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Global Market Report - 19 January

Lex Hall  |  19 Jan 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise as global markets held steady and US markets closed for a public holiday.

The Australian SPI 200 futures contract was up 34 points, or 0.5 per cent, at 6,631 points at 8.30am Sydney time on Tuesday, suggesting a positive start to trading.

Wall Street may be facing an uncomfortable four years after President-elect Joe Biden’s team confirmed on Monday it planned to nominate two consumer champions to lead top financial agencies, signaling a tougher stance on the industry than many had anticipated.

Gary Gensler will serve as chair of the Securities and Exchange Commission and Federal Trade Commission member Rohit Chopra will head the Consumer Financial Protection Bureau. Progressives see the agencies as critical to advancing policy priorities on climate change and social justice.

Locally, the nation’s top scientific advisers could recommend the rollout of a second round of immunisations to achieve herd immunity if the original vaccine program fails to control the spread of covid-19, The Australian reports.

The S&P/ASX200 benchmark index closed lower by 52.4 points, or 0.78 per cent, to 6,663.0 on Monday.

The All Ordinaries closed lower 51.4 points, or 0.74 per cent, at 6,935.4.

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The materials sector lost 1.93 per cent while financials fell 1.07 per cent.

Gold was up 0.5 per cent at $US1,837.45 an ounce; Oil was down 0.6 per cent to $US54.79 a barrel; Iron ore was up 0.2 per cent to $US174.07 a tonne.

Meanwhile, the Australian dollar was buying 76.79 US cents at 8.30am, down from 76.84 US cents at Monday's close.

Asia

China stocks closed higher on Monday as investors welcomed better-than-expected GDP data pointing to a strong recovery from the coronavirus crisis in the world’s second-largest economy.

The blue-chip CSI300 index rose 1.1 per cent to close at 5,518.52, while the Shanghai Composite Index gained 0.8 per cent to 3,596.22.

In Hong Kong, the Hang Seng index edged up 0.5 per cent to 28,712.79 points, while the Hong Kong China Enterprises Index gained 0.7 per cent, to 11,396.01.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.67 per cent, while Japan’s Nikkei index closed down 0.97 per cent.

Europe

European stocks rose on Monday as a jump in carmaker Stellantis and luxury stocks helped reverse early market losses due to worries about an economic recovery and losses in French grocer Carrefour.

The pan-European STOXX 600 index closed 0.2 per cent higher after see-sawing through the session. Trading globally was subdued with US markets closed for Martin Luther King Day.

The German DAX rose 0.4 per cent, boosted by a 4.8 per cent jump in Adidas, while UK’s FTSE 100 slipped 0.2 per cent and France’s CAC 40 rose just 0.1 per cent.

Luxury stocks including Richemont and LVMH were among the top boosts to the STOXX 600 after bullish brokerage calls.

European bourses took little cheer from data showing a better-than-expected quarterly rebound in China’s economy as investors feared that tight coronavirus restrictions and potential challenges to vaccine supplies could dent European economic growth in the first quarter.

“Given how far stocks have come since the end of October some hesitancy about the next steps is understandable—much of the good news that may be imparted by earnings season has already been factored in,” Chris Beauchamp, chief market analyst at IG, said in a note.

European earnings season will kick into high gear in the coming weeks, with analysts predicting a 26.3 per cent drop in fourth-quarter profit for companies listed on the STOXX 600, as per Refinitiv I/B/E/S estimates.

Investors also kept an eye on political developments in Rome as Prime Minister Giuseppe Conte faces two days of parliamentary votes that will decide if his fragile coalition can cling to power.

Attention is especially focused on the 321-seat Senate, where Conte looks certain to fall short of an absolute majority.

However, Italian stocks outperformed as shares in Stellantis jumped 7.6 per cent in their first day of trading on the completion of the $52 billion merger between Fiat Chrysler and PSA. Its shares rose 6.9 per cent in Paris markets.

M&A also drove big swings in stocks.

Carrefour slid 6.9 per cent after a possible takeover for 16.2 billion euro ($19.6 billion) by Canadian rival Alimentation Couche-Tard unravelled over the weekend.

The stock erased almost all its gains since the deal was announced last week, with the French government opposing the deal, citing food security concerns.

French waste and water management company Suez, which is fighting a takeover approach from arch-rival Veolia, rose 3.2 per cent after it said it had received an alternative proposal from investment firms Ardian and Global Infrastructure Partners.

Shares in Veolia fell 1.8 per cent.

Finland’s Tikkurila surged 16.5 per cent after Dutch paints and coatings maker Akzo Nobel entered the race to buy its rival with an offer 13 per cent higher than a bid from US rival PPG Industries.

North America

Wall Street’s main indexes were closed for a holiday.

With Reuters

is senior editor for Morningstar Australia

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