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Global Market Report - 23 June

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

Australian shares set to inch lower at the open after yesterday’s rally erased most of Monday’s losses and tech giants soared on Wall Street.

The Australian SPI 200 futures contract was down 5 points or 0.07 per cent to 7,253 near 7.10 am Sydney time on Wednesday, suggesting a negative start to trading.

The Nasdaq has ended at a record high, lifted by Amazon, Microsoft and other top-shelf tech companies as investors shifted their focus to growth stocks.

The Dow Jones Industrial Average rose 0.2 per cent to end at 33,945.58, while the S&P 500 gained 0.51 per cent to 4,246.44 and the Nasdaq Composite climbed 0.79 per cent to 14,253.27.

The Australian dollar was buying 75.51 US cents near 7.30am AEST, up from 75.13 at Tuesday’s close.

Locally, investors have had their best day on the ASX since March and regained most of Monday's losses after US financial leaders eased concerns about higher interest rates.

The benchmark S&P/ASX200 index closed up 1.48 per cent on Tuesday and the heavyweight categories of financials and materials shares rose by about two per cent.

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Energy and property gained two per cent or more.

The ASX200 followed US markets' direction and closed higher by 106.9 points, or 1.48 per cent, to 7342.2.

The index is little more than 40 points short of its record close of last week.

The All Ordinaries closed up by 107.5 points, or 1.44 per cent, to 7592.7.

Tribecca Investment Partners portfolio manager Jun Bei Liu said Monday's selling, which caused the ASX to lose 1.81 per cent, was unjust.

"I think the market overreacted yesterday and today was catch-up," she said.

"Equity markets look strong over the next six or 12 months."

Like investors, US Federal Reserve chair Jerome Powell reacted to some of his peers who last week signalled they expected rates to increase in 2023.

Mr Powell outlined why the recent jump in inflation to a 13-year high would be temporary.

In notes for his speech to US Congress on Wednesday, the financial leader said the surge was created by steep price drops last year, higher petrol prices and rapid increases in consumer spending.

He remained confident inflation would drop to the central bank's long-term goal of two per cent.

The US dollar remained at elevated levels after the rate risk talk.

The Aussie dollar was buying 75 US cents for much of the day after trading about 77 US cents early last week.

Meanwhile, Sydneysiders are hoping to avoid a coronavirus lockdown after 10 infections were reported.

The outbreak, which was traced to a driver working with international travellers, has prompted mask-wearing rules for all residents.

On the ASX, Soul Pattinson shares closed up 0.83 per cent to $30.50 after it agreed to buy all the remaining shares in rival investment group Milton Corporation.

The deal will create a $10 billion organisation by September if shareholders and courts approve.

Soul Pattinson is offering $6 per share. Independent Milton directors recommended shareholders accept.

Milton shares were higher by 16 per cent to $5.80.

Miner IGO gained some regulatory approvals needed for its joint venture with Tianqi Lithium Corporation.

The companies aim to finalise the creation of Tianqi Lithium Energy Australia by June 30.
IGO shares were up 6.21 per cent to $7.52.

The big miners also recorded strong gains.

BHP rose 2.35 per cent to $46.68, Fortescue gained 2.61 per cent to $22.38 and Rio Tinto climbed 1.62 per cent to $121.99.

Banks performed almost as well.

ANZ increased by 2.14 per cent to $28.68, the Commonwealth Bank surged by 2.21 per cent to $100.23, NAB was better by 1.17 per cent to $26.73 and Westpac improved by 1.76 per cent to $26.61.

Bank of Queensland rose 5.47 per cent to $9.26 after sliding about five per cent on Monday.

Healthcare was the only industry category lower. CSL fell 1.47 per cent to $300.52.

On Wednesday, Australia's international trade balance for May will be revealed by the Australian Bureau of Statistics.

Spot Gold was flat at $US1783.21 an ounce; Brent crude was down 0.1 per cent at $US74.81 a barrel, Iron ore was up 3 per cent at $US 214.32 a tonne.

The yield on the Australian 10-year bond closed at 1.59 per cent.

Asia

At the close, China's Shanghai Composite index was up 0.8 per cent at 3,557.41.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, was down 0.63 per cent, to 28,309.76.

Japan's Nikkei 225 Index closed up 3.12 per cent at 28,884.13.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 0.26 per cent at 456.42.

The German DAX rose 0.21 per cent to 15,636.33.

North America

The Nasdaq has ended at a record high, lifted by Amazon, Microsoft and other top-shelf tech companies as investors shifted their focus to growth stocks.

The Dow Jones Industrial Average rose 0.2 per cent to end at 33,945.58, while the S&P 500 gained 0.51 per cent to 4,246.44 and the Nasdaq Composite climbed 0.79 per cent to 14,253.27.

Microsoft rose 1.1 per cent and its stock market value briefly breached $US2 trillion ($A2.6 trillion) for the first time while Apple, Facebook and Amazon also rallied more than 1.0 per cent each.

Amazon had more than $US5.6 billion in total online sales in the United States on the first day of its Prime promotional event, according to Adobe Digital Economy Index.

In a congressional hearing, meanwhile, Federal Reserve Chair Jerome Powell reaffirmed the US central bank's intent to encourage a "broad and inclusive" recovery of the job market and not to raise interest rates too quickly based only on the fear of coming inflation.

So-called value stocks, expected to benefit from the economic recovery, have outperformed in 2021 while growth stocks, including major tech names like Apple and Nvidia, have rallied since the Fed last week took a stance on future rate hikes viewed by many as more aggressive than expected.

The S&P growth index has added almost 2.0 per cent since before the Fed last Wednesday projected an accelerated timetable for interest rate increases compared with a drop of almost 2.0 per cent in the value index.

"The market was caught off guard regarding the Fed's hawkish commentary, and that's 100 per cent of what is happening," said Andrew Mies, chief investment officer of 6 Meridian.
"All the smart people were surprised about how hawkish the Fed was, and now they are adjusting their portfolios."

Nine of the 11 major S&P sector indexes rose, with consumer discretionary and tech the biggest gainers, each up about 1.0 per cent.

GameStop jumped 10 per cent after the videogame retailer said it raised more than $US1 billion in its latest share offering, cashing in further on this year's Reddit-driven surge in its stock price.

Sanderson Farms rallied about 10 per cent to a record high after JP Morgan raised its price target on the stock after a source told Reuters that the poultry producer was exploring a sale.

Twitter ended almost 3.0 per cent higher after it said it will seek applications from users to test new content subscription and ticketing features as the social platform works to build more ways for users to earn money.

Moderna Inc rose 6.3 per cent after the European Union decided to take up an option under a supply contract with the drug maker that allows the bloc to order 150 million additional COVID-19 vaccines.

Splunk Inc surged over 11 per cent after the data analytics software maker said private equity firm Silver Lake invested $US1 billion in the company's convertible senior notes.

Advancing issues outnumbered declining ones on the NYSE by a 1.26-to-1 ratio; on Nasdaq, a 1.08-to-1 ratio favoured advancers.

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

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