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Global Market Report - 24 August

Lewis Jackson  |  24 Aug 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to edge higher after a rally on Wall Street sent the Nasdaq to an all-time high and the US gave full approval to the Pfizer vaccine.

The Australian SPI 200 futures contract was up 10 points or 0.13 per cent at 7,440 near 8.00 am Sydney time on Tuesday, suggesting a positive start to trading.

Wall Street has rallied and the Nasdaq reached an all-time closing high as sentiment was boosted by full FDA approval of a COVID-19 vaccine and market participants looked ahead to the Jackson Hole Symposium expected to convene later this week.

The Dow Jones Industrial Average rose 215.63 points, or 0.61 per cent, to 35,335.71, the S&P 500 gained 37.86 points, or 0.85 per cent, to 4,479.53 and the Nasdaq Composite added 227.99 points, or 1.55 per cent, to 14,942.65.

The Australian dollar was buying 72.08 US cents near 7.45am AEST, down from 72.10 US cents at last close.

Locally, investors have stopped a five-day slide on the Australian market but one analyst says they may simply be "buying the dip" as economic growth concerns linger.

Technology shares proved most popular, up 1.68 per cent, following strong support for the category on Wall Street on Friday.

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Artificial intelligence software vendor Appen rose more than seven per cent to $12.84.

Australia's big miners improved compared to their big losses last week from falling iron ore prices. BHP closed higher by 0.27 per cent after losing more than 16 per cent last week. Fortescue on Monday fell more than four per cent. Rio Tinto dropped by half a per cent.

Most industry categories closed higher but IG Markets analyst Kyle Rodda said investors could just be buying due to what they see as a dip in market value.

He said the spread of the coronavirus' Delta variant was adding to concerns about the rate of global economic growth.

Millions of people around Sydney and Victoria continue to endure lockdown and the virus may yet do more economic damage overseas.

China had an outbreak last month but on Monday reported no new local infections for the first time since July.

Meanwhile investors will monitor this week's US Federal Reserve symposium for clues on when the central bank may begin slowing its $US120 billion purchases of government bonds.
Some are concerned the Fed may ease support for the economy just as economic growth starts ebbing.

Still, investors put these concerns to one side and helped the benchmark S&P/ASX200 index close higher by 29 points, or 0.39 per cent, to 7489.9. The All Ordinaries closed up 36 points, or 0.47 per cent, to 7761.1.

Company earnings season continues. Those giving earnings on Tuesday include building materials supplier Boral, shopping platform Kogan, Oil Search and job advertising platform Seek.

Earlier, Sonic Healthcare showed how helpful COVID-19 testing has been to its revenues. Coronavirus testing played a notable part in a 149 per cent increase in net profit after tax to $1.3 billion. Sonic leaders said they expected significant coronavirus testing revenue to continue as the Delta variant spreads.

The figures were not enough for investors who sent shares lower by 2.76 per cent to $41.65.

New Zealand fuel distributor Z Energy sprung by 14.53 per cent to $3.31 after a takeover offer from Ampol. The Australian company wants to buy all the Z Energy shares on the New Zealand stock exchange for $NZ3.78 each.

Ampol returned to first-half profit and reported a $326 million net profit after tax. Shares were lower by 4.76 per cent to $26.22.

Shares in insurer NIB fell 11 per cent to $7.10 despite full-year profit being up 84 per cent. Claims were fewer than anticipated and net profit after tax was $160.5 million. Shareholders will receive a higher final dividend of 14 cents per share, fully franked.

Super Retail Group, which owns Supercheap Auto and Rebel, had its shares slump by 4.62 per cent to $12.18 after they traded ex-dividend.

Telecommunications group TPG continued to slide after its full-year earnings on Friday. Shares on Monday dropped 5.78 per cent to $6.20.

Among the big banks, most were little changed. The Commonwealth was the only one of the big four to show substantial movement. It shares gained 0.91 per cent to $100.17.

Gold futures were up 1.3% at $US1806.30 an ounce; Brent crude was up 5.5% at $US68.75 a barrel; Iron ore was down 2.7% at $US136.71.

The yield on the Australian 10-year bond closed at 1.09 per cent.

Asia

At the close, China's Shanghai Composite index was up 1.45 per cent at 3,477.13.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed up 1.05 per cent at 25,109.59.

Japan's Nikkei 225 was up 1.78 per cent at 27,494.24.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 0.66% at 471.88.

The German DAX was up 0.28% at 15,852.79.

North America

Wall Street has rallied and the Nasdaq reached an all-time closing high as sentiment was boosted by full FDA approval of a COVID-19 vaccine and market participants looked ahead to the Jackson Hole Symposium expected to convene later this week.

The Dow Jones Industrial Average rose 215.63 points, or 0.61 per cent, to 35,335.71, the S&P 500 gained 37.86 points, or 0.85 per cent, to 4,479.53 and the Nasdaq Composite added 227.99 points, or 1.55 per cent, to 14,942.65.

All three major US stock indexes ended the session sharply higher on Monday, with surging crude prices, driven by expected demand growth, putting energy shares out front.

"This has been the script all along," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. "We make new highs, pull back, and then we're off to the races again."

"That tells me the fundamentals are in place," Cardillo added. "There's worries out there, but it's hard to keep this market down."

The US Food and Drug Administration (FDA) granted full approval to the COVID-19 vaccine developed by Pfizer Inc and BioNTech SE in a move that could accelerate inoculations in the United States.

"Full approval means that there's most likely going to be more mandates, more companies will mandate that you have to get the vaccine in order to get back to the office," Cardillo said. "I don't think this will get all the doubters vaccinated but this news today will probably drive (the vaccinated rate) closer to 75 per cent."

Pfizer and US-listed shares of BioNTech advanced, as did rival Moderna Inc.

Spiking COVID-19 infections caused by the highly contagious Delta variant have fueled concerns over a protracted recovery from the global health crisis.

Data released on Monday painted a mixed portrait of an economy inching back to normal in the wake of the most abrupt contraction in history.

Sales of pre-owned homes unexpectedly increased in July, according to the National Association of Realtors, while a report from IHS Markit showed business activity accelerating this month.

The "Goldilocks" portrait of an economic recovery headed in the right direction, but not robust enough to warrant a change in the Federal Reserve's dovish monetary policy, helped feed investor risk appetite.

Market participants look to the Jackson Hole Symposium, due to convene in Wyoming later this week. Fed Chairman Jerome Powell's comments will be closely parsed for clues regarding the central bank's policy-tightening timeline.

Surging crude prices pushed the energy sector to its best day in nearly two months.
Exxon Mobil Corp and Chevron Corp also gained on the day.

US-listed shares of Trillium Therapeutics Inc soared after Pfizer agreed to buy the cancer drug developer in a $US2.26 billion ($A3.15 billion) deal.

General Motors Co fell following its announcement that it would take a $US1 billion ($A1.4 billion) hit to expand the recall of its Chevrolet Bolt electric vehicles.

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

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