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Global Market Report - 16 November

Lewis Jackson  |  16 Nov 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to slip after a flat finish on Wall Street.

The Australian SPI 200 futures contract was down 38 points or 0.4% at 7,435 near 8.00 am AEST on Tuesday, suggesting a negative start to trading.

US stocks wavered to start the week, with investors parsing how companies might withstand inflation pressures.

The indexes edged higher in early trading, then turned down later in the day. The S&P 500 was flat as of 4 pm New York. The tech-focused Nasdaq Composite Index and the Dow Jones Industrial Average both finished less than 0.1% lower.

Wall Street finished last week with slim losses, snapping a five-week winning streak.

The Australian dollar was buying 73.44 US cents near 8.00am AEST, up from the previous close of 73.28. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, rose to 89.35.

Locally, the S&P/ASX 200 closed 0.4% higher at 7470.1, eking out gains despite weakness among commodity stocks. The benchmark rose as much as 0.5% following a positive lead from US equities, before bouncing around through afternoon trade.

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Health, consumer discretionary and tech were the best performing sectors. Biotech developer Mesoblast jumped 12% on positive trial results and was the ASX 200's best performing component.

Retailers Premier Investments, Super Retail, Kogan and Bapcor added between 1.3% and 1.9%, while cloud-accounting platform Xero rose 2.5%.

Ex-dividend National Australia Bank lost 1.6%, keeping the financial sector flat.
Miners Rio Tinto and BHP fell 0.4% and 0.6%, respectively, while the energy sector tipped 0.2% lower.

Woodside Petroleum said on Monday it had agreed to sell a 49% stake in a proposed expansion of its Pluto liquefied natural gas facility in Western Australia to Global Infrastructure Partners. Woodside said GIP will fund 49% of the capital expenditure for Pluto Train 2 and an additional $835 million of construction costs.

Gold futures fell 0.2% to $US1865.00 an ounce; Brent crude fell 0.15% to $US82.05 a barrel; Iron ore was down 0.7% US$89.05.

The yield on the Australian 10-year bond fell to 1.76%; The US 10-year Treasury yield rose to 1.62%.

Asia

Chinese shares slipped lower, as property developers declined after fresh data showed China's property-sector downturn continuing. Chinese new home prices fell for the second consecutive month in October. Morgan Stanley said it expects near-term stock-price volatility for the property sector amid earnings headwinds. The Shanghai Composite Index and Shenzhen Composite Index each closed 0.2% lower. The ChiNext Price Index ended 0.8% lower.

Hong Kong stocks rose and extended an upturn to a fifth consecutive session after Chinese economic data showed surprisingly robust factory activity and consumer spending in October. The benchmark Hang Seng Index rose 0.2%. The rise also came ahead of a virtual meeting of Chinese and US top officials that is slated for Tuesday morning.

Japanese stocks ended higher, led by auto stocks as recent earnings underscore a steady recovery from the Covid-19 pandemic. Nissan Motor rose 2.9% while the Nikkei Stock Average added 0.6%. Developments over Japan's fiscal stimulus are being closely watched.

Europe

European stocks closed higher after European Central Bank President Christine Lagarde continued to push back on expectations for monetary policy tightening at a hearing before EU lawmakers.

The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies rose 0.3%.

"Comments from ECB President Lagarde highlighted the ongoing dovishness in the face of inflationary pressures, with their first rate hike still slated for 2023," IG analyst Joshua Mahony says.

In London, The FTSE 100 index slipped 0.05% after Bank of England Governor Andrew Bailey said he was “very uneasy” about rising inflation and hinted rates were poised to rise in December.

North America

US stocks wavered to start the week, with investors parsing how companies might withstand inflation pressures.

The indexes edged higher in early trading, then turned down later in the day. The S&P 500 was flat as of 4 pm New York. The tech-focused Nasdaq Composite Index and the Dow Jones Industrial Average both finished less than 0.1% lower.

Stocks finished last week with slim losses, snapping a five-week winning streak.

Despite price pressures that have lingered longer than many investors expected, the indexes are still close to record highs. Companies that have reported earnings so far have broadly beaten analysts' expectations, supporting stock prices. Higher inflation has also suppressed the returns on government bonds, a main alternative to stocks.

"It seems as if the equity markets are kind of a bit detached from other markets," said Jim Besaw, chief investment officer of GenTrust. Mr. Besaw is holding traditional hedges against inflation such as commodities, real-estate investment trusts and Treasury inflation-protected securities.

Dollar Tree added around 14% after The Wall Street Journal reported Friday that activist investor Mantle Ridge has a stake of at least $1.8 billion in the discount retailer and plans to push it to act to boost its share price. CyrusOne shares rose 4.7% after the data-center operator said it is selling itself to investment company KKR & Co. and Global Infrastructure Partners LLC in an all-cash transaction.

Boeing shares added around 5.5% after the company said over the weekend that it had received new orders for its converted freighters.

"Good news keeps coming up despite the fears. It makes it harder to wait for too much of a pullback," said David Russell, vice president of market intelligence at TradeStation Group.

Casper Sleep shares soared 88%. The company said Monday it had agreed to a takeover from investment group Durational Capital Management.

Tyson Foods Inc. reported a jump in sales after sharply raising prices for its beef, chicken and pork, citing growing costs the company said were likely to persist. Shares rose 3.6%.

In bond markets, the yield on the benchmark 10-year Treasury note moved higher for the third trading day to 1.621%, the largest three-day yield gain in a year. Yields rise when prices fall.

"We're seeing a recovery in the economy, seeing rising wages and the Fed is moving toward tighter monetary policy, so it's inevitable we're going to see yields moving higher," Mr. Russell said.

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

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