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Global Market Report - 14 January

Lex Hall  |  14 Jan 2021Text size  Decrease  Increase  |  
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Australian shares are set to edge up following meagre gains on Wall Street as stimulus uncertainty roils investors and impeachment proceedings begin.

The Australian SPI 200 futures contract was up 6 points, or 0.1 per cent, at 6,621 points at 8.30am Sydney time on Thursday, suggesting a slightly positive start to trading.

Wall Street’s benchmark S&P 500 index closed slightly higher on Wednesday with defensive sectors leading gains as investors waited for details of the next US fiscal stimulus plan and Congress began President Donald Trump’s impeachment hearings.

At the time of writing, the House of Representatives had officially voted to impeach President Donald Trump for the second time, 232 to 197, making him the first and only president to be impeached twice.

The Dow Jones Industrial Average fell 8.22 points, or 0.03 per cent, to 31,060.47, the S&P 500 gained 8.65 points, or 0.23 per cent, to 3,809.84 and the Nasdaq Composite added 56.52 points, or 0.43 per cent, to 13,128.95.

Locally, Beijing has instructed the owners of more than $1 billion of banned Australian coal to find new buyers outside China, as President Xi Jinping’s administration scuttles the $14bn export trade and ramps up pressure on the Morrison government, The Australian reports.

The S&P/ASX200 benchmark index closed higher by 7.5 points, or 0.11 per cent, to 6,686.6.

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The All Ordinaries closed better by 14.8 points, or 0.21 per cent, at 6,953.9.

Energy was the standout performer. The sector rose 4.25 per cent after oil prices hit an 11-month high just below $US57 a barrel, bolstered by Saudi Arabia's plans to limit supply.

The financial sector was mostly lower for the first three hours of Wednesday's trade but closed better by 0.17 per cent.

Gold was flat at $US1,854.74 an ounce; Oil was down 0.9 per cent to $US56.07 a barrel; Iron ore was down 1.5 per cent to $US170.11 a tonne

Meanwhile, the Australian dollar was buying 77.47 US cents at 8.30am, up from 77.04 US cents at Wednesday's close.


China’s main Shanghai Composite index fell 0.27 per cent at 3,598.65, on Wednesday, while the blue-chip CSI300 index closed down 0.33 per cent, on profit-taking.

Hong Kong shares retreated, with consumer shares leading the falls. Investors paused after a rally fuelled by the south-bound bargain hunting from mainland investors.

The Hang Seng index ended 29.72 points or 0.11 per cent lower at 28,268.80. The Hang Seng China Enterprises index fell 0.27 per cent to 11,199.59.

The MSCI Asia ex-Japan stock index rose 0.25 per cent, while Japan’s Nikkei index closed up 1.04 per cent.


European stocks closed slightly higher on Wednesday, with deal-related gains in French grocer Carrefour and Spain’s Telefonica offsetting wider concerns about extended covid-19 lockdowns.

Carrefour shares rose 13.4 per cent to their highest level since August 2019 after a surprise 16.2 billion euros ($25.45 billion) takeover approach from Canadian convenience-store operator Alimentation Couche-Tard.

Its stock led gains in Paris’ CAC 40, while shares in French rival Casino rose 3.9 per cent.

Telefonica jumped 9.7 per cent after it agreed to sell its mobile phone masts in Europe and Latin America to US-based telecom infrastructure operator American Towers for 7.7 billion euros.

While deal activity drove swings in regional markets and sectors, the pan-European STOXX 600 index rose just 0.1 per cent as investors paused after last week’s strong rally.

Banks, travel companies and automakers fell the most on fears that prolonged restrictions in Europe to control soaring coronavirus cases will further slow a recovery in earnings and economic growth.

Germany, Britain and the Netherlands indicated strict covid-19 curbs would last into early February and Italy said it would extend its state of emergency to the end of April.

Investors also kept an eye on political developments in Rome after former Prime Minister Matteo Renzi threatened to pull his tiny centrist party out of the ruling coalition.

Italy’s current premier Giuseppe Conte told reporters he was working on a new coalition pact to last until the end of the legislature.

Italy’s FTSE MIB rose 0.4 per cent, while banking stocks fell 0.7 per cent.

JPMorgan cut its forecasts for Italy’s economy, predicting that longer restrictions will result in no growth in the first quarter versus a previous forecast of 3.5 per cent growth.

Danish offshore wind farm developer Orsted fell 4.9 per cent after it said that a return to more normal wind speeds this year would hit operating earnings.

Just Eat Takeaway fell 4.1 per cent as disappointing 2020 margin guidance overshadowed a 57 per cent jump in fourth-quarter orders.

London Stock Exchange gained 1.8 per cent after EU antitrust regulators gave the green light for its US$27 billion ($35 billion) takeover of Refinitiv.

Siemens Gamesa and Siemens Energy rose 1.6 per cent and 4.2 per cent respectively after the companies said they were developing a commercial offshore wind turbine that produces hydrogen via electrolysis.

North America

Wall Street’s benchmark S&P 500 index closed slightly higher on Wednesday with defensive sectors leading gains as investors waited for details of the next US fiscal stimulus plan and Congress began President Donald Trump’s impeachment hearings.

US Treasury yields pulled back after rising for six straight sessions, giving a boost to rate-sensitive defensive sectors such as utilities and real estate, while economically sensitive cyclical sectors lagged.

Intel Corp advanced quickly, after the chipmaker said it would replace its chief executive officer Bob Swan with VMware Inc CEO Pat Gelsinger next month.

Wall Street’s main indexes had hit record highs last week on expectations for a hefty covid-19 relief package even as an attack on Capitol Hill ramped up political uncertainty.

But a day before details of incoming President Joe Biden’s fiscal relief plan was due to be announced, investors appeared to pull to the sidelines.

As US House of Representatives gathered to consider a second impeachment for Trump after the Capitol invasion by his supporters which left five dead, some investors were watching to see whether impeachment could delay stimulus or other parts of in-coming President Joe Biden’s agenda.

“The headlines coming in are causing some near term jitters but it looks like investors are looking past that to the rest of the year,” said Shawn Cruz, senior market strategist at TD Ameritrade in Jersey City, New Jersey.

While utilities and real estate lead percentage gains among the 11 major S&P sectors during the session the biggest losers were the more economically sensitive sectors such as materials and industrials.

“Investors are in wait-and-see mode for now ... if you’re moving to the sidelines you probably might want to be moving out of cyclicals,” said Cruz.

The Dow Jones Industrial Average fell 8.22 points, or 0.03 per cent, to 31,060.47, the S&P 500 gained 8.65 points, or 0.23 per cent, to 3,809.84 and the Nasdaq Composite added 56.52 points, or 0.43 per cent, to 13,128.95.

The S&P had expanded its gains temporarily in the late afternoon before losing ground again after the Federal Reserve released its “Beige Book” report which showed US economic activity increasing modestly in recent weeks as employment dropped in a growing number of Fed districts due to a surge in coronavirus infections.

Most of the 11 major S&P sectors gained ground. After boasting a record closing high in the previous day’s session, the Russell 2000 pulled back slightly and the S&P growth index outperformed the value index.

Earnings reports from big US banks including JPMorgan and Citigroup were also on investors minds as they will mark the unofficial start to the fourth-quarter earnings season on Friday.

Regeneron Pharmaceuticals Inc’s shares climbed as the US government said it would buy 1.25 million additional doses of its covid-19 antibody cocktail for about US$2.63 billion. Shares of VMware fell after the Intel news.

With Reuters

is senior editor for Morningstar Australia

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