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Global Market Report - 23 July

Lex Hall  |  23 Jul 2020Text size  Decrease  Increase  |  
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Australian shares are set for a lukewarm start amid investor caution ahead of the federal government unveiling the size of its budget deficit later on Thursday.

The Australian SPI 200 futures contract was higher by 7.0 points, or 0.12 per cent, to 6,048.0 points at 8am Sydney time on Thursday.

An economic and fiscal update by Treasurer Josh Frydenberg, to be released at 11am, will be the focus of the market's attention, with the government expected to reveal a huge debt bill after tagging tens of billions of dollars for measures to support the economy through the coronavirus pandemic.

Overnight, US markets edged higher, helped by robust home sales data, with the three main indices see-sawing through the trading session.

The US Federal Reserve's efforts to support the economy through the pandemic, and expectations the US government will deliver more financial aid, have been key in keeping markets mostly higher since stocks plunged in March.

The Dow Jones Industrial Average rose 0.62 per cent to 27,005.84, the S&P 500 gained 0.57 per cent, to 3,276.02 and the Nasdaq Composite added 0.24 per cent, to 10,706.13.

Meanwhile, Westpac has named a new boss for its institutional bank, tapping Deutsche Bank's chief executive for Australia and New Zealand Anthony Miller for the role.

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The Australian dollar was trading at 71.39 US cents at 8am, higher from 71.34 US cents at Wednesday's close.


China stocks ended higher for the fourth straight session on Wednesday, buoyed by Beijing’s capital market reforms, though gains were checked by ongoing Sino-US tensions.

At the close, the Shanghai Composite index was up 0.37 per cent at 3,333.16, while the blue-chip CSI300 index ended 0.5 per cent higher after rising 2.1 per cent earlier in the session.

Hong Kong stocks fell the most in nearly six weeks on Wednesday, as signs of escalating Sino-US tensions weighed on the market sentiment.

At the close of trade, the Hang Seng index was down 577.72 points, or 2.25 per cent, at 25,057.94, its biggest fall since 11 June. The Hang Seng China Enterprises index fell 1.93 per cent to 10,243.51.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.97 per cent, while Japan’s Nikkei index closed down 0.58 per cent.


European shares slid on Wednesday as escalating US-China tensions and a surge in coronavirus cases dented sentiment after an EU-wide debt deal sent the region’s markets to four-month highs in the previous session.

Breaking a three-day winning streak, the pan-European STOXX 600 closed down 0.9 per cent to post its sharpest one-day drop in a month.

Beijing said Washington had abruptly told it to close its consulate in the city of Houston, a move strongly condemned by China. In response, the Asian country is considering closing the US consulate in Wuhan, a source said.

Energy stocks took the biggest hit, down 2.8 per cent after data showed a bigger-than-expected inventory build-up in the US, adding to the pressure on oil prices. Royal Dutch Shell, BP and Total dropped more than 3 per cent.

US President Donald Trump warned overnight the pandemic would get worse before it got better, while a Reuters tally showed global covid-19 infections surged past 15 million on Wednesday.

The news deflated the positive mood after European Union members reached a deal on Tuesday over a 750-billion-euro ($1.4 trillion) coronavirus recovery fund to help with the bloc’s economic recovery from the virus outbreak.

Healthcare stocks marked their worst session in a month, while China-sensitive basic material stocks lost 1.4 per cent.

In earnings, UK home improvement chain Kingfisher had its best day in more than three decades, up 14.6 per cent, after it forecast first-half underlying profit ahead of last year.

Swiss engineering firm ABB rose 2.8 per cent after saying its order situation could improve in the coming months.

Industrial group Melrose Industries, meanwhile, dropped 14.2 per cent after it signalled it could lay off an unspecified number of employees following losses in the second quarter.

Automakers were hit by a 1.3 per cent slide in French car parts maker Valeo after it swung to a 1.2 billion euros  ($1.7 billion) first-half loss.

Expectations for second-quarter corporate profits in Europe have further deteriorated, Refinitiv data shows, as fears grow over the extent of the recession triggered by the pandemic.

Companies listed on the STOXX 600 are expected to report a decline of 58.6 per cent in quarterly earnings, versus 56.2 per cent forecast the week before.

North America

Wall Street ended higher on Wednesday after a see-saw session as investors digested mixed quarterly results and contentious stimulus negotiations in Washington.

The major stock indexes oscillated for much of the day but ended in the black. The Nasdaq had the smallest gain, capped by a 1.2 per cent drop in Amazon.com shares.

The S&P 500 remained in positive territory year-to-date, up 1.4 per cent. The Nasdaq has gained 19.3 per cent since 1 January, while the Dow remained down 5.4 per cent.

The latest figures showed more than 1,000 deaths in the US from covid-19 on Tuesday, bringing the total death toll to nearly 142,000. Experts warned that that number will rise further due to a surge in new infections.

Congressional Democrats and Republicans remained divided on the details of a new stimulus package expected to cost US$1 trillion or more, less than two weeks before extended benefits are due to expire for millions of unemployed Americans.

On the economic front, sales of existing homes jumped by a record 20.7 per cent in June, according to the National Association of Realtors.

The Philadelphia SE Housing index was up 3.0 per cent, handily outperforming the broader market.

The Dow Jones Industrial Average rose 165.44 points, or 0.62 per cent, to 27,005.84, the S&P 500 gained 18.72 points, or 0.57 per cent, to 3,276.02 and the Nasdaq Composite added 25.76 points, or 0.24 per cent, to 10,706.13.

Ten of the 11 major sectors in the S&P 500 advanced, with energy and financials losing ground.

Utilities enjoyed the biggest percentage gain. Second quarter earnings season is in full-swing, with 75 constituents of the S&P 500 having posted results. Of those, 77.3 per cent have beaten consensus, according to Refinitiv data.

But expectations have set a low bar. Analysts now see aggregate S&P 500 second quarter earnings plunging by 41.2 per cent year-on-year, per Refinitiv.

Pfizer Inc gained 5.1 per cent after the drugmaker and German biotech firm BioNTech announced the US government would pay $1.95 billion ($2.7 billion) for 100 million doses of their covid-19 vaccine candidate.

Hospital operator HCA Healthcare Inc reported better-than-expected quarterly revenue, sending its stock jumping 12.0 per cent.

Snap Inc shares sank 6.2 per cent after posting a net loss of US$326 million and forecasting fewer-than-expected current-quarter users.

Shares of United Airlines Holdings dropped 4.2 per cent after the company reported an adjusted net loss of $2.6 billion in the April to June quarter.

Microsoft Corp shares were down more than 2 per cent after the bell, following the company’s quarterly report.

Tesla Inc shares gained more than 2 per cent in post market trading after the electric car maker reported quarterly results.

is senior editor for Morningstar Australia

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