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Global Market Report - 23 November

Lex Hall  |  23 Nov 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise despite falls on Wall Street last week as shutdowns, and delays over stimulus and vaccines spook investors.

The Australian SPI 200 futures contract was up 34 points, or 0.5 per cent, to 6,568 points at 8.30am Sydney time on Monday, suggesting a positive start to trading.

US stocks closed lower on Friday as investors wrestled with fiscal stimulus developments, concerns over a lengthy rollout of vaccines, and a growing number of state-level shutdowns to combat the spiralling covid-19 pandemic.

The Dow Jones Industrial Average fell 219.75 points, or 0.75 per cent, to 29,263.48, the S&P 500 lost 24.33 points, or 0.68 per cent, to 3,557.54 and the Nasdaq Composite dropped 49.74 points, or 0.42 per cent, to 11,854.97.

Locally, Australia’s biggest miners and energy producers boosted the value of the nation’s investment pipeline to $334bn in 2020 but significant uncertainty surrounds the pace of development as tough conditions in the coal and gas industries dampen sentiment, The Australian reports.

The S&P/ASX200 benchmark index closed down eight points, or 0.12 per cent, to 6,539.2 on Friday. The All Ordinaries closed lower by 2.8 points, or 0.04 per cent, to 6,739.9.

Gold was up 0.2 per cent at $US1,870.99 an ounce; Brent oil was down 1.7 per cent to $US44.96 a barrel; Iron ore was up 0.7 per cent to $US128.83 a tonne.

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Meanwhile, the Australian dollar was buying 73.02 US cents at 8.30am, up from 72.92 US cents at Friday’s close.

Asia

Chinese shares closed higher on Friday, led by materials and machinery stocks, and posted a weekly gain as investors looked past recent bond market defaults and focused on broader economic recovery.

At the close, the Shanghai Composite index was up 0.44 per cent at 3,377.73.

The blue-chip CSI300 index was up 0.31 per cent, with its material sector sub-index jumping 2.14 per cent and the industrial sector sub-index gaining 1.36 per cent.

Hong Kong shares edged up on Friday to post their third consecutive weekly advance, led by consumer and material stocks, tracking mainland gains on upbeat data and policy support during the week.

At the close of trade, the Hang Seng index was up 94.57 points or 0.36 per cent at 26,451.54. The Hang Seng China Enterprises index fell 0.02 per cent to 10,553.35.

Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.52 per cent, while Japan's Nikkei index closed down 0.42 per cent.

Europe

European stocks edged higher on Friday as gains in retail and oil shares offset worries about US politics and an impasse over fresh stimulus measures to support a pandemic-stricken global economy.

The pan-European STOXX 600 index rose 0.2 per cent by 0815 GMT, on track for marginal weekly gains after signs of progress on covid-19 vaccine pushed the index to February highs earlier this week.

Global mood remained subdued after US Treasury Secretary Steven Mnuchin said key pandemic lending programs at the Federal Reserve would expire on 31 December, putting the outgoing Trump administration at odds with the central bank.

UK’s FTSE 100 found some support as retail sales bounced in October and British health minister said there were encouraging signs that virus cases were starting to flatten.

The retail index rose 0.8 per cent to lead sectoral gains, followed by oil and gas as well as travel and leisure stocks.

Italy’s BPER Banca rose 3.1 per cent after the top investor in the bank threw its weight behind the idea of a merger with rival Banco BPM.

North America

US stocks closed lower on Friday as investors wrestled with fiscal stimulus developments, concerns over a lengthy rollout of vaccines, and a growing number of state-level shutdowns to combat the spiralling covid-19 pandemic.

Stay-at-home plays such as Zoom Video Communications and Netflix, which have outperformed throughout the health crisis, helped curb the Nasdaq's loss.

Throughout the week, the ebb and flow of vaccine news and spiking infections had investors oscillating between economically-sensitive cyclical stocks and pandemic-resistant market leaders.

The S&P 500 and the Dow posted marginal losses for the week, while the tech-laden Nasdaq settled a bit higher from last Friday’s close.

“Markets are still stuck in a push-and-pull between the dramatic rise of new covid cases versus apparent progress on vaccines,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “This is likely to continue until we have an approved and distributed vaccine.”

US Treasury Secretary Steven Mnuchin announced late Thursday that he would allow key pandemic-relief lending programs at the Federal Reserve to expire at the end of the year, saying the US$455 billion ($623 billion) allocated last spring under the CARES act should be returned to Congress to be reallocated as grants for small companies.

The decision to pull the plug on lending programs deemed essential by the central bank comes at a time of spiralling new coronavirus infections and a fresh wave of layoffs, and was called “disappointing” by Chicago Federal Reserve president Charles Evans.

“This dust-up between the Fed and Treasury could have serious implications, as markets want to see the two institutions working well together,” Carter added. “The timing of this dust-up is unfortunate, as the risk of covid is still very much with us.”

Record infection numbers have caused covid hospitalisations to soar by 50 per cent and have prompted a new round of school and businesses closures, curfews and social distancing restrictions, hobbling economic recovery from the deepest recession since the Great Depression.

In the latest development in the race to develop a vaccine, Pfizer has applied to the US Food and Drug Administration for emergency use authorisation of its covid-19 vaccine, the first application of its kind in the battle against the disease. The drugmaker's shares rose 1.4 per cent, and provided the biggest lift to the S&P 500.

The Dow Jones Industrial Average fell 219.75 points, or 0.75 per cent, to 29,263.48, the S&P 500 lost 24.33 points, or 0.68 per cent, to 3,557.54 and the Nasdaq Composite dropped 49.74 points, or 0.42 per cent, to 11,854.97.

Of the 11 major sectors in the S&P 500, only utilities eked out a gain by closing bell. Tech and industrials suffered the largest percentage losses on the day.

Stay-at-home beneficiary Zoom provided the biggest lift to the Nasdaq.

Gilead Sciences shed 0.9 per cent as a World Health Organization panel advised against use of the company's covid-19 treatment remdesivir, citing lack of evidence the drug improves survival or reduces the need for ventilation.

is senior editor for Morningstar Australia

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