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Global Market Report - 25 August

Lex Hall  |  25 Aug 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to climb as optimism over a vaccine boosted all three Wall Street indexes.

The Australian SPI 200 futures contract was up 39 points, or 0.64 per cent, to 6,132 points at 8.30am Sydney time on Tuesday, suggesting a positive start to trading.

The S&P 500 and the Nasdaq reached new record closing highs on Monday as optimism over potential medical advances in the war against the coronavirus pandemic pushed all three major US stock indexes higher.

The Dow Jones Industrial Average rose 378.13 points, or 1.35 per cent, to 28,308.46, the S&P 500 gained 34.12 points, or 1.00 per cent, to 3,431.28 and the Nasdaq Composite added 67.92 points, or 0.6 per cent, to 11,379.72.

The S&P/ASX200 benchmark index closed higher by 18.4 points, or 0.3 per cent, to 6129.6 points on Monday. The All Ordinaries index closed higher by 29.6 points, or 0.47 per cent, to 6300.3.

Gold was down 0.7 per cent to $US1,926.03 an ounce; Brent oil was up 1.5 per cent to $US45.02 a barrel; iron ore was down 1.7 per cent to $US125.23 a tonne.

Meanwhile, the Australian dollar was buying 71.61 US cents at 8.30am, down from 71.74 US cents at Monday’s close.

Asia

China stocks closed higher on Monday, with strength seen in the tech-heavy start-up board ChiNext, as investors cheered Beijing’s continued market reforms to foster its tech strength.

The blue-chip CSI300 index rose 0.8 per cent to 4,755.85, while the Shanghai Composite Index added 0.2 per cent to 3,385.64.

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

Hong Kong stocks rose to a one-month closing high on Monday, led by tech firms as investors cheered Beijing’s continued efforts to foster tech strength.

The Hang Seng index was up 437.74 points, or 1.74 per cent, at 25,551.58, its best finish since 21 July. The Hang Seng China Enterprises index rose 1.22 per cent to 10,336.95.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.02 per cent, while Japan’s Nikkei index closed up 0.28 per cent.

Europe

European stocks marked their best day in nearly two weeks on Monday as signs of progress in developing a covid-19 treatment offset fears about a resurgence in virus cases stalling an economic recovery.

The pan-European STOXX 600 index ended 1.6 per cent higher, after the US health regulator said on Sunday it authorised the use of blood plasma from patients who have recovered from covid-19 as a treatment.

The day’s gains came after a lacklustre week for regional stocks, as a mix of low trading volumes, middling economic data and an uptrend in covid-19 cases weighed on sentiment.

Spain’s Grifols, one of the world’s top producers of treatments based on human plasma, gained 1.6 per cent.

AstraZeneca rose 2.1 per cent after the Financial Times reported the Trump administration was considering fast-tracking an experimental covid-19 vaccine being developed by the company, while AstraZeneca marked further progress in the vaccine’s production.

Oil and gas was the best performing European sector, adding some 3.4 per cent as crude prices gained on weather-related disruptions to supply. 

Automobile, chemical and bank stocks also rose more than 2 per cent.

British telecoms company BT Group jumped around 7 per cent after a media report that its board was preparing to defend it against takeover approaches from rivals and buyout firms.

UK government data showed on Friday the average number of people that one covid-19 infected person will pass the virus on to had risen and may now be above 1, indicating a risk that the overall epidemic is growing.

Similarly, Germany, France and Spain have seen a surge in virus cases, with their leaders looking at tightening travel restrictions.

Travel stocks were among the few percentage decliners for the day, as a rise in virus cases kept a recovery in the sector on shaky ground.

But Easyjet and Ryanair rose more than 3.5 per cent each after brokerage UBS said it continued to prefer European airlines which are more focused on domestic markets rather than international ones, due to the pandemic.

North America

The benchmark S&P 500 reclaimed its February closing high last week, confirming a bull market and the fastest recovery from a bear market trough on record.

The blue-chip Dow, while leading Monday’s gains, remains nearly 4.2 per cent below its all-time high, and down 0.8 per cent year-to-date. The Nasdaq and the S&P have gained 26.8 per cent and 6.2 per cent, respectively, since the final closing bell of 2019.

Of note, the Dow Transports index, often considered a barometer of US economic health, handily outperformed the broader market.

Markets worldwide were given a boost by new developments in the global race to battle the coronavirus, including an announcement from the Food and Drug Administration that it had given emergency authorisation for the use of plasma from recovered patients as a treatment option.

However, the World Health Organisation expressed scepticism about the treatment due to “low quality” data.

The Trump administration is considering fast-tracking an experimental covid-19 vaccine being developed by AstraZeneca Plc and Oxford University in hopes it could be deployed in the US before Americans head to the polls in November.

The four-day Republican national convention got under way on Monday, with the party making the case for Trump’s re-election.

On Capitol Hill, Democrats and Republicans remained at loggerheads over funding levels and unemployment benefits.

Market participants will pay close attention to US Federal Reserve Chairman Jerome Powell’s remarks on monetary policy at this week’s Kansas City Fed Jackson Hole symposium, which is being held this year in a virtual format.

Of the 11 major sectors in the S&P 500, all but healthcare ended the session in the black.

Energy and financials enjoyed the largest percentage gains.

Ahead of its 4-to-1 share split on Friday, Apple Inc provided the biggest boost to the S&P 500 and the Nasdaq, its share price closing above $500 days after becoming the first public US company to top US$2 trillion ($2.78 trillion) in market value. The stock gained 1.2 per cent.

Boeing Co gave the Dow its biggest lift, rising 6.4 per cent.

is content editor for Morningstar Australia

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