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Global Market Report - 23 April

Lewis Jackson  |  23 Apr 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are poised to open lower as US stocks turned negative after a report President Joe Biden may increase the capital gains tax rate for wealthy individuals to 39.6 per cent.

The Australian SPI 200 futures contract was down 15 points or 0.2 per cent to 7,010 at 7am Sydney time on Friday, suggesting a negative start to trading.

US stocks dived on Thursday on reports President Joe Biden planned to almost double the capital gains tax, news that analysts said provided an excuse to take profits in a directionless market ahead of big tech’s earnings next week.

The Dow Jones Industrial Average fell 0.94 per cent to 33,815.9, the S&P 500 lost 0.92 per cent at 4,134.98, and the Nasdaq Composite dropped 0.94 per cent to 13,818.41.

Locally, Australia's share market rebounded Thursday from two consecutive days of losses to stand 11 points short of its best close since February last year.

The benchmark S&P/ASX200 index wavered early then improved and closed up 57.9 points, or 0.83 per cent, to 7,055.4.

The All Ordinaries on Thursday closed higher by 53.1 points, or 0.73 per cent, to 7,312 points.

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Health and technology shares were best, and gained 1.74 and 1.51 per cent respectively.

Market giant CSL continued its momentum and rose by 1.81 per cent.

The biotech began Wednesday at $263.34 and closed on Thursday at $272.80.

In technology, Afterpay gained 2.64 per cent to $125.03.

Shares in property, industrials and consumer staples gained more than one per cent.

There was no obvious reaction from investors to Australia's foreign minister tearing up Victoria's Belt and Road agreement with China.

The deal would have given Chinese companies more opportunity to win infrastructure business with the state government.

AGL boss Brett Redman is leaving after only last month starting efforts to create separate coal-fired power and clean energy businesses. The company said Mr Redman had resigned as he could not commit beyond the proposed demerger.

AMP reported the loss of another corporate superannuation account but said cash flow was better.

The wealth manager will pursue a demerger of its AMP Capital private markets business. The action will form two new businesses—AMP Limited, a retail-focused wealth management, investment and banking group, and Private Markets, an investment manager focusing on infrastructure equity, infrastructure debt and real estate.

AMP Capital’s global head of infrastructure equity and North West region Boe Pahari will leave the business.

There was a plunge in the shares of online marketplace Redbubble, which fell 23.05 per cent to $4.24.

Gold was down 0.6 per cent at $US1,782.23 an ounce; Brent crude was up 0.4 per cent to $US65.56 a barrel; Iron ore was down 2.4 per cent to $US183.62 a tonne.

Meanwhile, the Australian dollar was buying 77.11 US cents at 7:00am, down from 77.54 this time Thursday.

Asia

China stocks weakened on Thursday, as Sino-US tensions dampened sentiment, offsetting a series of upbeat corporate earnings for the first quarter.

The blue-chip CSI300 index fell 0.2 per cent to 5,089.24, while the Shanghai Composite Index shed 0.2 per cent to 3,465.11.

At the close of trade, the Hang Seng index was up 133.42 points, or 0.47 per cent, at 28,755.34. The Hang Seng China Enterprises index rose 0.46 per cent to 10,939.12.

A bipartisan US congressional push to counteract China picked up steam on Wednesday as a Senate committee overwhelmingly backed a bill pressing Beijing on human rights and economic competition and other lawmakers introduced a measure seeking billions for technology research.

Though the stock market has been quite stable for the past few weeks, Ken Cheung, chief Asian FX strategist at Mizuho Bank in Hong Kong, said market sentiment stabilized on news China considered supporting Huarong with central bank funds.

The value of shares investors in China’s onshore stock markets have borrowed to sell short reached 151.9 billion yuan ($23.43 billion) on Wednesday, just a touch below a record high hit on Tuesday.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.36 per cent, while Japan’s Nikkei index closed up 2.38 per cent

Europe

European stocks moved towards record highs on Thursday, following a set of strong company earnings and as the European Central Bank left policy unchanged as expected.

Heavyweight Nestle rose almost 3 per cent after reporting its strongest quarterly sales growth in 10 years, while software group SAP and French spirits group Pernod Ricard were among some of the other stocks to surge after results.

The pan-European STOXX 600 index rose 0.7 per cent, extending gains for a second day, after fears of a new wave of COVID-19 cases pushed European markets to their worst day in 2021 on Tuesday.

The ECB’s decision to keep rates unchanged as widely expected sets the stage for a battle at the June 10 meeting, when policymakers have to decide whether to slow bond buying, even if that means allowing borrowing costs to drift higher.

Shares of renewable energy companies such as Vestas and Siemens Gamesa surged, with Vestas jumping 10 per cent for its best day in a month, after the Biden administration on Thursday pledged at a US climate summit to slash US greenhouse gas emissions in half by 2030.

Birkin bag maker Hermes was up 2.1 per cent as strong growth in Asia powered a 44 per cent surge in quarterly sales.

North America

US stocks dived on Thursday on reports President Joe Biden planned to almost double the capital gains tax, news that analysts said provided an excuse to take profits in a directionless market ahead of big tech’s earnings next week.

The Dow Jones Industrial Average fell 0.94 per cent to 33,815.9, the S&P 500 lost 0.92 per cent at 4,134.98, and the Nasdaq Composite dropped 0.94 per cent to 13,818.41.

Biden will propose raising the marginal income tax rate to 39.6 per cent from 37 per cent and nearly double capital gains taxes to 39.6 per cent for people earning more than $1 million, sources told Reuters.

The proposal targets about $1 trillion for child care, universal pre-kindergarten education and paid leave for workers, the sources said.

Markets have been listless after the Dow and S&P 500 recently scaled all-time peaks as investors await guidance from Microsoft Corp, Google parent Alphabet Inc and Facebook Inc when they report earnings next week.

“Until we get out of this information vacuum the market is going to be generally directionless,” said Thomas Hayes, chairman and managing member at hedge fund Great Hill.

“All that really matters moving forward is what are those big tech earnings next week?”

Investors welcomed data showing the number of Americans filing new claims for unemployment benefits last week dropped to a fresh one-year low. The Labor Department report suggested layoffs were subsiding and expectations were rising for another month of blockbuster job growth in April.

Chipmaker Intel Corp forecast second-quarter revenue above Wall Street targets, betting its next generation of processors for data centers and PCs will meet growing demand for cloud-based services. Shares slipped about 1 per cent in after-hours trade.

AT&T Inc beat Wall Street revenue targets as the US economic reopening following pandemic-linked restrictions boosted smartphone sales and the media business. AT&T shares rose 4.2 per cent.

With Reuters

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

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