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Global Market Report - 24 August

Lex Hall  |  24 Aug 2020Text size  Decrease  Increase  |  
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Australian shares are set to open lower despite a week of records on Wall Street and upbeat business data.

The Australian SPI 200 futures contract was down 11 points, or 0.2 per cent, to 6,057 points at 8.30am Sydney time on Monday, suggesting a negative start to trading.

The S&P 500 and Nasdaq closed at record highs on Friday, with both lifted by Apple after data pointed to some pockets of strength in the US economy.

The Dow Jones Industrial Average rose 0.69 per cent to end at 27,930.33 points, while the S&P 500 gained 0.34 per cent to 3,397.16. The Nasdaq Composite climbed 0.42 per cent to 11,311.80.

Locally, David Murray has resigned as AMP chairman and Boe Pahari has quit has CEO of AMP Capital in the wake of the handling of sexual harassment allegations against Mr Pahari. Debra Hazelton has been appointed as chairman of AMP Limited, effective immediately.

G8 Education has posted a $239 million loss in the first half of the year after recognising a $237 million non-cash impairment charge.

Fortescue Metals Group reports today and is tipped to post a record dividend. Woolworths and Afterpay also report.

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The Reserve Bank expects the economy to have contracted by about seven per cent in the June quarter.

Figures on Wednesday will show how the covid-19 pandemic affected the construction sector. Economists expect work completed in the June quarter declined by 5.8 per cent after a one per cent fall in the previous quarter.

On Thursday, business investment data will be released. Economists expect June quarter private business capital expenditure tumbled 7.9 per cent, extending the 1.6 per cent fall in the first three months of the year.

The S&P/ASX200 benchmark index closed lower by 8.8 points, or 0.14 per cent, at 6,111.2 on Friday. The All Ordinaries index finished lower by 1.0 points, or 0.02 per cent, at 6,270.7.

Gold was down 0.4 per cent to $US1,940.47 an ounce; Brent oil was down 1.2 per cent to $US44.35 a barrel; iron ore down 1.5 per cent to $US127.38 a tonne.

Meanwhile, the Australian dollar was buying 71.93 US cents at 8.30am, up from 72.02 US cents at Friday’s close.


China stocks ended higher on Friday and posted a weekly rise, as investors cheered a series of solid corporate earnings, though uncertainty over Sino-US trade talks kept a check on gains.

The blue-chip CSI300 index rose 0.9 per cent, to 4,718.84, while the Shanghai Composite Index added 0.5 per cent to 3,380.68.

For the week, CSI300 was up 0.3 per cent, while SSEC climbed 0.6 per cent.

Hong Kong stocks climbed on Friday, helped by IT and consumer firms, but posted a marginal weekly drop as uncertainty over Sino-US trade talks weighed on sentiment.

The Hang Seng index rose 1.3 per cent to 25,117.47, while the China Enterprises Index gained 0.7 per cent to 10,221.90.

Technology stocks helped Japanese shares edge higher, following Wall Street’s overnight rally, although investors taking profits ahead of the weekend capped gains.

The benchmark Nikkei share average closed up 0.17 per cent at 22,920.30, after briefly rising over 1 per cent in early trade.

However, the Nikkei lost 1.58 per cent this week after posting two consecutive weeks of gains.


Downbeat economic data that pointed to a stalling of the euro zone recovery hit regional stock markets on Friday, with the pan-European STOXX 600 index marking weekly losses as coronavirus cases rose across the continent.

The German DAX reversed early gains to trade 0.5 per cent lower after Purchasing Managers Index surveys showed service sector activity unexpectedly came to a near standstill in August, although factory activity rebounded further.

Paris-listed shares fell 0.3 per cent after a worse showing from the French survey, while euro zone blue chips were down 0.4 per cent.

The opening gains proved short-lived, with the wider STOXX 600 index falling 0.2 per cent, but firmer trading on Wall Street on the back of better data helped limit losses into the close.

The STOXX 600 recorded a 0.9 per cent loss for the week, with growth-linked cyclical sectors such as banks, oil & gas firms and automakers hit hard as several European countries saw a resurgence in coronavirus cases that raised fears of more restrictions on business activity.

London's exporter-heavy FTSE 100 slipped only 0.2 per cent, supported by a slump in the pound on a mix of bad news on the latest Brexit negotiations and gains for the US dollar.

Travel and leisure stocks were the biggest sectoral gainers, up 3.1 per cent, with France’s Accor and British rival InterContinental Hotels surging for a second day on reports of a possible merger.

Irish building and insulation materials firm Kingspan jumped 8.9 per cent after its chief executive said the company saw significant pent-up demand post-lockdown.

Swiss drugmaker Novartis rose 0.5 per cent after it won US health regulator’s approval to repurpose an 11-year-old blood cancer drug against multiple sclerosis.

Dutch-based payment-processing company Adyen fell 3.7 per cent as several top executives each sold 15 per cent of their stakes in the company, cashing in 693 million euros ($1.14 billion) in all.

North America

US business activity snapped back to the highest since early 2019 in August, according to IHS Markit surveys, as companies in both manufacturing and services sectors saw a resurgence in new orders.

Another report showed US home sales rose at a record pace for a second straight month in July and home prices hit all-time highs.

The unexpectedly sharp increases in Markit’s indexes extend a pattern of choppy US economic data this week—including weekly jobless claims—that paint a picture of a fitful recovery from the covid-19 recession.

Apple Inc rallied over 5 per cent as its market value continued to swell after the most valuable publicly listed company in the world crossed the US$2 trillion ($2.78 trillion) milestone this week. The iPhone maker boosted the S&P 500 and Nasdaq more than any other company on Friday.

Bets that technology-focused companies including Apple and Amazon.com will emerge stronger from the pandemic set the S&P 500 and the Nasdaq on track to close out the week higher.

On Tuesday, the S&P 500 recouped all its losses caused by the coronavirus-driven slump and joined the Nasdaq in scaling new peaks. The Dow is still 6 per cent below its all-time high in February.

Investors also worry about a stalemate in talks between House Democrats and the White House over the next coronavirus aid bill as about 28 million Americans continued to collect unemployment checks.

For the week, the Dow was near unchanged, the S&P 500 rose 0.7 per cent and the Nasdaq added 2.7 per cent.

During Friday’s session, the S&P 500 information technology index jumped 1.2 per cent and industrials rose 0.35 per cent. The two were the strongest sectors.

Tesla jumped 2.4 per cent after surging past the $2,000 a share mark on Thursday for the first time, extending its rally ahead of an upcoming share split.

Deere & Co rose 4.4 per cent after the world’s largest farm equipment maker raised its full-year earnings forecast.

is senior editor for Morningstar Australia

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