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Global Market Report - 20 April

Lewis Jackson  |  20 Apr 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to follow European and US stocks lower at the open.

ASX futures were down 32 points or 0.5 per cent to 7,018 near 7am Sydney time on Tuesday, suggesting a negative start to trading. The currency edged higher. The yield on the US 10-year note was up 2 basis points to 1.60 per cent 

US stocks closed lower on Monday, slipping from last week’s record levels, as investors awaited guidance from first-quarter earnings to justify high valuations, while Tesla Inc shares fell after a fatal car crash.

The Dow Jones Industrial Average fell 123.04 points, or 0.36 per cent, to 34,077.63. The S&P 500 lost 22.21 points, or 0.53 per cent, at 4,163.26; while the Nasdaq Composite dropped 137.58 points, or 0.98 per cent, to 13,914.77.

Locally, Australia's share market eked out its best close since February 2020 as it neared a record high, while the US reporting season could make or break that bid.

The benchmark S&P/ASX200 index closed higher by 2.1 points, or 0.03 per cent, to 7,065.6 on Monday.

The All Ordinaries reached a record 7,358.8 points, extending a milestone set last week

Materials shares were strongest and rose 0.78 per cent. Iron ore traded for about $US175 per tonne.

There was some good news domestically. Quarantine-free flights for Australians to New Zealand began, and should help travel and tourism.

Crown Resorts received a $3 billion funding proposal that would allow it to buy James Packer's stake in the gaming company. The unsolicited approach was made by US-based Oaktree Capital Management.

Lithium providers Galaxy and Orocobre proposed a $4 billion merger they claim would create the fifth-largest lithium provider in the world.

Rio Tinto will give a first quarter production update.

Gold was down 0.3 per cent at $US1,770.80 an ounce; Brent crude was up 0.5 per cent to $US67.10 a barrel; Iron ore was up 1.9 per cent to $US181.80 a tonne.

Meanwhile, the Australian dollar was buying 77.56 US cents at 7:00am, up from 77.34 this time on Monday.

Asia

China stocks started the week on a firm note on Monday led by robust gains for new energy vehicles firms, while strong foreign inflows also helped sentiment.

The CSI300 index rose 2.1 per cent to 5,069.66 points at the end of the morning session, while the Shanghai Composite Index gained 1.3 per cent to 3,471.17 points.

Leading the gains on Monday, the CSI new energy vehicles index jumped 5.7 per cent after Huawei’s launch of automated-driving solutions on Sunday.

The Hang Seng index rose 0.5 per cent to 29,106.15, while the China Enterprises Index gained 0.6 per cent to 11,092.95.

However, tech giants weakened, with Alibaba losing 1.5 per cent and pushing the Hang Seng IT index 0.1 per cent lower. Tencent Holdings Ltd and JD.Com Inc slipped 0.8 per cent and 0.5 per cent, respectively.

Ant Group is exploring options for founder Jack Ma to divest his stake in the financial technology giant and give up control, as meetings with Chinese regulators signaled to the company that the move could help draw a line under Beijing’s scrutiny of its business, according to a source familiar with regulators’ thinking and two people with close ties to the company.

China has imposed a sweeping restructuring plan on Jack Ma’s Ant Group, the fintech conglomerate whose record $37 billion IPO was derailed by regulators in November, that will see the group become a financial holdings company among other things.

Investors need to pay close attention to tech stocks, which have seen an evident correction, in order to have a sense of where the market could go next, brokerage Central China International said in a report.

Europe

European stocks retreated slightly from record highs on Monday, as a weaker open on Wall Street and rallying currencies offset optimism about a solid start to the earnings season.

After marking its seventh straight week of gains on Friday, the pan-European STOXX 600 index closed little changed but fell about 0.3 per cent from all-time highs hit earlier on Monday.

The auto and parts sector led losses, down 1.6 per cent after a 2 per cent surge in the previous session, followed by the technology sector.

Italy’s Juventus surged 18 per cent after top European football clubs including Juventus FC and Manchester United announced a breakaway competition to rival the UEFA Champions League.

Danske Bank slipped 2.4 per cent as Chief Executive Officer Chris Vogelzang resigned after Dutch authorities named him as a suspect in a probe into violations of money-laundering regulations at lender ABN Amro.

ABN Amro rose 2.3 per cent after it said it had reached a 480 million-euro ($574 million) settlement with prosecutors over money laundering allegations.

Meanwhile, rising European bond yields saw eurozone bank stocks surge, lifting the lender-heavy Spanish index to close at one-month highs.

North America

US stocks closed lower on Monday, slipping from last week’s record levels, as investors awaited guidance from first-quarter earnings to justify high valuations, while Tesla Inc shares fell after a fatal car crash.

The Dow Jones Industrial Average fell 123.04 points, or 0.36 per cent, to 34,077.63. The S&P 500 lost 22.21 points, or 0.53 per cent, at 4,163.26; while the Nasdaq Composite dropped 137.58 points, or 0.98 per cent, to 13,914.77.

The electric-car maker slid 3.4 per cent after a Tesla vehicle believed to be operating without anyone in the driver’s seat crashed into a tree on Saturday north of Houston, killing two occupants.

The stock was the biggest drag on the S&P 500 and Nasdaq Composite Index. An 8.4 per cent drop over the weekend in bitcoin, in which Tesla has an investment, also weighed on its share price.

The S&P 500 was mostly lower, with Microsoft Corp, Amazon.com Inc and Nvidia Corp also weighing on the benchmark index as analysts await results this week and next that form the bulk of earnings season.

Corporate outlooks should indicate to what degree the rally from last year’s lows can continue. Analysts expect first-quarter earnings to have grown 30.9 per cent from a year ago, according to Refinitiv IBES data.

A recent retreat in benchmark 10-year Treasury yields from 14-month highs has helped high-flying technology stocks to rebound, while strong economic data has lifted the S&P 500 and the Dow to record levels.

Nvidia fell 3.5 per cent after the UK government said it would look into the national security implications of Nvidia’s purchase of British chip designer ARM Holdings, raising a question mark over the $40 billion deal.

GameStop Corp jumped 6.3 per cent on the announcement of its chief executive’s resignation.

Crypto stocks including miners Riot Blockchain and Marathon Digital each fell more than 8 per cent as bitcoin took a hammering over the weekend. Bitcoin closed down 0.7 per cent.

With Reuters

is a reporter/data journalist for Morningstar. You can follow Lewis on Twitter @lewjackk

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