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Global Market Report - 12 August

Lex Hall  |  12 Aug 2020Text size  Decrease  Increase  |  
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Australian shares are poised for a positive start despite Wall Street losing gains in late trade to close down, ending a winning streak.

The Australian SPI 200 futures contract was up 9 points, or 0.15 per cent, to 6,103 points at 8.30am Sydney time on Wednesday, suggesting a positive start to trading.

US stocks closed lower on Tuesday, with the S&P 500 and Dow snapping a seven-day streak of gains and falling late in the session on growing uncertainty about breaking a stalemate in Washington over a fiscal stimulus deal.

The Dow Jones Industrial Average fell 104.53 points, or 0.38 per cent, to 27,686.91, the S&P 500 lost 26.78 points, or 0.80 per cent, to 3,333.69 and the Nasdaq Composite dropped 185.53 points, or 1.69 per cent, to 10,782.82.

Locally, the financial sector gained 1.14 per cent and the S&P/ASX200 benchmark index closed higher by 28.5 points, or 0.47 per cent, at 6138.7 points on Tuesday. The All Ordinaries index closed up by 25.0 points, or 0.40 per cent, at 6,272.1.

Commonwealth Bank has reported an 11.3 per cent drop in full-year profit to $7.3bn and its lowest final dividend since 2006, as covid-19 hit the economy and caused a rise in expected loan losses.

Toll road operator Transurban also felt the bite of the pandemic, which curbed traffic volumes and forced it to a loss of $111 million, compared to a profit of $117 million in the previous corresponding period.

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Gold was down 5.2 per cent to $US1,921.35 an ounce; Brent oil fell 1.1 per cent to $US44.50 a barrel; and Iron ore rose 1.6 per cent to $US121.09 a tonne.

Meanwhile, the Australian dollar is buying 71.45 US cents at 8.30am, down from 71.68 US cents at the close on Tuesday.


China stocks ended lower on Tuesday, dragged down by tech firms, as worries over rising Sino-US tensions weighed on investor sentiment.

At the close, the Shanghai Composite index was down 1.15 per cent at 3,340.29, while the blue-chip CSI300 index was down 0.91 per cent.

Hong Kong stocks ended higher on Tuesday, led by strong gains for consumer firms, as they were expected to be less impacted by the Sino-US tensions.

Snapping a three-day losing streak, the Hang Seng index rose 2.1 per cent to close at 24,890.68, while the China Enterprises Index gained 1.6 per cent, to 10,153.40.

Leading the gains, the Hang Seng consumer discretionary index ended 3 per cent higher at a near seven-month peak, with Chinese hot-pot restaurant chain operator Haidilao International Holding surging 13 per cent to a record peak.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.49 per cent, while Japan’s Nikkei index closed up 1.88 per cent.


European stocks hit a near three-week high on Tuesday, as US stimulus bets and encouraging data out of China and Germany galvanised growth-linked cyclical sectors like travel and leisure, banking and automakers.

The pan-European STOXX 600 index closed 1.7 per cent higher, with Wall Street's S&P 500 coming in close quarters with an all-time high as investors hoped for more US fiscal stimulus.

Carmakers surged 4.4 per cent in Europe after data showed China’s auto sales climbed 16.4 per cent in July, the fourth straight month of gains as the world’s biggest vehicle market comes off lows hit during the coronavirus lockdown.

Other hard-hit sectors like travel & leisure, oil & gas and banks jumped between 3.7 per cent and 4.5 per cent.

Unprecedented monetary and fiscal stimulus, hopes of a covid-19 vaccine and Europe’s relative success in limiting the spread of coronavirus have helped the STOXX 600 climb 38 per cent from its March lows, but remains about 15 per cent below its record highs.

A ZEW survey showed investor sentiment in Germany picked up more-than-expected in August, reflecting hopes that Europe’s biggest economy is on the road to recovery.

The upbeat global mood helped investors look past data showing the number of people in work in Britain suffered the biggest drop since 2009 in the three months through June.

Holiday Inn-owner InterContinental Hotels gained 4.8 per cent as it saw some “very early” signs of a recovery in demand, but its profit slumped 82 per cent in the first half of 2020.

German online fashion retailer Zalando rose 1.9 per cent after reporting a more than doubling of sales on its site.

Of the 240 companies in the STOXX 600 that have reported second-quarter earnings so far, 60.4 per cent topped analysts’ estimates, according to Refinitiv Eikon data. In a typical quarter, half beat estimates.

Banco BPM surged 6.9 per cent on expectations that Italy’s third-largest bank could become involved in a possible merger.

Defensive sectors like real estate, utilities, healthcare and food & beverage—considered more stable during an economic crisis—posted smaller gains.

North America

The S&P 500 and the Dow had been higher for much of the session, and the S&P 500 came within striking distance of its closing record high from February, before the onset of the coronavirus crisis in the US that caused one of Wall Street’s most dramatic crashes in history.

The day’s declines followed comments from US Senate Republican leader Mitch McConnell, who told Fox News that White House negotiators had not spoken on Tuesday with Democratic leaders in the US Congress on coronavirus aid legislation after talks broke down last week.

Investors have been hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over with US cases surpassing 5 million last week.

The Nasdaq fell more than 1 per cent, extending recent losses and registering its biggest daily percentage decline since 23 July, with investors continuing to shed technology-related market heavyweights in favor of value names.

Apple, Amazon.com and Microsoft were the biggest drags on the S&P 500. Financials and industrials, which have underperformed other sectors this year, were the only two positive S&P 500 sectors on the day.

The Russell 1000 value index rose sharply during the session before ending near flat. It sharply outperformed the Russell 1000 growth index, which sank 1.5 per cent.

In early afternoon trading, the S&P 500 hit a session high of 3,381.01, putting it just 0.15 per cent shy of its 3,386.15 record closing high and 0.37 per cent from its 3,393.52 all-time intraday peak, both registered on 19 February.

Ultra-low interest rates, trillions of dollars in stimulus and, more recently, a better-than-feared second-quarter earnings season have allowed all three of Wall Street’s main indexes to recover.

is senior editor for Morningstar Australia

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