Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn


Global Market Report - 2 November

Lex Hall  |  02 Nov 2020Text size  Decrease  Increase  |  
Email to Friend


Australian shares are set to rise despite falls on Wall Street last week as covid cases surge and investors brace for volatility ahead of Tuesday’s US election.

The Australian SPI 200 futures contract was up 52 points, or 0.9 per cent, to 5,942 points at 8.30am Sydney time on Monday, suggesting a positive start to trading.

US stock indexes closed lower on Friday to cap Wall Street’s biggest weekly sell-off since March, as losses in richly priced tech heavyweights, a record rise in coronavirus cases and jitters over the presidential election snuffed investor sentiment.

The Dow Jones Industrial Average fell 157.51 points, or 0.59 per cent, to 26,501.6. The S&P 500 lost 40.15 points, or 1.21 per cent, to 3,269.96 and the Nasdaq Composite dropped 274.00 points, or 2.45 per cent, to 10,911.59.

Locally, Westpac says it will restart dividend payments for the latter half of its financial year, despite full-year cash earnings falling 62 per cent to $2.61 billion.

Australia's share market had its worst week since April, and one investment analyst has warned more trouble looms if the US election result this week takes time to unfold. The S&P/ASX200 benchmark index finished down 32.7 points, or 0.55 per cent, to its session low of 5,927.6 on Friday. The All Ordinaries closed lower by 34.8 points, or 0.56 per cent, to 6,133.2.

Gold was up 0.6 per cent at $US1,878.81 an ounce; Brent oil was down 0.8 per cent to $US37.94 a barrel; Iron ore was up 1.3 per cent to $US117.49 a tonne.

Investing Compass
Listen to Morningstar Australia's Investing Compass podcast
Take a deep dive into investing concepts, with practical explanations to help you invest confidently.
Investing Compass

Meanwhile, the Australian dollar was buying 70.28 US cents at 8.30am, slightly up from 70.23 US cents at Friday’s close.


China stocks closed lower on Friday, dragged by food and beverage firms following slower profit growth in the third quarter, although the indexes posted monthly gains on strength in consumer discretionary and banking shares.

The blue-chip CSI300 index ended 1.6 per cent lower at 4,695.33, while the Shanghai Composite Index shed 1.5 per cent to 3,224.53. For the month, CSI300 was up 2.4 per cent, while SSEC inched up 0.2 per cent.

Hong Kong stocks fell on Friday, tracking other Asian markets' declines on worries over this week's US presidential election and a shaky global economic outlook, but strength in tech companies led to monthly gains.

At the close of trade, the Hang Seng index was down 1.95 per cent at 24,107.42. The Hang Seng China Enterprises index fell 1.96 per cent to 9,760.24.

Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.28 per cent, while Japan's Nikkei index closed down 1.52 per cent.


Some strong earnings helped European stocks end higher on Friday, but they posted their sharpest weekly and monthly declines since a brutal selloff in March, as a new round of coronavirus lockdowns dampened prospects for a sustained economic recovery.

Gains in energy major Total and some Spanish banks after upbeat results boosted the pan-European index which finished a volatile session up 0.2 per cent.

Data showing the euro zone economy rebounded more strongly than expected also helped prop up markets, but fears that the recovery would be cut short as countries reintroduce restrictions to stem a second wave of the pandemic kept gains in check.

With Spain, one of Europe's worst covid-19 hot spots, declaring a state of emergency until early May, and Germany and France reimposing tight restrictions this week, the STOXX 600 lost more than 5 per cent on the week, pushing the monthly performance into negative territory.

“After the drubbing it took earlier in the week, Europe is managing to avoid any bigger losses,” said Chris Beauchamp, chief market analyst at online trader IG.

“Better GDP figures might be helping ... but it is more likely due to a grateful realisation that even if Q4 is absolutely dire, the ECB will be along in due course with some form of rescue programme.”

On Thursday, the central bank gave its clearest signal yet that it will ease policy in December to help the economy through the health crisis.

