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Global Market Report - 21 June

Lewis Jackson  |  21 Jun 2022Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise after European stocks rallied and US stock futures advanced. Iron ore continued to decline amid a slowdown in Chinese steel production.

ASX futures were up 47 points or 0.7% at 6388 as of 8.00am on Tuesday, pointing to a pop at the open after seven consecutive declines for the benchmark.

US stock and bond markets were shut for the first time on Monday for the Juneteenth public holiday. The S&P 500 last week endured its biggest percentage decline since the Covid-19-driven crash of March 2020 after the Fed's decision to raise interest rates by a three-quarter-point spooked investors. Futures for the benchmark index rose 0.4% Monday.

The pan-European Stoxx Europe 600 index rose 1%. Gains for retail, auto and travel-and-leisure companies offset losses for construction and basic-resource stocks.

Locally, the S&P/ASX 200 closed 0.6% lower at 6433.4 as commodity stocks pulled the benchmark to its lowest level since November 2020.

Miners, energy explorers and power generators dragged the ASX 200 to a seventh consecutive session in the red, a run last recorded through March 1, 2020, when the Covid-19 pandemic was upending global markets.

"What is feeding this story is worries about global growth and we're already seeing it with the OECD and the World Bank revising down global GDP numbers," said Chris Conway, lead fund manager at Marcus Today.

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Shares of lithium, gold and iron ore miners all lost ground, with Rio Tinto, BHP and Fortescue dropping between 5.1% and 8.6%.

The energy sector shed 5.2%, while power generators and retailers Origin and AGL fell 3.7% and 1.1%, respectively.

Australia's competition watchdog says it is monitoring the energy market for potential manipulation amid soaring prices and demand.

In commodity markets, Brent crude oil added 0.9% to US$114.13 a barrel. Iron ore fell 8% to US$112.35. Gold edged up 0.01% to US$1840.70.

Long bond markets edged higher on Monday and the yield on Australian 2 Year government bonds declined to 3.23% while the 10 Year closed lower at 4.06%. US bond markets were closed for a holiday.

The Australian dollar gained to 69.51 US cents, up from 69.33 at the previous close. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies slipped to 97.14.

Asia

Chinese stocks closed the day broadly higher, as gains among property, home-appliance makers and construction-material companies offset losses by coal miners and oil majors. Analysts said sentiment on the real-estate sector was supported by the PBOC's decision to leave key rates unchanged and signs of improving contracted sales from May. Seazen Holdings advanced 7.1%, Xinjiang Tianshan Cement added 4.1% and Midea Group rose 4.2%, while PetroChina slid 6.5% and China Shenhua weakened 4.7%. The Shanghai Composite Index ended flat at 3315.43, the Shenzhen Composite Index rose 1.3% and the ChiNext Price Index was 2.0% higher.

Hong Kong shares ended higher, reversing early losses as property-related companies gained, taking the benchmark Hang Seng Index up 0.4% to 21163.91. Real-estate companies rose after the People's Bank of China kept benchmark lending rates steady, meaning that homebuyers won't face higher mortgage payments amid rising inflation, which could boost sales, CGS-CIMB Securities analyst Raymond Cheng says. Country Garden Services led advances on the HSI with a 15% gain. China Overseas Land surged 9.0%, China Resources Land was 8.4% higher and Country Garden Holdings rose 7.2%. The Hang Seng Tech Index was 0.1% higher at 4657.37.

The Nikkei Stock Average closed 0.7% lower at 25771.22, reversing early gains amid fears over some fresh market volatility after the S&P 500 and Dow Jones Industrial Average on Friday wrapped up their worst weeks since 2020. Recessionary fears that swept the US on Friday could continue to weigh on sentiment in Asia for now, Oanda senior market analyst Jeffrey Halley says in a note. Insurance stocks ended lower, with Dai-ichi Life Holdings declining 1.6%, Sompo Holdings falling 0.9% and Tokio Marine 1.1% lower.

Europe

European markets rose as investors remained positive with US markets closed for a public holiday. The pan-European Stoxx 600 gained 1%, German DAX added 1.1%, and the French CAC 40 was up 0.6%.

"The FTSE 100 and other European markets have moved up a touch this afternoon, taking advantage of a US holiday," IG analyst Chris Beauchamp says in a note. "Heavyweight US markets are out of the picture for the day, which at least removes the risk of any fresh selling in tech stocks for a few hours."

London’s FTSE 100 closed up 1.5% Monday, taking advantage of a public holiday in the US Banks made some solid gains "on the back of hawkish comments from Bank of England MPC member Catherine Mann, which sent UK yields sharply higher and 2-year yields to their highest levels since December 2008," Michael Hewson, analyst at CMC Markets, said in a note.

Elsewhere oil companies enjoyed a modest rebound after Friday's losses. The day's biggest risers were International Consolidated Airlines Group, up 7.2%, followed by ITV, up 6.6%, and HSBC, up 5.7%. Intermediate Capital Group, Persimmon and Berkeley Group Holdings were the day's biggest fallers, down 4.8%, 4.5% and 4.1% respectively.

North America

US markets were closed for the Juneteenth public holiday.

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

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