The All Ordinaries closed higher by two points, or 0.03 per cent, to 7,252.3 points.

The market was down for most of the session but investors rallied late.

In a trading week shortened by Easter holidays, the ASX200 gained 2.44 per cent.

On Thursday, the index closed at its highest level since the coronavirus crash, 6,998.8.

Gold was down 0.7 per cent at $US1,743.88 an ounce; Brent oil was down 0.4 per cent to $US62.95 a barrel; Iron ore was up 0.3 per cent to $US173.54 a tonne.

Meanwhile, the Australian dollar was buying 76.24 US cents at 8.30am, up from 76.07 US cents at Friday’s close.

Asia

China stocks ended lower on Friday to post a weekly loss, as robust inflation data raised investor concerns over policy tightening, while Sino-US tensions also weighed on the market.

The blue-chip CSI300 index fell 1.5 per cent to 5,035.34, while the Shanghai Composite Index eased 0.9 per cent to 3,450.68.

For the week, CSI300 dropped 2.4 per cent, while the SSEC shed 1 per cent.

Hong Kong stocks closed lower on Friday to log weekly losses, as robust China inflation data raised investor concerns over policy tightening, while Sino-US tensions also weighed on the market.

At the close of trade, the Hang Seng index was down 309.27 points, or 1.07 per cent, at 28,698.80. The Hang Seng China Enterprises index fell 1.19 per cent to 10,977.37.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.68 per cent, while Japan’s Nikkei index closed up 0.2 per cent.

Europe

European stocks were subdued on Friday, but marked their longest weekly winning streak since November 2019 as hopes of a rapid recovery in economic growth offset doubts over the euro zone’s covid-19 vaccination programme.

The pan-European STOXX 600 index was up 0.1 per cent after hitting an all-time high at the open, while the UK’s blue-chip FTSE 100 slipped 0.4 per cent.

Global sentiment was underpinned by the US Federal Reserve’s pledge to keep its super-easy policy in place even as data showed the world’s largest economy kicking into higher gear.

London equities have outperformed this week, with the domestically focused FTSE mid-cap index notching a record high as Britain gradually emerges from a strict winter coronavirus lockdown.

“While the UK and US have done relatively well on the vaccination roll-out, continental Europe has lagged,” said Dhaval Joshi, chief strategist at BCA Research.

“But they will sort it out later this year. You’ll see an early rebound in UK and US economies from Q2 onwards. In continental Europe, it will be later this year rather than Q2.”

European stocks hit a series of all-time highs this week, despite setbacks on the vaccination front after European regulators found a potential link between AstraZeneca’s covid-19 vaccine and reports of rare brain blood clots.

“The year has been without a major correction so far, and with equity inflows continuing to hit new multi-year highs the sense of ‘irrational exuberance’ is building once again,” said Chris Beauchamp, chief market analyst at IG.

“Some measure of caution would seem to be the prudent approach until a more comprehensive conclusion can be drawn.”

Investors will shift their focus to the US earnings season next week, with profits at S&P 500 companies expected to jump 25 per cent in the first quarter, according to Refinitiv IBES estimate.

Airbus rose 0.3 per cent after the French planemaker reported slightly higher deliveries in the first quarter.

Holiday company TUI fell 2.1 per cent after it said it was raising 350 million euros ($416.33 million) through an issuance of convertible bonds to bolster its finances and repay debt.

British American Tobacco dropped 2.5 per cent, among the biggest drags on STOXX 600, after J.P. Morgan downgraded the stock to “neutral”.

North America

The S&P 500 and the Dow rose on Friday to close at record highs, posting a third straight weekly rise partly on a lift from growth stocks, with a late-day rally building gains ahead of quarterly earnings season next week.

Growth names have found their footing over the past two weeks after being outperformed by value stocks for most of the year. A pullback in the 10-year US Treasury yield from a 14-month high hit in late March encouraged buying in growth.

Data showed US producer prices increased more than expected in March, bringing the largest annual gain in 9½ years.

Many investors now expect higher inflation as vaccine rollouts help the US economy rebound from lockdowns, yet stocks showed little concern as the Federal Reserve has maintained it will allow inflation to overshoot its target.

“This is why all week long (Powell) was jawboning, he made sure everyone understood they were expecting a spike and they are ready for it, it wasn’t a surprise,” said Ken Polcari, managing partner at Kace Capital Advisors in Jupiter, Florida.

“Which is why the market is not backing off, because he succeeded in jawboning the anxiety and stopped people from getting really panicked about it.”

The Dow Jones Industrial Average rose 297.03 points, or 0.89 per cent, to 33,800.6, the S&P 500 gained 31.63 points, or 0.77 per cent, to 4,128.8 and the Nasdaq Composite added 70.88 points, or 0.51 per cent, to 13,900.19.

For the week, the S&P rose 2.71 per cent, the Dow advanced 1.96 per cent and the Nasdaq climbed 3.12 per cent.

The banks kick off first-quarter earnings season next week with Goldman Sachs, JPMorgan and wells Fargo scheduled to report on Wednesday. Analysts expect profits for S&P 500 firms to show a 25 per cent jump from a year earlier, according to Refinitiv IBES data. That would be the strongest performance for the quarter since 2018.

Megacap names such as Apple, Amazon and Microsoft, which are in the growth index, advanced to pace the S&P 500. Amazon shares rose 2.21 per cent as warehouse workers in Alabama rejected an attempt to form a union.

The Russell 1000 growth index, comprised largely of technology stocks, outperformed its value counterpart, made up mostly of cyclical stocks such as financials and energy names, for a second week following the pullback in longer-dated Treasury yields.

Bank of America’s weekly fund flow figures showed investors have pumped more money into equities over the past five months than in the last 12 years.

A 3.24 per cent gain in Honeywell helped lift the Dow as Jefferies and J.P. Morgan raised their price targets on the US aero parts maker’s shares.

With Reuters

is senior editor for Morningstar Australia

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