Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn


Global Market Report - 12 October

Lewis Jackson  |  12 Oct 2021Text size  Decrease  Increase  |  
Email to Friend


Australian shares are set to open lower after US stocks skidded and an oil price jump added to concerns over elevated energy costs.

The Australian SPI 200 futures contract was down 27 points or 0.4 per cent at 7,237 near 8.00 am AEST on Tuesday, suggesting a negative start to trading.

US stocks fell Monday, while oil prices rallied.

The S&P 500 retreated 0.7%, while the Dow Jones Industrial Average declined 0.7%. The technology-heavy Nasdaq Composite slipped 0.6%.

Stocks rose in the morning, but later turned lower as investors fretted about the combination of inflation and slowing growth. Inflation has proved stickier than expected, brought on by supply-chain disruptions, labor shortages and surging energy prices.

The Australian dollar was buying 73.43 US cents near 8.00am AEST, up from the previous close of 73.06. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, rose to 88.82.

Locally, the S&P/ASX 200 closed 0.3% lower at 7299.8, weighed by technology, health and gambling stocks. The benchmark pared losses through the session after dropping as much as 1.0% early on, but it was unable to build on strength in commodity stocks.

Investing Compass
Listen to Morningstar Australia's Investing Compass podcast
Take a deep dive into investing concepts, with practical explanations to help you invest confidently.
Investing Compass

WiseTech, Xero and Afterpay lost between 3.4% and 4.2% as tech stocks followed Friday's weak lead from their US counterparts.

The health sector lost 1.3%, with Cochlear, Healius, Pro Medicus and Clinuvel leading declines.

Star Entertainment was the worst-performing ASX 200 component, shedding 23% after allegations that it enabled criminal activity at its casinos. Crown Resorts and Skycity followed, falling 3.4% and 5.4%, respectively.

Fortescue announced Monday plans to build a green energy manufacturing center in Queensland. Construction will commence in February 2022. Shares rose 5.26% to close at $15.

Gold futures fell 0.1% to $US1755.70 an ounce; Brent crude rose 1.5% to $US83.62 a barrel; Iron ore was up 9.4% US$135.03.

The yield on the Australian 10-year bond rose to 1.71%; US bond markets were closed for Columbus Day.


Chinese stocks ended Monday lower, as the market continued to trade in a tight range after the weeklong National Day holidays.

The benchmark Shanghai Composite Index edged down 0.46 points while the Shenzhen Composite Index fell 0.4% to 2403.46. Power producers led the downturn as investors continue to worry about elevated coal costs, despite Beijing's recent efforts to secure coal supplies and support electricity tariff increases.

Hong Kong shares ended the session higher, led by gains in technology stocks. The Hang Seng Index closed 2.0% higher at 25325.09.

Alibaba Group added 7.9% and Tencent Holdings rose 2.9%. Meituan was the best performer of the day with an 8.4% gain, after Chinese authorities imposed a fine on the company that was lower than expected, KGI Securities said.

Japanese stocks ended broadly higher, led by especially strong gains in auto and electronics stocks. The Nikkei Stock Average rose 1.6%.


European markets were flat Monday. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies, was up 0.05%.

"The rise in oil prices continues to be the major bugbear—the rally shows no sign of slowing, creating the potential for a feedback loop that accelerates the price rise and sends inflation fears into overdrive," IG analyst Chris Beauchamp says.

In London, the FTSE 100 closed 0.7% higher.

North America

US stocks fell on Monday, while oil prices rallied.

The S&P 500 retreated 0.7% as of the 4 p.m. ET close of trading, while the Dow Jones Industrial Average declined 0.7%, or 249 points. The technology-heavy Nasdaq Composite slipped 0.6%.

Front-month US oil futures climbed 1.5% to settle at $80.52 per barrel, their highest level since 2014. Futures on Brent crude, the global oil benchmark, rose 1.5% to $83.65 a barrel, their highest settle value in three years.

Crude prices have climbed in recent weeks on the back of a world-wide shortage of natural gas, raising expectations that some power plants could switch their fuel from gas to oil as winter approaches. The rally in crude prices boosted stocks such as oilfield-services giant Halliburton, whose shares gained 3.6%.

Meanwhile, gains in industrial metals lifted mining stocks. Freeport-McMoRan advanced 3.25%, making it one of the best-performing stocks in the S&P 500 on Monday. Copper futures in New York rose 2.1% to settle at about $4.37 a pound, a three-week high.

Stocks rose in the morning, but later turned lower as investors fretted about the combination of inflation and slowing growth. Inflation has proved stickier than expected, brought on by supply-chain disruptions, labor shortages and surging energy prices.

Meanwhile, the pace of the post-pandemic recovery has slowed. Over the weekend, Goldman Sachs lowered its projections for US growth in the fourth quarter of 2021 and next year, citing factors such as the impact of Covid-19 on consumer spending and a looming drop-off in government support for the economy.

"We're seeing a stagflation trend, with growth expectations falling and inflation rising," said Chris Senyek, chief investment strategist at Wolfe Research.

Investors are also looking ahead to the third-quarter earnings season, which kicks off this week. Corporate earnings could shed light on how price increases are affecting companies, while companies' revenue and profit projections will show how optimistic executives are about growth and consumer spending.

No major earnings are due Monday. Companies set to report later in the week include Delta Air Lines, Domino's Pizza and JPMorgan Chase.

The S&P 500 is down nearly 3.5% from its record close of early September. Stocks have been volatile in recent weeks.

"If it wasn't for the huge amount of savings people are sitting on from the pandemic, I'd be more worried," said Mike Bell, global market strategist at J.P. Morgan Asset Management. "The obvious risk to that is winter. I don't think anyone knows if that will lead to another pickup in cases and hospitalizations."

Among individual stocks, Southwest Airlines shares slid 3.4% as the carrier cancelled hundreds of flights on Monday, following roughly 1,900 flight cancelations over the weekend. Severe weather in Florida and air-traffic-control issues caused the wave of disruptions.

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

AAP logo

© 2022 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

Email To Friend