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Global Market Report - 22 January

Lex Hall  |  22 Jan 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to open lower as the Biden administrations takes control of the US government and European shares lose steam.

The Australian SPI 200 futures contract was down 24 points, or 0.4 per cent, at 6,748 points at 6.30am Sydney time on Friday, suggesting a negative start to trading.

US stocks closed at record highs on Thursday, propelled by optimism about more pandemic relief under the Biden administration to support the economy after data showed a tepid labor market recovery.

The Dow Jones Industrial Average fell 12.37 points, or 0.04 per cent, to 31,176.01, the S&P 500 gained 1.23 points, or 0.03 per cent, to 3,853.08 and the Nasdaq Composite added 73.67 points, or 0.55 per cent, to 13,530.92.

Locally, the Australia's share market closed higher and at 11-month highs on Thursday, as an improved unemployment rate supported investor optimism on day one of Joe Biden's US presidency.

The S&P/ASX200 benchmark index closed higher 53.3 points, or 0.79 per cent, to 6,823.7 on Thursday.

The index has not closed this high since February 25.

The All Ordinaries closed higher 56.1 points, or 0.8 per cent, at 7,107.1.

Information technology was the standout sector, up 2.7 per cent.

Earlier, US markets closed higher as Joe Biden, who has pledged to deliver $US1.9 trillion ($2.4 trillion) in economic stimulus, was sworn in as US president.

The Australian economy also had favourable news. The unemployment rate dropped to 6.6 per cent in December as another 50,000 people found jobs in the month.

Meanwhile, the Australian dollar was buying 77.57 US cents at 6.30am, down from 77.73 US cents at Thursday's close. Brent crude fell -0.02 per cent to $US56.07 a barrel while iron ore was up 0.6 per cent to $US171.51 a tonne.

Asia

China stocks settled higher on Thursday, in line with other Asian markets on hopes of more stimulus from US President Joe Biden's administration to cushion the economic damage wreaked by the covid-19 pandemic.

The blue-chip CSI300 index rose 1.6 per cent to 5,564.97, while the Shanghai Composite Index added 1.1 per cent to 3,621.26.

Hong Kong stocks ended lower on Thursday, snapping a five-day winning streak, as investors locked in profit following sharp gains helped by strong demand from mainland investors.

At the close of trade, the Hang Seng index was down 0.12 per cent at 29,927.76. The Hang Seng China Enterprises index fell 0.5 per cent to 11,889.45.

Japanese shares hit their highest close in 30 years, taking cues from solid overnight performances on Wall Street, on investor optimism over upbeat corporate earnings and that new US administration’s massive stimulus package will bolster growth.

Nikkei share average gained 0.82 per cent to 28,756.86, the highest close since August 1990, while the broader Topix inched up 0.6 per cent to 1,860.64.

Europe

European stocks lost steam heading into the close on Thursday, weighed down by oil and real estate shares, while the European Central Bank stuck to its monetary policy but warned a surge in covid-19 infections posed a risk to the euro zone’s recovery.

The pan-European STOXX 600 index ended flat after rising as much as 0.8 per cent earlier in the session.

Energy majors BP, Royal Dutch Shell and Total each fell more than 2 per cent as oil prices slipped after industry data showed a surprise increase in US crude inventories. 

Tech stocks jumped 1.6 per cent as their US peers rallied, while British software maker Sage Group jumped 4.9 per cent after posting higher quarterly recurring revenue.

NorthAmerica

The S&P 500 and Nasdaq closed at record highs on Thursday, propelled by optimism about more pandemic relief under the Biden administration to support the economy after data showed a tepid labor market recovery.

The number of Americans filing new applications for unemployment benefits dipped to 900,000 last week but still remained stubbornly high as the covid-19 pandemic tears through the nation, raising the risk that the economy will shed jobs for a second straight month in January.

But other data showed the housing and manufacturing sectors as areas of strength to help buttress the economy.

Unofficially, the Dow Jones Industrial Average fell 12.37 points, or 0.04 per cent, to 31,176.01, the S&P 500 gained 1.23 points, or 0.03 per cent, to 3,853.08 and the Nasdaq Composite added 73.67 points, or 0.55 per cent, to 13,530.92.

The Nasdaq Composite advanced, boosted by a jump in shares of megacap stocks such as Alphabet Inc, Apple Inc and Amazon.com Inc ahead of their earnings reports in the coming weeks.

It follows Netflix Inc’s blowout results on Wednesday that revitalized the “stay-at-home” beneficiaries, adding $262 billion in overall market capitalization to the FAANG group of stocks.

President Joe Biden has launched several initiatives during his initial days in office, including ramping up testing and vaccine rollouts.

Technology, consumer discretionary and communication services which includes Alphabet and Facebook, were the only S&P sectors in green.

Energy was the biggest drag among 11 major S&P sectors, following news Biden revoked the Keystone XL oil pipeline project’s presidential permit.

With Reuters

is content editor for Morningstar Australia

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