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Global Market Report - 19 August

Lex Hall  |  19 Aug 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are poised to fall despite a surge on Wall Street in which the S&P 500 staged one of the most dramatic rallies on record.

The Australian SPI 200 futures contract was down 7 points, or 0.12 per cent, to 6,062 points at 8.30am Sydney time on Wednesday, suggesting a negative start to trading.

The S&P 500 closed at a record high on Tuesday, rebounding from huge losses triggered by the coronavirus pandemic and crowning one of the most dramatic recoveries in the index’s history.

The Dow Jones Industrial Average fell 66.84 points, or 0.24 per cent, to 27,778.07, the S&P 500 gained 7.79 points, or 0.23 per cent, to 3,389.78 and the Nasdaq Composite added 81.12 points, or 0.73 per cent, to 11,210.84.

Locally, ANZ posted a higher, unaudited third quarter cash profit of $1.5 billion and declared an interim dividend of 25 cents per share.

The S&P/ASX200 benchmark index closed higher by 47.0 points, or 0.77 per cent, to 6,123.4 points on Tuesday. The All Ordinaries index finished higher by 50.2 points, or 0.81 per cent, at 6,268.7.

Gold is up 1.0 per cent to $US2,005.14 an ounce; Brent oil is down 0.6 per cent to $US45.09 a barrel; iron ore  is up 5.4 per cent to $US128.57 a tonne.

Meanwhile, the Australian dollar was buying 72.43 US cents at 8.30am, up from 72.30 US cents at Tuesday's close.

Asia

Shanghai stocks ended higher on Tuesday, extending a previous session’s rally, helped by strong gains in healthcare and consumer stocks.

At the close, the Shanghai Composite index was up 0.36 per cent at 3,451.09, while the blue-chip CSI300 index slipped 0.05 per cent.

Hong Kong stocks closed higher on Tuesday boosted by technology and consumer companies, although gains were checked by the persistent Sino-US tensions.

At the close of trade, the Hang Seng index was up 20.04 points, or 0.08 per cent, at 25,367.38. The Hang Seng China Enterprises index rose 0.38 per cent to 10,425.42.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.72 per cent, while Japan’s Nikkei index closed down 0.2 per cent.

Europe

European shares ended lower on Tuesday, with banking and energy stocks leading the losses on worries about escalating US-China tensions even as a tech-powered rally saw New York’s S&P 500 hit an all-time high.

After hovering in the positive territory earlier in the session, the pan-European STOXX 600 turned decidedly lower in afternoon trading. The index closed down 0.6 per cent, still 15 per cent below its record high.

However, markets globally failed to make headway after the Trump administration on Monday expanded its curbs on China’s Huawei Technologies Co, in a further escalation of tensions between the world’s two largest economies.

A lack of progress on the US stimulus front has also disappointed investors.

Banks and energy sectors were among the biggest drags on the STOXX 600, down more than 1 per cent, with the latter hit a slide in oil prices.

In earnings-driven moves, UK-listed miner BHP Group fell 2.6 per cent as its annual profit fell 4 per cent, missing analysts’ estimate, and it warned that most major economies except China will have to bear the brunt of a coronavirus-led downturn this year.

Danish jewellery maker Pandora tumbled 7.5 per cent as it expected sales to decline this year by up to one-fifth, despite having reopened nearly all its stores.

Britain’s Marks & Spencer fell 4.9 per cent after it revealed plans to cut a further 7,000 jobs, dealing the latest blow to the beleaguered retail sector from the covid-19 crisis.

Among the bright spots, British housebuilder Persimmon jumped 8.0 per cent after saying it would reinstate its dividend after an “excellent start” to the second half of the year.

North America

Trillions of dollars in fiscal and monetary stimulus have made Wall Street flush with cash, pushing yield-seeking investors into equities. Amazon and other high growth technology-related stocks have been viewed as the most reliable to ride out the crisis.

The S&P record confirms, according to a widely accepted definition, that Wall Street’s most closely followed index entered a bull market after hitting its pandemic low on 23 March. It has surged about 55 per cent since then.

That makes the bear market that started in late February the S&P 500’s shortest in its history.

Since the 23 March closing low, the S&P posted the largest gain in a 103-day period in 87 years, according to Refinitiv data.

Doubts about the underlying health of the economy, however, persisted in Tuesday’s session, with lukewarm reactions to bumper results from Home Depot and Walmart limiting gains.

The S&P 500 flirted with all-time highs for several sessions before finally hitting a new record, raising questions about whether this run of gains could last.

Amazon, which rose 4.1 per cent, was the largest gainer in the S&P 500.

Meanwhile Nasdaq clocked its 18th record closing high since early June, when it confirmed its recovery from the coronavirus sell-off. Tuesday’s record was its 34th record close so far this year compared with 31 record closing highs in 2019 and 29 in 2018.

Consumer discretionary rose the most among major S&P sectors on strength in Amazon while technology stocks provided another major support to the benchmark index.

Home Depot Inc reported its biggest rise in quarterly same-store sales in at least two decades, however, its shares fell 1.1 per cent to $285 after analysts cautioned that its sales might have hit their peak.

Walmart Inc dipped 0.9 per cent despite posting its biggest-ever quarterly growth in online sales.

Data on Tuesday showed US homebuilding accelerated by the most in nearly four years in July in the latest sign the housing sector is emerging as one of the few areas of strength in an economy suffering a record slowdown. That further added to market optimism.

is content editor for Morningstar Australia

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