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Global Market Report - 18 January

Lewis Jackson  |  18 Jan 2022Text size  Decrease  Increase  |  
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Australia

Australian shares are poised to rise in line with gains overseas as China’s central bank cut interest rates amid slowing growth. US markets are closed for the Martin Luther King Jr holiday.

ASX futures were up 22 points or 0.3% at 7343 as of 8.00 am AEST, suggesting a positive start to trading.

Overseas, the Shanghai composite rose 0.6% after the Chinese central bank cut interest rates as the country reported the slowest GDP growth in 18 months. Shares in Hong Kong fell 0.7% while Japan’s Nikkei 225 added 0.7%. In London, the FTSE 100 jumped 0.9% as GlaxoSmithKline rebuffed a GBP50 billion offer for its consumer products division from Unilever. Europe’s pan-continental STOXX 600 advanced 0.7%.

The S&P/ASX 200 closed 0.3% higher at 7417.3 on Monday, overcoming weakness in mining stocks, to claw back some of the prior week's losses. Retail, energy and tech sectors led the gains.

Beaten-down travel stocks Webjet and Flight Centre clawed back some of their recent Covid-driven losses, rising 2.8% and 3.9%, respectively, to help the consumer discretionary sector gain 2.2%.

Santos, Woodside and Beach Energy put on between 1.0% and 3.9% amid higher oil prices, while tech stocks followed Friday's bounce by their US counterparts.

The heavyweight materials sector was the biggest loser, dropping 1.0% on weakness from gold and iron-ore miners.

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Turning to commodities, gold futures added 0.1% to $US1818.90 an ounce; Brent crude gained 0.6% to $US86.54 a barrel; Iron ore fell 2.2% to US$124.00 a tonne.

In bond markets the yield on the Australian 10-year bond continued its rise to 1.91%. US bond markets were closed for a public holiday.

The Australian dollar was buying 72.10 US cents near 8.00am AEST, up from the previous close of 72.06. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, edged up to 89.27.

Asia

Chinese stocks ended higher, as software and telecom companies led gains. The Chinese central bank's move to lower two key interest rates today signalled more room for monetary easing, and investment opportunities may arise in industries that enjoy policy support, such as the digital economy and 5G networks, Sealand Securities says. Yonyou Network jumped 8.9%, Sangfor Technologies advanced 8.3% and telecom equipment company ZTE Corp. rose 3.9%. Notable decliners included China Tourism Group Duty Free, which was down 5.0% after the company released preliminary expected earnings for 2021. The Shanghai Composite Index rose 0.6%, the Shenzhen Composite Index added 1.5% and the ChiNext Price Index was 1.6% higher.

Hong Kong stocks ended lower, as the market continued to weaken after a strong upturn earlier this month. The benchmark Hang Seng Index edged down 0.7%. Property developers and managers dragged the index after latest official data showed a further sequential decline in housing prices in December. Country Garden Services slumped 9.1% and its parent Country Garden Holdings dived 8.1%. Agile was down 4.6% and Sunac China shed 5.0%. On the bright side, Macau casino operators soared, with Sands China leading the pack with a 15% surge. The sector's rally came after the city's new gaming law draft turned out to be less stringent than investors had feared.

Japanese stocks ended higher, led by gains in energy, auto and electronics stocks as the yen weakened despite concerns about the spread of the Omicron variant. Inpex gained 3.1%, Nissan Motor advanced 2.4% and Olympus added 3.0%. The Nikkei Stock Average rose 0.7%. Investors are focusing on Covid-19 infection trends in Japan as local media repot that the government is considering measures that may limit restaurants' operating hours in Tokyo and three surrounding prefectures.

Europe

European stocks closed mostly higher as traders stay positive despite the lack of US trading due to a US public holiday. The pan-European Stoxx Europe 600 rose 0.7%, falling a similar amount for the week.

"While European markets have been able to edge higher, the gains will be swiftly reversed if US traders come back tomorrow in a similarly bearish mood to that on Friday," IG analyst Chris Beauchamp says. "And with US earnings season still warming up and a key Fed meeting yet to come this month, there's still plenty that might hold back investors from taking on more risk.".

In London, the FTSE 100 jumped 0.9% amid blockbuster merger and acquisition news and as China cut interest rates in the face of slowing growth, AJ Bell's investment director Russ Mould said.

"The Chinese GDP figures were no worse than expected. However, the central bank's decision to ease rates reflects concern about a property market slowdown and the impact of tighter restrictions brought in to limit the spread of the Omicron variant of Covid-19," Mould said.

Meanwhile, GlaxoSmithKline stock closed up 4.1% as GlaxoSmithKline rebuffed a GBP50 billion offer from Uniliver for its consumer products division.

North America

US markets were closed for the Martin Luther King Jr. Day public holiday.

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

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