Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

Global Market Report - 26 April

Lewis Jackson  |  26 Apr 2022Text size  Decrease  Increase  |  
Email to Friend

Australia

Australian shares are poised to fall when the local share market opens from another holiday weekend amid concerns the strict policies China has in place to combat Covid-19 will further disrupt global supply chains.

ASX futures were down 25 points or 0.3% at 7298 as of 7.00am on Tuesday, suggesting a negative start to the day ahead of a shorted trading week.

US stocks flipped higher Monday as government-bond yields retreated and investors took the opportunity to scoop up shares of beaten-down technology and other growth stocks.

The S&P 500 climbed 24.34 points, or 0.6%, to 4296.12 after dropping nearly 1.7% earlier in the session. The Dow Jones Industrial Average advanced 238.06 points, or 0.7%, to 34049.46.

The tech-heavy Nasdaq Composite Index rose 165.56 points, or 1.3%, to 13004.85. Twitter shares rose 5.7% after the social-media company accepted Elon Musk's $44 billion takeover deal.

All three indexes had opened lower after Chinese shares suffered their worst selloff in more than two years as Beijing sticks to its zero-Covid strategy while faced with increasing cases in major cities. Oil prices fell, at one point dipping below $100 a barrel, before staging an afternoon rally.

Locally, the Australian share market has closed sharply lower on Friday amid growing concerns the global economy will suffer a hard downturn and that the cost of capital will rise.

Investing Compass
Listen to Morningstar Australia's Investing Compass podcast
Take a deep dive into investing concepts, with practical explanations to help you invest confidently.
Investing Compass

The benchmark S&P/ASX200 index was saturated with red on Friday, falling 119.5 points, or 1.57 per cent, to close at 7473.3. Miners drove the exchange lower, although all sectors were down with the exception of resilient healthcare stocks and a flat consumer staples index.

The poor sentiment is largely tied to signs in the US that the central bank will aggressively raise interest rates to combat inflation, which includes a possible 0.5 per cent rate hike in May.

There are also growing concerns of a steep economic downturn in the US and elsewhere, weighing on stock exchanges around the world.

The All Ordinaries index fell 118.9 points, or 1.51 per cent, to close at 7768.2 on Friday.

Australia's big iron ore miners led the market lower. BHP shares shed 4.36 per cent to close at $48.49. Rio Tinto closed 2.37 per cent lower.

Oz Minerals disclosed on Friday that copper production had fallen in the March quarter due to bouts of bad weather and the pandemic, prompting a 6.33 per cent fall in its share price to $24.55.

The S&P/ASX200 was on track to hit a new high point this week - the record 7624.8 points was struck in August last year - before Friday's sell-off more than wiped out post-Easter gains.

Healthcare stocks represented a rare bright spot on the exchange, with its index rising 0.54 per cent. Ramsay Health Care, which is subject to a $20 billion takeover led by private equity firm KKR, rose 1.66 per cent to $84.37 on Friday.

Large biotech company CSL, which has been raising money in the US debt market, closed up 1.45 per cent.

In commodity markets, iron ore fell 9.8% to US$S135.75 per tonne; gold futures lost -1.7% to $US1899.50/oz; Brent crude oil fell 5.3% to $US101.00 a barrel.

In local bond markets, the yield on the Australian 10 Year bond rose to 3.13%.

The Australian dollar was buying 71.75 US cents as of 7.00am, down from the previous close of 73.69.

Asia

Chinese stocks fell sharply on broad-based selling, with heavy losses among nonferrous metals and electronics, as the economic impact of Covid-19 continues to weigh on sentiment.

The Shanghai Composite Index slid 5.1% to end at 2928.51, its biggest one-day drop since February 2020, and its lowest closing level since June 2020.

Ganfeng Lithium skidded 9.1% and Zijin Mining retreated 6.3%, while Luxshare Precision weakened 7.5%.

Other notable decliners included China Merchants Bank, shedding 8.6% after the country's anti-corruption watchdog placed former CEO Tian Huiyu under investigation.

Jiangsu Hengrui Medicine slumped 10% after it reported lower 2021 net profit.

The Shenzhen Composite Index declined 6.5% and the ChiNext Price Index lost 5.6%.

Hong Kong stocks ended the session sharply lower, following steep losses in China's A share market and Wall Street's selloff on Friday.

The benchmark Hang Seng Index fell 3.7% to settle at 19869.34, its lowest closing level in more than a month. Consumer stocks led the downturn, as Haidilao dived 16% and Anta Sports shed 8.3%. The Hang Seng TECH Index dropped 4.9%.

