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Global Market Report - 15 June

Lex Hall  |  15 Jun 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are expected to start the week with an increase after US technology and financial stocks pushed Wall Street higher on Friday.

The local SPI 200 futures contract was higher by 24 points, or 0.41 per cent, at 5,834.0 at 8am Sydney time on Monday.

Bargain hunters returned to US markets on Friday after grim Federal Reserve projections for the economy caused plenty of selling midweek.

The central bank said it would use its full range of tools to support the US economy during this challenging period.

It last week kept the benchmark interest rate at a record low of zero to 0.25 per cent and signalled it planned to keep it there for some time.

The cautionary economic forecast and concerns over a possible resurgence of COVID-19 had tempered investors' appetite.

In Australia, Boral on Monday morning announced a new chief executive from July.

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Zlatko Todorcevski from Adelaide Brighton will take the top job while current Boral boss Mike Kane will retire in September.

Data on people arriving from overseas in April will be published on Monday and may give some indication of how the airline industry is tracking amid the coronavirus pandemic.

The Australian dollar was buying 68.25 US cents at 8am, down from 68.61 US cents on Friday.

Asia

China stocks recouped earlier losses to end higher on Friday, led by tech, as investors cheered Beijing’s pledge to push forward with capital market reforms.

At the close, the Shanghai Composite index was down 0.04 per cent at 2,919.74, while the blue-chip CSI300 index was up 0.18 per cent.

Hong Kong stocks fell on Friday to end the week lower, tracking losses in other markets amid growing concerns over a resurgence of coronavirus infections.

The Hang Seng index fell 0.7 per cent, to 24,301.38, while the China Enterprises Index lost 1.1 per cent, to 9,832.53 points.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 1.42 per cent, while Japan’s Nikkei index closed down 0.75 per cent.

Europe

European shares closed slightly up on Friday after heavy losses in the previous session, but marked their worst week since the peak of the coronavirus sell-off due to persistent concerns over the pace of an economic recovery.

The pan-European STOXX 600 index ended 0.3 per cent higher, after clocking its worst single-day loss since March 23 in the previous session.

The index has lost about 5.7 per cent for the week, with travel and leisure stocks the worst performers as fears of a second wave of coronavirus infections in the US rattled sentiment.

Markets had come off three-month highs through the week, with the sell-off intensifying on Thursday after the US Federal Reserve pointed to a long road to economic recovery for the world’s largest economy.

On the day, battered shares of automakers, basic resources and real estate companies rose between 1.4 per cent and 2 per cent.

Royal Dutch Shell, BP and Total rose between around 0.6 per cent and 1.7 per cent, despite a drop in oil prices.

Data also showed that euro zone industrial output fell the most on record in April as lockdowns halted activity across the region, with analysts pointing to an arduous recovery for the sector.

Italian stocks rose 0.4 per cent on the day. Italian Economy Minister Roberto Gualtieri said on Friday that the country's economic contraction this year may be slightly worse than the 8 per cent decline currently forecast by the government.

France’s Interparfums surged 13.3 per cent after Italy’s Moncler entered an agreement with the company to start selling perfumes.

Italian infrastructure group Atlantia gained 3.9 per cent as said it hoped for a positive solution to its row with the transport ministry over its motorway concession. The company swung to a net loss in the first quarter.

North America

US stocks ended higher on Friday as bargain hunters stepped back into the market following sharp losses a day earlier, but all three major indexes suffered their biggest weekly percentage declines since March.

The day’s trading was marked by wild swings, with the S&P 500 up about 3 per cent at its high of the session and down about 0.6 per cent at the low.

The Federal Reserve’s indication earlier this week of a long road to recovery and rising COVID-19 cases in the United States had cast a pall over investor optimism about a swift economic rebound, and the S&P 500 dropped about 6 per cent on Thursday.

The S&P 500 closed well above its 200-day moving average, a closely watched technical level, after moving above and below the level during the session.

The financial and technology sectors gave the biggest boosts to the S&P 500.

The Dow Jones Industrial Average rose 477.37 points, or 1.9 per cent, to 25,605.54, the S&P 500 gained 39.21 points, or 1.31 per cent, to 3,041.31 and the Nasdaq Composite added 96.08 points, or 1.01 per cent, to 9,588.81.

For the week, the Dow ended down 5.6 per cent, the S&P 500 fell 4.8 per cent and the Nasdaq shed 2.3 per cent, the biggest weekly percentage declines for the indexes since the week ended March 20.

The Cboe Volatility index ended down on the day but registered its biggest weekly gain since the week ended March 13.

Earlier this week, the Nasdaq confirmed it had been in a bull market since March 23 and the S&P 500 briefly turned positive on the year.

On Friday, Photoshop maker Adobe Inc rose 4.9 per cent after posting a better-than-expected quarterly profit, driven by strong demand for its cloud software.

Yoga apparel maker Lululemon Athletica Inc fell 3.8 per cent after posting lower-than-expected quarterly results following coronavirus-induced store closures.

is senior editor for Morningstar Australia

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