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Global Market Report - 15 October

Lewis Jackson  |  15 Oct 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to go higher after a broad-based rise on Wall Street was helped by falling US jobless claims and strong earnings from several banks.

The Australian SPI 200 futures contract was up 46 points or 0.63 per cent at 7,335 near 7.00 am AEST on Friday, suggesting a positive start to trading.

US stocks rose Thursday, bolstered by a wave of earnings, including from major banks.

The S&P 500 climbed 1%, putting the broad market index on course for a second day of gains. The Dow Jones Industrial Average rose 1.2%, and the Nasdaq Composite gained 1%.

Investors are watching earnings to gauge the impact of stickier-than-expected inflation, rising energy prices, supply-chain disruptions and anticipated interest rate increases over the next two years.

The Australian dollar was buying 74.15 US cents near 7.00am AEST, up from the previous close of 73.76. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, fell to 88.42.

Locally, the S&P/ASX 200 closed 0.5% higher at 7311.7, ending a three-session losing run amid gains by mining and technology stocks. The benchmark followed a positive lead by US stocks to snap its worst losing streak since mid-August.

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Iron ore mining companies BHP, Rio Tinto and Fortescue added between 0.6% and 2.3%, while South32 jumped 4.9% after acquiring a 45% stake in a Chilean copper mine.

Afterpay, Xero and WiseTech climbed between 4.5% and 7.2%, helping the tech sector rise 4.1%.

The financial sector pared overall gains by the ASX 200 amid losses by insurers and Commonwealth Bank, which fell 1.3%.

Westpac raised its expectations for Australia's house-price growth in 2021 and 2022 despite the Australian banking regulator firing a warning shot at surging lending for mortgages earlier this month. Westpac now expects house prices to rise 22% this year, up from 18% projected previously.

Gold futures rose 0.2% to $US1798.50 an ounce; Brent crude rose 1.2% to $US84.17 a barrel; Iron ore was up 1.4% US$125.91.

The yield on the Australian 10-year bond fell to 1.62%; The US 10-year Treasury note fell to 1.51.

Asia

Chinese stocks closed mixed Thursday, as property developers and pharma sector retreated, while car makers broadly rose. The Shanghai Composite Index slipped 0.1%, while the Shenzhen Composite Index and the ChiNext Price Index each gained 0.2%.

The property sector's rebound from late September's low levels appeared to be losing steam, with market leaders China Vanke down 4.5%, Seazen Holdings 3.5% lower and Poly Developments off 2.9%Stock markets in Hong Kong were closed due to a typhoon.

Markets in Hong Kong were closed for a public holiday.

Japanese stocks are higher, led by railway and airline stocks, on hopes for economic reopening and fiscal stimulus by a new government led by Fumio Kishida. The Nikkei Stock Average is up 0.4%. Investors are focusing on any policy-related developments as Kishida is expected to be selected as Japan's new prime minister later in the day.

Europe

European stocks ended Thursday on a strong note, buoyed by improving US bank earnings and falling US jobless claims. Higher oil prices boosted oil stocks, while miners, financial and tech stocks were all broadly higher. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies, was up 1.2%.

"Fears around energy prices and inflation appear to have eased for now, although today's 5% rise in natural gas prices raise the risk that this respite may be brief in nature," says Josh Mahony, analyst at IG.

In London, the FTSE 100 closed 1% higher, its highest level since late February 2020.

North America

US stocks rose Thursday, bolstered by a wave of earnings, including from major banks, which investors will use to assess how companies are positioned to deal with risks including inflation and higher energy prices.

The S&P 500 climbed 1%, putting the broad market index on course for a second day of gains. The Dow Jones Industrial Average rose 1.2%, and the Nasdaq Composite gained 1%.

Investors are watching earnings to gauge the impact of stickier-than-expected inflation, rising energy prices, supply-chain disruptions and anticipated interest rate increases over the next two years.

"Can companies weather those risks or was the entire rally only fueled by ultraloose monetary policy?" said Carsten Brzeski, ING Groep's global head of macro research. Investors are looking to see "where are we in terms of the post-lockdown cycle and also to get some insights into how solid earnings and companies are going into this tapering period and this era of somewhat higher interest rates."

Shares of banks reporting earnings broadly rose in premarket trading. Bank of America gained 2.4% after its third-quarter profit rose 58% from a year earlier. Shares of both Wells Fargo and Citigroup rose after each bank reported jumps in profit, boosted by the release of funds set aside for potential pandemic-related loan losses. Morgan Stanley added 2.8% premarket after its quarterly profit rose 36% from a year earlier, due to a surge in deal making.

Domino's Pizza shares fell 4.1% premarket after the pizza-delivery chain reported quarterly revenue that missed analysts' forecasts. Shares of UnitedHealth Group added 2.8% after it raised its guidance for full-year earnings, and held steady its expectations for how Covid-19 would affect this year's results. Shares of Walgreens Boots Alliance rose 1% after posting a profit rise, as its pharmacy and retail businesses in the US grew, and recovery continued in the U.K. as Covid-19 restrictions eased.

Meantime, data showed US jobless claims for the week ended Oct. 9 fell to 293,000 from 329,000 the week prior—the first time they have fallen below 300,000 since the pandemic began.

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

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