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Global Market Report - 13 October

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

The ASX is set to open higher despite a negative steer from the US, where Wall Street edged lower.

The Australian SPI 200 futures contract was up 14 points or 0.19 per cent at 7,261 near 7.30 am AEST on Wednesday, suggesting a positive start to trading.

US stocks inched lower on Tuesday amid losses in communications companies.

The Dow Jones Industrial Average lost 117.72 points, or 0.3%, to close at 34378.47. The S&P 500 ticked down 10.54 points, or 0.2%, to close at 4350.65 while the tech-heavy Nasdaq declined 20.28 points, or 0.1%, to close at 14465.92.

The Australian dollar was buying 73.49 US cents near 7.30am AEST, up from the previous close of 73.44. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, rose to 88.89.

Locally, the S&P/ASX 200 closed a volatile session 0.3% lower at 7280.7. The benchmark slipped at the open in line with futures and rallied to sit 0.4% higher after an hour before sliding back into the red.

The tech, utility and energy sectors were the biggest losers, the latter giving away strong early gains amid higher overnight oil prices.

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Westpac dropped 1.65% after flagging A$1.3 billion in write-downs and other one-offs, helping pull the heavyweight financial sector 0.35% lower.

Protective-garment manufacturer Ansell was the worst-performing ASX 200 component, falling 4.6% after Macquarie downgraded the stock to underperform.

Spot Gold rose 0.4% to $US1760.62 an ounce; Brent crude fell 0.4% to $US83.28 a barrel; Iron ore was down 4.5% US$129.00.

The yield on the Australian 10-year bond rose to 1.72%; The US 10-year Treasury note fell to 1.574.

Asia

Chinese shares finished lower Tuesday, as the downtrend for steelmakers and mining companies continued. The Shanghai Composite Index dropped 1.2%, the Shenzhen Composite Index declined 1.6% and the ChiNext Price Index was 1.8% lower.

Hong Kong shares ended lower amid declines by auto makers and technology companies. The benchmark Hang Seng Index fell 1.4%, while the Hang Seng Tech Index slipped 3.2%. Auto makers were weighed by weak vehicle sales in China amid ongoing chip shortages.

Tech stocks also retreated, with Alibaba Health Information Technology down 4.4%, Meituan 3.0% lower and Tencent sliding 2.6%.

Japanese stocks ended lower, dragged by declines in tech and retail stocks amid continuing concerns about higher costs of borrowing and raw materials. The Nikkei Stock Average fell 0.9%.

Europe

European markets were flat again Tuesday. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies, was up 0.07%.

In London, the FTSE 100 closed 0.23% lower.

North America

US stocks inched lower on Tuesday amid losses in communications companies.

The Dow Jones Industrial Average lost 117.72 points, or 0.3%, to close at 34378.47. The S&P 500 ticked down 10.54 points, or 0.2%, to close at 4350.65 while the tech-heavy Nasdaq declined 20.28 points, or 0.1%, to close at 14465.92.

Stock indexes have been dragged lower in choppy trading in recent weeks. Investors are contending with an energy crunch that threatens to add to inflationary pressures just as signs emerge that global economic growth is slowing.

"Investors are running around like chickens with their heads cut off," said John Buckingham, portfolio manager at Kovitz. "They focus on one thing at a time and buy and then change their mind and sell."

Concerns about disappointing economic data also have intensified.

"There is a tone of worry on the data front, and that's been the factor that hasn't really turned around yet. We haven't seen any strong reports that suggest that this is just a temporary Delta variant driven slowdown, " said Anwiti Bahuguna, senior portfolio manager and head of multiasset strategy at Columbia Threadneedle Investments.

MGM Resorts International rose $4.28, or 9.6%, to $48.70 after Credit Suisse more than doubled its price target for the company. Other entertainment stocks also rallied: Caesars Entertainment Inc. climbed and Las Vegas Sands Corp. both added around 2%. Southwest Airlines Co. shares gained 48 cents, or 0.9%, to $52.15 with the carrier working to reset itself after it canceled more than 2,000 flights over the weekend and into Monday.

General Motors Co. said it would recover from supplier LG Electronics Inc. nearly all of the $2 billion cost of recalling Chevrolet Bolt electric models for the risk of battery fires. Shares of the Michigan-based company rose 86 cents, or 1.5%, to $58.95.

Tech stocks pulled back: Facebook Inc. declined 0.5%, Alphabet Inc. fell 1.8% and Apple lost 0.9%. Steeply rising yields and regulation issues have dragged down tech shares in recent sessions.

Third-quarter earnings season, which begins this week, will provide clues on how companies are faring with price increases. Some of the US's biggest financial firms, including JPMorgan Chase and BlackRock, are set to kick off the reporting season Wednesday.

"The main topic will be inflation, there is some real concern about a winter of discontent," said Brian O'Reilly, head of market strategy for Mediolanum International Funds. "We could see some volatility if companies don't get their communications right on their cost pressures."

US data showed job openings dropped to 10.4 million, missing forecasts of 10.9 million. Meanwhile, the International Monetary Fund lowered its growth forecast for the world economy for this year, citing supply-chain disruptions in rich economies and global-health concerns caused by the spread of the contagious Covid-19 Delta variant.

The yield on the benchmark 10-Year US Treasury note was little changed at 1.579%, the largest one-day decline in more than a week. Yields, which rise when bond prices fall, have been on an upward trajectory since the Federal Reserve strongly signaled last month it could start tapering its bond purchases as soon as November.

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

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