Japanese stocks end lower, dragged by falls in tech and electronics shares, which were hit by continued concerns about the Fed's pace of tightening.

SoftBank Group loses 7.8% and electric-motor maker Nidec Corp. drops 6.7%. Shimizu Corp. sheds 7.5% after the general contractor cut its net-profit view for the fiscal year ended March, citing soaring material prices.

The Nikkei Stock Average falls 1.9% at 26590.78. Earnings are in focus. The 10-year Japanese government bond yield stays flat at 0.245%.

Europe

European markets fall amid global economic growth concerns, though speculation about US interest-rate hikes boosts the dollar.

The Stoxx Europe 600, FTSE 100 and the DAX drop more than 1% and the CAC 40 sheds 2% despite French President Emmanuel Macron's election victory.

The FTSE 100 fell 1.9% on Monday, as global markets reacted to fears of a potential Covid-19 lockdown in Beijing, China's capital.

The prospect of further restrictions in China could lead to a mix of further inflationary pressure, as supply chains get disrupted, and weaker economic growth, AJ Bell's Russ Mould said in a note.

In London, mining and oil companies booked the largest losses. Anglo American plunged 6.8% as Chilean regulators recommended blocking the next phase of its Los Broncos copper project.

Shares in peers Glencore, Rio Tinto and Antofagasta fell too, as well as those in oil majors Shell and BP.

North America

US stocks flipped higher Monday as government-bond yields retreated and investors took the opportunity to scoop up shares of beaten-down technology and other growth stocks.

The S&P 500 climbed 24.34 points, or 0.6%, to 4296.12 after dropping nearly 1.7% earlier in the session. The Dow Jones Industrial Average advanced 238.06 points, or 0.7%, to 34049.46.

The tech-heavy Nasdaq Composite Index rose 165.56 points, or 1.3%, to 13004.85. Twitter shares rose 5.7% after the social-media company accepted Elon Musk's $44 billion takeover deal.

All three indexes had opened lower after Chinese shares suffered their worst selloff in more than two years as Beijing sticks to its zero-Covid strategy while faced with increasing cases in major cities. Oil prices fell, at one point dipping below $100 a barrel, before staging an afternoon rally.

A decline in bond yields signaled to investors that the Federal Reserve may not move to raise interest rates as aggressively as feared, investors said.

"Rates had been weighing against the market," said Jack Ablin, chief investment officer of Cresset Capital. "Now what we're seeing is a reversal of that trend."

The yield on the benchmark 10-year Treasury note ticked down to 2.825% Monday from 2.905% Friday as investors sought safer assets to hold. Yields and prices move inversely.

"I think a lot of growth stocks have been punished too severely," said Brian Price, head of investment management for Commonwealth Financial Network. "Part of what we're seeing may be a reversal of that. Longer-term rates have just moved so far.

"The market is stepping back and assessing if they should have moved so fast. And falling interest rates tend to help growth stocks."

Twitter rose $2.77 to $51.70. Microsoft climbed $6.69, or 2.4%, to $280.72, while Google parent Alphabet added $68.77, or 2.9%, to close at $2,461.48

Meantime, the S&P 500's energy sector was the biggest decliner, falling 3.3%. Schlumberger fell $2.96, or 7.1%, to $38.69. Halliburton dropped $2.36, or 6.3%, to $35.33. APA, Apache's parent company, slipped $1.63, or 4%, $39.08.

Investors are worried that strict policies China has in place to combat Covid-19 will further disrupt global supply chains. But the extended lockdowns, and a slowdown in China's economy, also could crimp global demand for oil, investors said.

Limitation of movement in China also could sap demand for oil. Brent crude, the international benchmark for oil, fell 4.1% to $102.32 a barrel. Oil prices still remain near historically high levels due to concerns about disruptions to energy markets from Russia's invasion of Ukraine.

In other corporate news, shares of Coca-Cola rose 69 cents, or 1.1%, to $65.94. The company said it logged higher sales for the latest quarter as demand held up in the face of price increases. Advanced Micro Devices added $2.55, or 2.9%, to $90.69 after a Raymond James analyst lifted his rating on the chip maker's shares.

Elevated inflation has caused the Federal Reserve to increase efforts to combat it. Last week, Fed Chairman Jerome Powell signaled that the central bank is ready to tighten monetary policy more quickly and indicated that it was likely to raise interest rates by a half-percentage point at its meeting in May.

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

AAP logo

© 2022 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

Email To Friend