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Global Market Report - 13 August

Lewis Jackson  |  13 Aug 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to rise after the S&P 500 closed at record a high for a third day running.

The Australian SPI 200 futures contract was up 28 points or 0.37 per cent at 7,498 near 7.00 am Sydney time on Friday, suggesting a positive start to trading.

The Dow and S&P 500 have jumped to record closes for a third straight day, with mega-cap technology stocks driving the market higher as investors warmed to jobs data showing a steady US economic recovery.

The Dow Jones Industrial Average rose 14.88 points, or 0.04 per cent, to 35,499.85, the S&P 500 gained 13.13 points, or 0.30 per cent, to 4,460.83 and the Nasdaq Composite added 51.13 points, or 0.35 per cent, to 14,816.26.

The Australian dollar was buying 73.40 US cents near 7.20am AEST, down from 73.61 US cents at Thursday’s close.

Locally, a Telstra turnaround and enthusiasm for insurers' earnings have helped the ASX inch its way to a closing high.

Telstra delivered improved full-year earnings and a $1.35 billion share buyback, while insurer QBE surged after returning to profit, on an eventful Thursday.

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AMP also pleased investors with earnings, but the trio's share price gains were offset by losses for titans Rio Tinto, Goodman Group and the Commonwealth Bank.

Rio Tinto fell 6.88 per cent to $120.26 after shares traded ex-dividend.

Investors may also be concerned by a plunging iron ore price.

UBS analyst Myles Allsop said iron ore prices had fallen by $US60 per tonne in the past three weeks.

China was cracking down on steel production for environmental benefit, he said.

The biggest company on the market, the Commonwealth Bank, also limited gains. Its shares lost 2.12 cent to $105.88.

Investors a day earlier pushed the bank's shares to a record price after its full-year earnings.

The benchmark S&P/ASX200 index closed higher by 3.9 points, or 0.05 per cent, to 7588.2.

The All Ordinaries closed up 5.9 points, or 0.08 per cent, to 7860.5.

Property giant Goodman Group dampened the mood by not raising its dividend despite an improved full-year profit.

Goodman improved net profit by 53 per cent to $2.31 billion but kept investors' payout constant.

Investors lowered the shares by 2.25 per cent to $22.64.

Market participants preferred Telstra, which said full-year earnings not affected by NBN costs would return to growth.

The company improved full-year profit by 3.4 per cent and promised an improved final dividend of eight cents per share.

Shares gained 3.66 per cent to $3.97.

QBE Insurance also attracted attention after it returned to first-half profit.

Shares climbed more than eight cent to $12.51.

Rival IAG rose by more than six per cent to $5.45 after it reinstated a final dividend the previous day.

The upbeat earnings news came as people in the Australian Capital Territory enter a seven-day coronavirus lockdown.

They join millions of people in NSW and Victoria enduring stay-at-home orders.

Elsewhere on the market, financial services giant AMP posted a 28 per cent drop in first-half net profit after weaker performances at its main wealth management and AMP Capital businesses.

The company reported net profit of $146 million for the six months to June 30, down from $203 million a year ago.

The board decided against paying an interim dividend.

Shares were up 3.24 per cent to $1.11.

Australia's largest energy retailer and generator AGL warned of further pain after slumping to a $2.06 billion full-year net loss.

Lower power prices continue to weigh on AGL and its underlying profit dropped 34 per cent to $537 million.

AGL warned of lower earnings by the same measure this financial year.

Shares sunk by 5.53 per cent to $7.18.

NAB gave a third-quarter update and said cash earnings were up more than 10 per cent on the same quarter last year.

Housing lending grew by two per cent while lending to small business improved by 4.3 per cent.

NAB boss Ross McEwan said coronavirus lockdowns were causing challenges for customers but he was optimistic about the long term.

Shares were up 0.18 per cent to $27.27.

Rio Tinto's peers in the iron ore trade had modest results.

BHP gained less than one per cent while Fortescue was even.

