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Global Market Report - 22 November

Lewis Jackson  |  22 Nov 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to slip after a weak finish on Wall Street amid a covid outbreak in Europe.

The Australian SPI 200 futures contract was down 45 points or 0.6% at 7,351 near 8.00 am AEST on Monday, suggesting a negative start to trading.

US stocks closed mixed Friday. Investors piled into the safety of the dollar and government bonds after fresh Covid-19 restrictions in Europe clouded prospects for the global economic recovery.

The tech-heavy Nasdaq Composite climbed 0.4%, hitting its 46th record this year. The S&P 500 slipped 0.1% and the Dow Jones Industrial Average declined 0.7%.

Covid-19 cases are rising in the US and Europe, according to data from Johns Hopkins University. The Austrian chancellor announced Friday that his country would go into a nationwide lockdown starting Monday, with restaurants and retail sectors to close. Areas in Germany are also going into a partial lockdown this week.

The Australian dollar was buying 72.33 US cents near 8.00am AEST, down from the previous close of 72.77. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, rose to 89.81 as investors flocked to the safe haven currency.

Locally, the S&P/ASX 200 closed 0.2% higher at 7396.5 on commodity-stock gains but still racked up a consecutive weekly loss. The ASX lost 0.6% for the week.

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The benchmark briefly dipped into negative territory midway through the session before recovering amid strength from shares of miners and energy producers.

Rio Tinto Fortescue, and BHP gained between 0.8% and 1.1%. Crown Resorts led overall gains with a 17% jump after Blackstone returned with a sweetened third offer for the casino operator.

Crown on Friday said Blackstone had offered a price of $12.50 a share, minus any dividends to be paid by Crown, to buy the business. Blackstone most recently offered A$12.35 per share for Crown in May, increasing an earlier offer of A$11.85 per share.

The proposal includes a number of conditions, including due diligence and a unanimous Crown board recommendation, as well as final approval from casino regulators in the states of Victoria, New South Wales and Western Australia, Crown said.

Yet the consumer discretionary sector still fell amid losses by Domino's Pizza Enterprises, Tabcorp and Aristocrat Leisure.

Wages growth in Australia has lagged well behind surging house price growth, said CoreLogic on Friday. While wages increased 81.7% in the past 20 years, Australian home values have grown 193.1%. 

Gold futures fell 0.5% to $US1854.30 an ounce; Brent crude slipped 2.9% to $US78.89 a barrel; Iron ore was up 5.1% US$91.69.

The yield on the Australian 10-year bond edged up to 1.80%; The US 10-year Treasury yield fell to 1.55%.

Asia

Chinese stocks ended higher amid gains by property developers. The benchmark Shanghai Composite Index rose 1.1%, the Shenzhen Composite Index gained 1.2% while the ChiNext Price Index was 1.0% higher. While still facing headwinds from low property sales, the sector is finding support as Beijing slowly eases credit conditions, UOB Kay Hian says.

Hong Kong stocks slipped lower, extending their losing streak for the third straight day. The downturn was led by Chinese tech companies, which have suffered recent losses due to some disappointing earnings, as well as weakness in the US tech sector. The benchmark Hang Seng Index fell 1.1%. Alibaba dropped 11% after the e-commerce giant cut its revenue guidance for fiscal year 2022.

Japan's Nikkei Stock Average rose 0.5% amid yen weakness and hopes for economic stimulus spurred by media reports that the government is planning a Y55.7 trillion ($68 billion) fiscal package.

Europe

European stocks closed lower on worries about renewed restrictions to contain rising coronavirus cases. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies dropped 0.3%. Both Austria and Germany will go into lockdowns this week as covid outbreaks worsen.

In London, the FTSE 100 index rose 0.3% as gains for miners offset losses for UK home-improvement retailer Kingfisher. BHP and Rio Tinto advanced as copper and other base-metal prices rose.

North America

US stocks closed mixed Friday. Investors piled into the safety of the dollar and government bonds after fresh Covid-19 restrictions in Europe clouded prospects for the global economic recovery.

The tech-heavy Nasdaq Composite climbed 0.4%, hitting its 46th record this year. The S&P 500 slipped 0.1% and the Dow Jones Industrial Average declined 0.7%.

Covid-19 cases are rising in the US and Europe, according to data from Johns Hopkins University. The Austrian chancellor announced Friday that his country would go into a nationwide lockdown starting Monday, with restaurants and retail sectors to close. Areas in Germany are also going into a partial lockdown next week.

"As Covid spreads in Europe and restrictions are strengthened in places in Germany and Austria, there's a general recognition that things may not be going the right way," said Sebastien Galy, a macro strategist at Nordea Asset Management. "This affects sentiment, both within markets and in households."

Stock valuations are at extremes, he added: "We had a relief rally from earnings, but now people are concerned about what comes next."

Oil prices fell, hammered by concerns about the effect of renewed lockdowns on energy demand. Brent crude, the global oil benchmark, declined 2.9% to $78.89, its fourth consecutive weekly decline.

"Today we are seeing a very typical end of week sell-off as traders decide it's not worth the risk to await more potential demand-side bearish news," research company Rystad Energy said in a statement.

Philip Orlando, chief equity market strategist at Federated Hermes Inc., said he expects oil prices to rise toward the end of the year, thanks to inflation, surging demand and diminishing supply.

The yield on the benchmark 10-year Treasury note dropped to 1.535% Friday from 1.586% Thursday. Bond prices rise when yields decline.

Safe-haven currencies strengthened, with the WSJ Dollar Index rising.

Investors seem to be adjusting their positions ahead of Thanksgiving week, potentially leading to exaggerated moves, said Christopher Brown, co-portfolio manager of the total return bond strategy at T. Rowe Price Group Inc. Investors, he said, will likely soon go back to paying more attention to inflation.

"I suspect Covid has sort of faded into the background," Mr. Brown said. "I think we're going to have wobbles like this. Is it ever going to go away? Probably not."

Foot Locker declined 12%, or $6.88, to $50.68 after the retailer said it expects supply-chain issues to persist. Farfetch sank 14%, or $6.33, to $39.26 after the fashion e-commerce company reported revenue that missed Wall Street's estimates. Financial software firm Intuit climbed 10%, or $63.40, to $692.34 after it raised its full-year guidance.

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

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