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Global Market Report - 18 October

Lewis Jackson  |  18 Oct 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to rise after the S&P 500 notched its best week since July amid a jump in retail trade and strong Q3 earnings. 

The Australian SPI 200 futures contract was up 31 points or 0.42 per cent at 7,364 near 8.00 am AEST on Monday, suggesting a positive start to trading.

US stocks rose, notching their biggest weekly gains in months following a strong streak of earnings reports.

The S&P 500 added 0.75% after rallying in its biggest one-day advance since March on Thursday. The Dow Jones Industrial Average gained 1.1%, while the technology-focused Nasdaq Composite ticked up 0.5%. For the week, the S&P 500 was up 1.8%, its best showing since July.

Solid quarterly results from healthcare companies and banks including Morgan Stanley and Citigroup have buoyed the market in recent days. Economic data have also helped reassure investors about the growth outlook.

The Australian dollar was buying 74.19 US cents near 8.00am AEST, up from the daily low of 73.03. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, fell to 88.36.

Locally, the S&P/ASX 200 closed 0.7% higher at 7362.0 on Friday, overcoming a midsession wobble amid gains by travel and mining stocks. The ASX 200 finished 0.6% higher for the week.

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Qantas, Corporate Travel Management, Flight Centre and Webjet added between 2.0% and 4.05% after New South Wales said it would no longer quarantine fully vaccinated international arrivals from next month.

The materials sector added 1.3% amid gains by BHP and Fortescue, although Rio Tinto dragged after downgrading its FY guidance.

Hub24 and Netwealth added 5.8% and 4.3%, respectively, as analysts responded positively to the wealth managers' quarterly updates.

Gold futures fell 1.7% to $US1768.30 an ounce; Brent crude rose 1% to $US84.86 a barrel; Iron ore was down 0.5% US$125.22.

The yield on the Australian 10-year bond fell to 1.65%; The US 10-year Treasury note rose to 1.57.

Asia

Chinese stocks ended the session higher Friday with coal and renewable-energy companies rising. Renewable-energy companies are facing tailwinds from continued policy support as China seeks to decarbonize. Coal producers, on the other hand, are likely benefiting from high coal prices as the country faces an energy crunch.

The Shanghai Composite Index ended 0.4% higher, the Shenzhen Composite Index gained 0.1%, while the ChiNext Price Index rose 1.9%.

Hong Kong shares ended the session higher, recovering its upward momentum after the market snapped an earlier winning streak Tuesday, its last trading session. The benchmark Hang Seng Index rose 1.5%.

The renewable-energy sector led gains, with EV maker BYD jumping 7.6% on upbeat retail sales data in September. Xinyi Solar and Xinyi Glass rose 6.4% and 6.6%, respectively.

Japanese stocks ended broadly higher, led by especially strong gains in electronics stocks, as the yen fell to its lowest level in nearly three years and amid continued hopes for economic reopening. The Nikkei Stock Average rose 1.8%, its highest level since November 2018.

Europe

European stocks ended the week higher, as upbeat economic and corporate news boosts investor sentiment. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies, was up 0.7%. The market was up 2.65% for the week.

In London, the FTSE 100 closed 0.3% higher.

North America

US stocks rose Friday, notching their biggest weekly gains in months following a strong streak of earnings reports.

Stocks began the week with losses, but turned higher after companies ranging from banks to insurers delivered robust results for the latest quarter.

Economic data also helped reassure investors about the growth outlook. Data Friday showed retail sales unexpectedly rose in September, despite economists' worries about the Delta variant of Covid-19 and the end of enhanced unemployment benefits.

The S&P 500 added 33.11 points, or 0.7%, to 4471.37 and jumped 1.8% for the week, posting its best weekly performance since July. The Dow Jones Industrial Average gained 382.20 points, or 1.1%, to 35294.76 and advanced 1.6% for the week, delivering its biggest weekly gain since June.

The technology-focused Nasdaq Composite ticked up 73.91 points, or 0.5%, to 14897.34 and climbed 2.2% for the week.

Bank stocks helped lead the market higher Friday.

Shares of Goldman Sachs Group jumped $14.87, or 3.8%, to $406.07 after the firm reported earnings of $5.38 billion in the third quarter, up 60% from the comparable period of 2020 and surpassing expectations from analysts.

Meanwhile, logistics company J.B. Hunt Transport Services rose $15.31, or 8.7%, to $190.55 after reporting a rise in third-quarter profits.

Shares of Alcoa climbed $7.40, or 15%, to $56.00 after the metals producer posted higher third-quarter sales Thursday, boosted by higher aluminum prices.

Moderna slipped $7.67, or 2.3%, to $324.21 after The Wall Street Journal reported the Food and Drug Administration is delaying a decision on authorizing the company's Covid-19 vaccine for adolescents while it assesses the risk of a rare inflammatory heart condition.

While earnings this season have largely impressed investors so far, many say they remain cautious about the market's outlook, citing fears that supply-chain blockages and a steep rise in energy prices will fuel more inflationary pressures. That in turn could push central banks to withdraw stimulus at a faster pace than currently forecast.

Correlations between different markets will remain in flux as investors debate the inflation outlook, said Richard McGuire, head of rates strategy at Rabobank.

"We've seen an ebb and flow this week," he said. Mr. McGuire expects the inflation burst to fade, as "high prices will sow the seed of their own downfall," with consumers starting to spend less.

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

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