In the US, investors will look to the producer price index for more understanding of inflation.

The consumer price index increased 0.5 per cent last month after climbing 0.9 per cent in June, the largest drop in month-to-month inflation in 15 months.

The easing inflation may cause Federal Reserve officials to wait longer before tapering support measures.

The Dow Jones Industrial Average and S&P 500 were at record levels.

Spot Gold was flat at $US1752.03 an ounce; Brent crude was down 0.3 per cent at $US71.22 a barrel; Iron ore was down 1.5 per cent to $US162.96.

The yield on the Australian 10-year bond closed at 1.19 per cent.

Asia

At the close, China's Shanghai Composite index was down 0.22 per cent at 3,524.74.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed down 0.53 per cent at 26,517.82.

Japan's Nikkei 225 was down 0.20 per cent at 28,015.02.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up at 474.84.

The German DAX was up at 15,937.51.

North America

The Dow and S&P 500 have jumped to record closes for a third straight day, with mega-cap technology stocks driving the market higher as investors warmed to jobs data showing a steady US economic recovery.

The Dow Jones Industrial Average rose 14.88 points, or 0.04 per cent, to 35,499.85, the S&P 500 gained 13.13 points, or 0.30 per cent, to 4,460.83 and the Nasdaq Composite added 51.13 points, or 0.35 per cent, to 14,816.26.

Apple Inc, Microsoft Corp, Amazon.com, Google parent Alphabet Inc and Facebook Inc, which account for a quarter of the S&P 500's market capitalisation, led shares on the S&P and tech-heavy Nasdaq.

The Dow eked out a record close at the bell.

Tesla Inc, Nvidia Corp and Moderna Inc also rallied on a day in which more stocks declined than advanced.

"Today the S&P 500 reached another all-time high, and is at an all-time high for good reasons," said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis.

The fundamental backdrop is supportive of higher equity prices, Sandven said.
Earnings are trending higher, interest rates are low and inflation remains moderate, he said.

Traders snapped up big tech shares that had missed out on the overall market marching higher the past week, according to Tim Ghriskey, chief investment strategist at Inverness Counsel.

"The move into big tech is simply a trading opportunity. Big tech has been down for a week or so, underperforming the market pretty significantly," Ghriskey said.

"There are bargain hunters coming in, jumping on those securities."

Apple added the most to the S&P, rising 2.1 per cent, followed by Microsoft with a 1.0 per cent gain and Tesla adding 2.0 per cent.

Growth stocks rose 0.5 per cent, outpacing a 0.06 per cent gain in value shares, in a reversal of a recent trend.

Healthcare and technology were the best- performing S&P 500 sectors.

Energy weighed the most on the market.

The number of people in the US filing claims for unemployment benefits fell again last week as the economic recovery from the COVID-19 pandemic continued.

Data on Thursday showed US producer prices posted their largest annual increase in more than a decade last month, raising inflation concerns, after Wednesday's US consumer price index reading indicated the pace appeared to be slowing.

The data reflect well-known supply chain challenges that will not change Federal Reserve policy, said Mike Loewengart, managing director of investment strategy at E*TRADE Financial.

"Everyone is expecting potentially tapering to begin in September," he said.

"But for the most part, it would not change the conducive environment that we are currently in, for additional gains in equity markets."

Trading volume has slumped, typical of August, as a stellar second-quarter earnings season winds down.

Investors are now waiting for the Fed's annual meeting in Jackson Hole, Wyoming, at month end for clues on its plans to tighten policy.

Volume on US exchanges was 8.31 billion shares, compared with about 9.55 billion average for the full session over the last 20 trading days.

Micron Technology slid 6.4 per cent, one of the biggest weights on the S&P 500, after Morgan Stanley downgraded the stock to "equal-weight".

In earnings-related moves, Baidu Inc's US shares fell 3.2 per cent even after the company posted upbeat quarterly revenue.

Palantir Technologies Inc jumped 11.4 per cent after the US data analytics firm forecast third-quarter sales above expectations.

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

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