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Global Market Report - 13 May

Lewis Jackson  |  13 May 2021Text size  Decrease  Increase  |  
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Australian shares are set to open lower again, as the US reported the biggest monthly jump in inflation since 2009, raising concerns the Fed could hike rates sooner than expected

The Australian SPI 200 futures contract was down 28 points or 0.4 per cent to 6993 near 7.00 am Sydney time on Thursday, suggesting a negative start to trading.

Wall Street closed lower on Wednesday with the S&P suffering its biggest one-day percentage drop since February, as inflation data fueled concerns over whether interest rate hikes from the Fed could happen sooner than anticipated.

The Dow Jones Industrial Average fell 681.5 points, or 1.99 per cent, to 33,587.66, the S&P 500 lost 89.06 points, or 2.14 per cent, to 4,063.04 and the Nasdaq Composite dropped 357.75 points, or 2.67 per cent, to 13,031.68.

Locally, concerns that markets may have peaked at record heights have forced Australian shares lower, despite the Commonwealth Bank impressing.

The ASX had broad-based losses and fell for a second consecutive day after on Monday posting a record high close.

The benchmark S&P/ASX200 index closed down by 52.1 points, or 0.73 per cent, to 7044.9 on Wednesday.

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The All Ordinaries closed down 50.5 points, or 0.69 per cent, to 7281.1 points.

Strong third-quarter earnings for the Commonwealth Bank could not lift the wider market.

Australia's biggest bank said cash profit from continuing operations rose to $2.4 billion in the third quarter of this financial year.

This was helped by strong home-loan growth and increases in business lending. There were fewer bad loans.

The market heavyweight was the only one of the big four banks to close higher, rising 1.05 per cent to $95.57.

Qantas delayed resuming international flights until late December after the federal budget revised forecasts for overseas travel.

Qantas shares were down 3.43 per cent to $4.50.

Building materials supplier CSR lifted full-year profit by 17 per cent, and the good times may continue as Australians take advantage of the federal government's HomeBuilder stimulus.

CSR reported a net profit of $146.1 million for the 12 months to March 31.

Shares were up 4.23 per cent to $6.16.

Elsewhere on the ASX the biggest losses were in energy and utilities. Both lost more than two per cent.

Shares in information technology and telecommunications were the only ones higher, rising by less than one per cent.

Accounting software vendor Xero gained 2.25 per cent to $134.88 prior to its full-year earnings on Thursday.

The big miners were mixed amid the gloom.

BHP dropped 0.55 per cent to $51.00; Fortescue gained 1.41 per cent as iron ore prices remained near record levels; Rio Tinto shed 0.44 per cent to $130.04.

Gold was down 0.9 per cent at $US1820.93 an ounce; Brent crude was up 1.1 per cent to $US69.28 a barrel; Iron ore was up 3.8 per cent at $US237.57 a tonne.

Meanwhile, the Australian dollar was buying 77.24 US cents around 7:00am, down from 78.40 this time Wednesday.


China shares ended higher on Wednesday, rising the most in more than three weeks, with agriculture and steel stocks leading gains, as demand surges on sustained upbeat economic momentum.

At the close, the Shanghai Composite index was up 0.61 per cent at 3,462.75, its biggest single-day jump since April 19, while the blue-chip CSI300 index was up 0.43 per cent.

Leading the gains, the healthcare sub-index and the agriculture sub-index were both up 1.79 per cent, while the consumer staples sector gained 1.06 per cent.

Vehicle sales in China rose 8.6 per cent in April versus the same month a year earlier, their 13th consecutive month of gains, as the world’s biggest car market leads the sector’s recovery from the COVID-19 pandemic.

At the close of trade, the Hang Seng index was up 217.23 points, or 0.78 per cent at 28,231.04.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.84 per cent, while Japan’s Nikkei index closed down 1.61 per cent.


European stocks rose on Wednesday, led by a charge in energy shares as oil prices hit two-year highs, while strong regional earnings reports and signs of speedy economic recovery offset concerns about a rapid rise in US prices.

The pan-European STOXX 600 index rose 0.3 per cent after falling almost 2 per cent on Tuesday, their worst selloff this year.

The European oil & gas index jumped 2.0 per cent, with shares of Royal Dutch Shell Plc , BP Plc, Paris-listed shares of TechnipFMC rising over 3.5 per cent each.

A jump in crude prices driven by signs of a swift economic rebound and upbeat forecasts for energy demand also pushed London’s FTSE 100 index up 0.8 per cent.

Data showed Britain’s economy grew by a stronger-than-expected 2.1 per cent in March from February.

Major European bourses also shrugged off a surprisingly strong read on US inflation which dragged down Wall Street’s main indexes deep in the red.

Ample liquidity, a global semiconductor shortage and a recent rally in commodity prices are heightening fears of inflation as developed economies gradually reopen after lockdowns imposed to curb coronavirus outbreaks.

Miners provided the biggest boost, with shares of Glencore, Anglo American and Rio Tinto gaining about a percent each as commodity prices continued to rally.

“We have a kind of central bank-sanctioned rally in commodities because they want the economy to run hot. That is great for industrials and materials and those stocks will continue to do well,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets.

German lender Commerzbank jumped 8.6 per cent after it beat expectations for first-quarter profit and raised its revenue outlook.

Spirits maker Diageo rose 3.4 per cent on restarting its capital return program, while Amsterdam-based technology investor Prosus NV gained 2.1 per cent, buoyed by plans to acquire up to 45.4 per cent of shares in its parent Naspers.

French video games company Ubisoft fell 11.1 per cent after it warned that operating profit might fall this financial year.

North America

Wall Street closed lower on Wednesday with the S&P suffering its biggest one-day percentage drop since February, as inflation data fueled concerns over whether interest rate hikes from the Fed could happen sooner than anticipated.

The Dow Jones Industrial Average fell 681.5 points, or 1.99 per cent, to 33,587.66, the S&P 500 lost 89.06 points, or 2.14 per cent, to 4,063.04 and the Nasdaq Composite dropped 357.75 points, or 2.67 per cent, to 13,031.68.

All three major US stock indexes ended the session deep in the red following the Labor Department’s April consumer prices report, which showed the biggest rise in nearly 12 years.

The report was hotly anticipated by market participants who have grown increasingly worried over whether current price jumps will defy the US Federal Reserve’s reassurances by morphing into long-term inflation.

But pent-up demand from consumers flush with stimulus and savings is colliding with a supply drought, sending commodity prices spiking, while a labor shortage drives wages higher.

“The topic on everyone’s mind is obviously inflation,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. “It’s something the (Fed) has been looking for and they’re finally getting their wish.”

“The question is how long will its fires run hot before starting to simmer?”

Core consumer prices (CPI), which exclude volatile food and energy items, grew at 3 per cent year-on-year, shooting above the central bank’s average annual 2 per cent inflation growth target.

Of the 11 major sectors in the S&P 500, 10 closed in negative territory, with consumer discretionary down most.

Energy was the sole gainer, advancing 0.1 per cent, boosted by rising crude prices.

Market-leading mega-caps, including Amazon.com Inc, Apple Inc, Alphabet Inc, Microsoft Corp and Tesla Inc, fell between 2 per cent and 3 per cent as investors shied away from what many feel are stretched valuations.

“The CPI number being stronger than expected has led to further weakness in tech stocks,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. “Tech investors are concerned that higher rates are going to lead to multiple compression and less attractive valuations for tech names in a higher rate environment.”

Online dating platform Bumble Inc gained in after-hours trading after posting quarterly results.

With Reuters

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

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