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
About

News

Global Market Report - 14 August

Lex Hall  |  14 Aug 2020Text size  Decrease  Increase  |  
Email to Friend

Australia

Australian shares are set for a subdued start to trading as a bleak forecast from Cisco Systems hobbled Wall Street’s record run.

The Australian SPI 200 futures contract was down 3 points, or 0.05 per cent, to 6,044 points at 8.30am Sydney time on Thursday, suggesting a flat start to trading.

The S&P 500 ended slightly lower on Thursday after briefly trading above its record closing high level for a second day, and the Dow also fell in the wake of a disappointing forecast from Cisco Systems Inc.

The Dow Jones Industrial Average fell 80.12 points, or 0.29 per cent, to 27,896.72, the S&P 500 lost 6.92 points, or 0.20 per cent, to 3,373.43 and the Nasdaq Composite added 30.27 points, or 0.27 per cent, to 11,042.50.

Locally, National Australia Bank posted a 7 per cent fall in third quarter cash earnings to $1.55 billion, warning of "modest" asset quality deterioration.

The S&P/ASX200 benchmark index closed lower by 41.0 points, or 0.67 per cent, at 6,091.0 points on Thursday. The All Ordinaries index ended down 33.1 points, or 0.53 per cent, at 6,223.9.

Gold was up 1.9 per cent to $US1,952.10 an ounce; Brent oil was down 0.8 per cent to $US45.09 a barrel; iron ore was down 0.1 per cent to $US121.38 a tonne.

Meanwhile, the Australian dollar was buying 71.47 US cents at 8.30am, down from 71.63 US cents at Thursday’s close.

Asia

China shares ended little changed on Thursday, as caution ahead of a US-China meeting this weekend to review the implementation of a bilateral trade agreement offset strength in agriculture stocks on food security concerns.

Senior US and Chinese officials will review the Phase 1 trade deal and likely air mutual grievances in an increasingly tense relationship during a 15 August video conference.

At the close, the Shanghai Composite index was up 0.04 per cent at 3,320.73.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.15 per cent, while Japan’s Nikkei index closed up 1.78 per cent.

Europe

European stocks broke a four-day winning streak on Thursday as ex-dividend trading and a stronger pound hit the UK’s blue-chip companies, while investors sold off banks and energy stocks that have outperformed this week.

The pan-European STOXX 600 closed 0.6 per cent lower, with London's FTSE 100 sliding 1.5 per cent as a jump in the pound hurt exporters on the index, while heavyweights like AstraZeneca, BP, and GlaxoSmithKline traded without entitlement to a dividend payout, hitting their shares.

Reversing a recent trend, investors favoured pockets of markets that have remained resilient in the wake of the coronavirus crisis such as the technology sector. On Wall Street, Apple was set to record US$2 trillion ($2.8 trillion) in market capitalisation.

That left some of the cyclical sectors that are more exposed to an economic downturn, such as banks, oil & gas, miners and automakers, falling between 0.8 per cent and 1.9 per cent.

After a US move to ban two popular Chinese apps last week, investors were nervous about upcoming talks between Beijing and Washington officials over a trade deal agreed earlier this year.

Meanwhile, US Democrats and Republicans remain deadlocked after weeks of wrangling over a fifth coronavirus aid bill to support a struggling economy.

Trillions of dollars in stimulus and a stellar rally in technology stocks have helped the US S&P 500 index reach striking distance of a record high. The European blue-chip index is still about 15 per cent below its February peak, but the pace of recovery for both from a market crash in March has been similar.

Weak earnings also dented the mood, with struggling conglomerate Thyssenkrupp plunging 16.3 per cent after it said its steel unit would rack up 1 billion euros ($1.65 billion) in operating losses this year, raising pressure to fix or sell the division.

TUI, the world’s largest tourism company, fell 6.2 per cent as it sank to a 1.1 billion euro loss in the third quarter due to the pandemic.

Danish brewer Carlsberg slid 5.8 per cent on a warning that lockdowns will hurt sales in the second half of the year in its key markets of China and Western Europe.

North America

The benchmark S&P 500 rose as high as 3,387.24 during the session, just above its record high closing level of 3,386.15 from 19 February.

The record came just before investors sold shares in anticipation of what proved to be the biggest slump in the US economy since the Great Depression.

The index’s intraday record high of 3,393.52 was also set on 19 February.

An 11.2 per cent slump in shares of Cisco Systems weighed on the Dow and S&P 500 after the company forecast first-quarter revenue and profit below estimates.

Concern about corporate earnings has continued despite a mostly stronger-than-expected second-quarter profit season.

Apple shares rose 1.8 per cent, helping to support the Nasdaq and limiting losses in the S&P 500.

Also limiting bearishness, jobless claims fell below 1 million for the first time since efforts to curb the outbreak in the US began five months ago.

Wall Street has recovered most of the trillions in market capitalisation lost during the start of the pandemic and the Nasdaq was the first of the three major indexes to hit a record high in June. The Dow remains below its February peak.

Initial claims for state unemployment benefits decreased to 963,000 for the week ended 8 August, the lowest level since mid-March. But the expiration of a $600 ($836) weekly jobless supplement at the end of July likely contributed to the decline.

Data last week showed the economy had regained only 9.3 million of the 22 million jobs lost between February and April, indicating a long road to reach pre-pandemic levels.

Investors continue to hold on to hopes Democrats and the White House can reach agreement on a stimulus package to help the economy recover. Unemployment benefits have been a sticking point in their talks.

The US presidential election is expected to add another layer of uncertainty into markets, with roughly 12 weeks remaining until Election Day.

is content editor for Morningstar Australia

AAP logo

© 2020 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