Heading into the week of US Presidential elections, a slide in Wall Street's big tech stocks after earnings overnight also weighed on global sentiment, with Europe's tech sector slipping 0.5 per cent.

Apple suppliers ASM International, Dialog Semiconductor and STMicroelectronics fell between 1.2 per cent and 1.7 per cent after the late launch of new 5G iPhones caused customers to put off buying new devices.

Spain's blue-chip IBEX was supported by better-than-expected earnings from lenders Banco Sabadell and BBVA.

French oil and gas producer Total rose 2.8 per cent after it maintained its dividend despite a sharp drop in third-quarter net profit.

Third-quarter earnings season has been largely supportive, with 74 per cent of the nearly half the STOXX 600 companies that reported so far topping profit estimates, according to Refinitiv data.

But video game maker Ubisoft slipped to the bottom of the STOXX 600 after it cut its outlook for the year as the covid-19 pandemic delayed the production of blockbuster games Far Cry 6 and Rainbow Six Quarantine.

North America

US stock indexes closed lower on Friday to cap Wall Street’s biggest weekly sell-off since March, as losses in richly priced tech heavyweights, a record rise in coronavirus cases and jitters over the presidential election snuffed investor sentiment.

The pandemic pushed US hospitals to the brink of capacity as coronavirus cases surpassed 9 million, while the prospect of wider covid-19 restrictions in Europe raised concerns about the economic recovery.

The CBOE volatility index closed just below a 20-week high, a sign of investor jitters ahead of the final weekend before Election Day on Tuesday. The main indexes pared steeper losses toward the closing bell, with the Dow down less than 1 per cent.

“We’re two market days away from Election Day and people want to make sure that they’re not completely caught off guard,” said Pete Santoro, a Boston-based equity portfolio manager at Columbia Threadneedle.

The S&P 500 has fallen about 8.9 per cent since hitting an all-time high in early September in a rally driven by the tech mega caps whose quarterly results this week failed to meet highly optimistic expectations.

Apple Inc tumbled 5.6 per cent after it posted the steepest drop in quarterly iPhone sales in two years due to the late launch of new 5G phones.

Amazon.com Inc slid 5.45 per cent after it forecast a jump in costs related to covid-19, while Facebook Inc fell 6.3 per cent as it warned of a tougher 2021.

“All these names are eventually going to be repriced, they’re all ridiculously valued. It’s just that I don’t know when and I don’t know from what stratospheric valuation they inevitably reprice,” said David Bahnsen, chief investment officer at The Bahnsen Group in Newport Beach, California.

Communication services got a boost from a jump in shares of Alphabet Inc after the Google parent beat estimates for quarterly sales as businesses resumed advertising.

Google may have benefited as it has been trading at about 36 times earnings, far less than the 119 times earnings valuation of Amazon, Bahnsens said.

“There is a big selloff in those big tech names because they didn’t live up to the hype and people are really worried about next week’s election,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.

Republican President Donald Trump has consistently trailed Democratic challenger Joe Biden in national polls for months, but polls have shown a closer race in the most competitive states that could decide the election.

The Dow Jones Industrial Average fell 157.51 points, or 0.59 per cent, to 26,501.6. The S&P 500 lost 40.15 points, or 1.21 per cent, to 3,269.96 and the Nasdaq Composite dropped 274.00 points, or 2.45 per cent, to 10,911.59.

For the week, the Dow fell 6.5 per cent, the S&P 500 5.6 per cent and the Nasdaq 5.5 per cent. For the month, the Dow slid 4.6 per cent, the S&P 500 2.8 per cent and the Nasdaq 2.3 per cent.

Volume on US exchanges was 10.31 billion shares.

The third-quarter earnings season is almost past its halfway mark, with about 86.2 per cent of S&P 500 companies topping earnings estimates, according to Refinitiv data. Overall, profit is expected to fall 10.3 per cent from a year earlier.

Twitter Inc, the largest S&P 500 decliner by percentage, slumped 21.1 per cent after the micro-blogging site added fewer users than expected and warned the US election could affect ad revenue.

is senior editor for Morningstar Australia

AAP logo

© 2022 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

Email To Friend