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Global Market Report - 13 August

Lex Hall  |  13 Aug 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise after US tech-related stocks led a broad rally in which Wall Street neared pre-pandemic highs.

The Australian SPI 200 futures contract was up 42 points, or 0.69 per cent, to 6,130 points at 8.30am Sydney time on Thursday, suggesting a positive start to trading.

The S&P 500 jumped on Wednesday but finished just short of its February record closing high, in a broad rally led by tech-related stocks.

The Dow Jones Industrial Average rose 289.93 points, or 1.05 per cent, to 27,976.84, the S&P 500 gained 46.66 points, or 1.40 per cent, to 3,380.35 and the Nasdaq Composite added 229.42 points, or 2.13 per cent, to 11,012.24.

Locally, Woodside Petroleum has recorded a half-year net loss of $US4.07 billion ($5.7 billion), mainly due to impairment losses and “onerous” contract provisions. But the company said it had posted record first-half production and was poised to meet its guidance for higher output in 2020.

Insurer QBE has posted a $US712 million loss for the half year, compared to a profit of $US463 million a year ago.

The S&P/ASX200 benchmark index closed lower by 6.7 points, or 0.11 per cent, at 6,132.0 points on Wednesday. The All Ordinaries index closed lower by 15.1 points, or 0.24 per cent, at 6,257.0.

Gold is up 0.3 per cent to $US1,916.82 an ounce; Brent oil is up 1.9 per cent to $US45.36 a barrel; and iron ore is up 0.3 per cent to $US121.51 a tonne.

Meanwhile, the Australian dollar was buying 71.56 US cents at 8.30am, up from 71.28 US cents at Wednesday’s close.

Asia

Chinese shares fell for a second straight session on Wednesday after global market sentiment soured on the prospect of a swift US stimulus boost and as domestic data showed softer growth in bank lending.

The Shanghai Composite index closed down 0.6 per cent at 3,319.27. The blue-chip CSI300 index fell 0.7 per cent.

The smaller Shenzhen index lost 1.3 per cent, the start-up board ChiNext Composite index fell almost 2 per cent and Shanghai's tech-focused STAR50 index dropped 2.2 per cent.

Hong Kong shares touched a near three-week high on Wednesday, led by a rebound in heavyweight financial stocks, and as a regional sell-off in equities ran out of steam towards the end of the trading session.

The Hang Seng index closed up 1.4 per cent at 25,244.02, near its highest level since July 23 hit earlier in the session. The Hang Seng China Enterprises index rose 0.6 per cent.

Japanese stocks edged higher on Wednesday as some investors bought shares of major exporters on the back of a slightly weaker yen, although sentiment was cautious due to a stalemate in talks over additional US economic stimulus.

The Nikkei 225 Index ended up 0.41 per cent at 22,843.96, with the industrial and consumer discretionary sectors leading gains. The broader Topix rose 1.23 per cent.

Europe

European stocks rallied on Wednesday as a billion-dollar takeover offer for Swiss firm Sunrise Communications boosted the telecom sector and investors looked past a collapse in Britain’s quarterly economic output to bet on a stimulus-driven recovery.

The pan-European STOXX 600 closed 1.1 per cent higher, marking its fourth consecutive day of gains and settled near a three-week high. Wall Street's benchmark S&P 500 headed for a record high boosted by technology stocks.

Sunrise Communications surged 26.8 per cent to a record high after US firm Liberty Global launched a takeover offer for the company in a deal valued at 6.8 billion Swiss francs ($10.3 billion).

Shares in German telecoms investor Freenet, Sunrise’s largest shareholder, jumped 16.8 per cent, while the broader sector gained 1.7 per cent to lead sectoral gains.

Meanwhile, London's FTSE 100 jumped 2 per cent as investors focused on signs of a recovery in economic output in June, shrugging off a record 20.4 per cent plunge in the second quarter, the largest contraction reported by any major economy.

June output grew by 8.7 per cent from May, just above economists’ average expectation in a Reuters poll for an 8 per cent rise.

Stock markets globally have rallied this week on improving data from China and Europe, signs of progress in developing a covid-19 vaccine and expectations of fresh US stimulus.

But US House Speaker Nancy Pelosi said Democrats and the Trump administration remained far apart regarding any agreement over further economic aid.

Among other individual movers, Dutch bank ABN Amro jumped 8.1 per cent after it said its corporate bank will retreat to northwest Europe, exiting the US, Asia, Australia and Brazil as it joins a growing list of banks restructuring their commodities business to cut risk.

European food-ordering firm Just Eat Takeaway.com rose 3.2 per cent after reporting higher revenue and underlying profit for the first half of 2020.

British online fashion retailer ASOS jumped 13.3 per cent as it forecast full-year sales and profit significantly ahead of market expectations.

North America

The S&P 500 in afternoon trading briefly surpassed its record high closing level of 3,386.15 from 19 February, before the onset of the coronavirus crisis in the US that caused one of Wall Street’s most dramatic crashes in history.

The index reached as high as 3,387.89. Its intraday record of 3,393.52 was also set on 19 February.

Heavyweights Microsoft Corp, Amazon.com and Apple were among the top boosts to the S&P 500 during the session.

The Nasdaq and Dow also rose sharply. The Nasdaq was the first of the three major indexes to bounce back to an all-time high in June. The Dow remains below its February peak.

With a better-than-feared second-quarter earnings season largely over, investors are preparing for the risk of a closely contested US presidential election in the fall.

They also are awaiting news on stimulus talks. A breakdown in bipartisan talks over the next federal aid bill to help tens of millions of Americans suffering in the coronavirus pandemic entered a fifth day, with neither side ready to resume negotiations.

Democratic candidate Joe Biden on Tuesday picked Senator Kamala Harris as his choice for vice president.

Tesla shares jumped 13.1 per cent, in one of the biggest boosts to the Nasdaq, after it announced a five-for-one stock split in an attempt to make its shares more accessible to employees and investors.

Data showed US consumer prices increased more-than-expected in July, but high unemployment is likely to keep inflation under control, allowing the Federal Reserve to continue pumping money into the economy.

is content editor for Morningstar Australia

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