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Global Market Report - 19 November

Lewis Jackson  |  19 Nov 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to rise after an uneven advance on Wall Street amid a positive jobs report.

The Australian SPI 200 futures contract was up 5 points at 7,372 near 8.00 am AEST on Friday, suggesting a positive start to trading.

US stocks wavered Thursday as department store retailers posted strong earnings and unemployment data showed the labour market is continuing to recover.

The S&P 500 ticked up 0.3% to a fresh record high, reversing Wednesday's 0.3% losses. The Nasdaq Composite Index rose 0.5%, also reaching a new high, as technology stocks added to early gains. The Dow Jones Industrial Average slipped 0.2%.

The Australian dollar was buying 72.72 US cents near 7.00am AEST, up from the previous close of 72.64. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, edged down to 89.44.

Locally, the S&P/ASX 200 closed 0.1% higher at 7379.2, edging up amid gains by materials stocks.

The benchmark ended a run of consecutive losses despite another slip by Commonwealth Bank, which lost 1.5%, a day after the country's largest listed company by market capitalization suffered its fifth biggest share-price fall.

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The two best-performing ASX components were both in the materials sector. Nufarm bounced 5.2% from the prior day's heavy fall, while Evolution jumped 9.7% as analysts digested its acquisition of the remaining 70% of the Ernest Henry copper-gold mine.

A clutch of gold miners including Newcrest, Northern Star and Ramelius rose in its wake, gaining between 1.4% and 2.9%.

There’s speculation that Seven could add to its 30% shareholding in Beach Energy, just weeks after chief executive Matt Kay’s departure. Macquarie notes Seven's energy business was built on contrarian upstream bets. "It would not be a stretch for Seven to obtain control (circa $500 million-$600 million additional stock)," Macquarie says. "Seven has historically shown an appetite to act rapidly, where it sees opportunity to add value from obtaining control of underperforming portfolio companies." Shares closed down 0.4%.

Elsewhere, Treasury Wine announced it would buy US luxury winemaker Frank Family Vineyards for $315 million.

Gold futures fell 0.4% to $US1864.70 an ounce; Brent crude rose 1.1% to $US81.14 a barrel; Iron ore was down 4.4% US$87.27.

The yield on the Australian 10-year bond slipped to 1.79%; The US 10-year Treasury yield fell to 1.58%.

Asia

Chinese stocks finished the session lower, as property developers declined. Property-sector data for October deteriorated further, and the government's easing so far hasn't been enough to turn consumer confidence around, Orient Securities said. The Shanghai Composite Index slipped 0.5%, the Shenzhen Composite Index lost 0.7% and the ChiNext Price Index was 1.1% lower.

Hong Kong stocks ended the session lower, with the benchmark Hang Seng Index losing 1.3%. The tech sector fell sharply, following losses in the US market overnight. Alibaba companies were the top losers on the HSI. The e-commerce giant itself dived 6.1% ahead of its fiscal 2Q earnings release due later in the day. Property developers further weighed on the market, as the sector continued to retreat from earlier gains.

Japanese stocks close lower, dragged by falls in energy and shipping companies following weaker crude oil prices overnight. The Nikkei Stock Average falls 0.3%. Investors are focusing on Japan's fiscal stimulus and any other economic initiatives by Prime Minister Fumio Kishida.

Europe

European stocks closed lower as investors fretted that rising inflation could lead monetary policy to tighten ahead of schedule. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies was down 0.5%.

In London, the FTSE 100 index fell 0.48% to join other global markets on the downswing.

Weakness in emerging markets is spreading across to their developed peers, with inflation and slowing growth concerns making themselves felt once again, IG Group Chief Market Analyst Chris Beauchamp said.

North America

US stocks wavered Thursday as Macy's and Kohl's posted strong earnings and unemployment data showed the labour market is continuing to recover.

The S&P 500 ticked up 0.3% to a fresh record high, reversing Wednesday's 0.3% losses. The Nasdaq Composite Index rose 0.5%, also reaching a new high, as technology stocks added to early gains. The Dow Jones Industrial Average slipped 0.2%.

Stocks have wavered this week as earnings rolled in and concerns about rising consumer prices continued. Results have overall been strong, but some major companies such as Target have been hit by supply-chain snarls and rising costs.

"Markets are trying to figure inflation out, and maybe part of that is just how temporary the situation will be," said Jim Polk, head of equity investments at Homestead Funds. "Concerns about congestion and how much that's impacting inflation—those are really the big things."

Shares of Macy's surged 21% and Kohl's jumped 7.8%, as both retailers released earnings that beat analysts' estimates and raised their full-year guidance.

"Consumers are taking whatever is on the shelves at whatever prices they are listed at, so that's really good for retailers and margins," said George Cipolloni, a portfolio manager at Penn Mutual Asset Management, who is recommending holding small-cap stocks.

US-listed Alibaba shares declined 11% after the Chinese e-commerce giant reported a drop in quarterly profit due to losses from its investments in equities.

Technology firm Nvidia rose 8.1% after posting record quarterly revenue. Cisco Systems slid 7.3% after the company gave earnings guidance that was below Wall Street's estimates and said it was affected by the semiconductor shortage.

Electric-vehicle makers Rivian Automotive and Lucid Group extended losses into a second day. The stocks were both down around 15%.

The latest data showed 268,000 people filed for jobless claims in the week ended 13 Nov, a decline from the previous week. The number of claims is beginning to approach pre-pandemic levels, as employers hang on to their workers in a tight labor market.

Some investors are closely watching for a Federal Reserve chair nomination after President Joe Biden hinted to reporters Tuesday he could reveal his choice around the end of the week. President Biden will be making his pick between current chair Jerome Powell or Fed governor Lael Brainard.

Bitcoin traded at around $57,797, extending its fall into a fourth day. It is down 3.8% from its level on Wednesday at 5 pm New York, according to data from CoinDesk.

 

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

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