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Global Market Report - 26 August

Lewis Jackson  |  26 Aug 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to start the session lower as a rebound in cyclical stocks led Wall Street higher.

The Australian SPI 200 futures contract was down 11 points or 0.1 per cent at 7,461 near 7.30 am Sydney time on Monday, suggesting a negative start to trading.

In the US, stocks helped by the reopening, as well as some other cyclical stocks, led the major stock indexes higher, adding to the Nasdaq and S&P 500’s record highs this week.

The Dow Jones Industrial Average added 0.1%. Goldman Sachs Group, American Express and Caterpillar all pulled the blue-chip benchmark higher. It was the same story in the S&P 500, which added 0.2%. The Nasdaq Composite rose 0.2% amid minor gains for some technology stocks.

The Australian dollar was buying 72.76 US cents near 7.30am AEST, up from the daily low of 72.37. The WSJ Dollar Index, which measures the US dollar relative to 16 foreign currencies, fell to 87.54.

Locally, the ASX 200 gained 0.4% to 7531.9, rising for a third straight session, after a late lift by the financial sector added to gains by tech and commodity stocks.

The tech sector put on 1.9%, propelled by software firm WiseTech's 28% jump. Appen rose 8.7% on the eve of its 1H results, taking it 15% higher this week. Materials added 1.4% despite weakness among gold stocks, while banks ANZ, Commonwealth, Westpac and NAB added between 0.3% and 1.0%

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Trading in WiseTech was suspended yesterday after the shares soared 40% to $50.68 during the day. WiseTech Global shares' surge is excessive despite the logistics software provider's stronger-than-expected FY 2022 guidance, Citibank says.

The mid-point of WiseTech's FY 2022 Ebitda guidance of $260 million-$285 million is about 15% higher than the average analyst’s expectations, Citibank says.

Zip and Afterpay both reported yesterday, with double digit growth in sales and customers at both buy-now-pay-later firms.

Afterpay reported active customers grew by 63% to 16.2 million. Sales rose 90% to $21.1 billion while earnings fell 13% to $38.7% million.

Zip reported revenue up 150% to $403.2 million while customer numbers rose 248% to 7.3 million.

Australian consumers have pulled back on discretionary spending during the country's current Covid-19 lockdowns compared with their outlays in the early days of the pandemic, Zip Co. Co-Founder Peter Gray says.

Mr. Gray says spending on electronics and home office equipment hasn't surged as much this time around, but that consumers are paying down loans and using installment payments to buy groceries and other staples.

Online jobs advertiser Seek is looking at letting employers ask potential hires whether they are vaccinated against Covid-19. Seek says it hasn't committed to providing the capability and has no firm timeline for implementing any change but sees it as inevitable given employers' interest.

Asia

Chinese stocks climbed for a third straight session on Wednesday, supported by coal miners and new-energy sectors. Futures of coking coal, used in steel production, have surged on supply concerns, buoying sentiment on miners. Some property developers weighed on the market amid lingering regulatory worries.

The Shanghai Composite Index rose 0.7% to 3540.38, while the Shenzhen Composite Index and the ChiNext Price Index each gained 0.5%.

Chinese authorities have allowed a few ships to berth at world’s third busiest port after a two-week closure due to a covid breakout. It’s raising hopes the port may open soon, reducing pressure on global shipping rates that have tripled since the beginning of the year.

Hong Kong stocks fell after consecutive gains earlier in the week. The benchmark Hang Seng Index fell 0.1% to 25,693.95. Consumer companies led the declines.

The Nikkei Stock Average closed flat at 27,724.80 as gains in steel and auto stocks helped offset losses in retail and chemical stocks.

Europe

The London’s The FTSE 100 closed up 0.3% to 7150.12 on Wednesday with financials such as Standard Chartered, HSBC and Lloyds edging higher. Industrials also performed well.

Although hesitation prevailed across stock markets as a stronger US durable goods order failed to provide much direction, the FTSE continues to target a move back towards 7200, Chris Beauchamp at IG says.

The analyst added that the FTSE 100 could also benefit from the Fed's upcoming Jackson Hole summit, which may revive the reflation trade which powered the index higher from November.

The pan-European STOXX 50 index, which tracks the return of the largest listed companies across 19 European countries, is down 4.99 points or 0.14% at 3620.99.

North America

Economically sensitive stocks and banks led major US indexes to another set of fresh records.

The stock market on Wednesday continued its general upswing over the past few days after US regulators gave full approval for one of the Covid-19 vaccines . Manufacturers got an additional boost as the government moved toward a September vote on a roughly $1 trillion infrastructure bill.

Shares of banks climbed even higher as bond yields rose ahead of the annual Jackson Hole gathering of central bankers. Yields rise as prices fall, usually making lending activities more profitable for financial firms.

That all helped send the S&P 500 up 9.96 points, or 0.2%, to 4496.19, notching a fifth straight day of gains and its 51st record of the year. The Dow Jones Industrial Average added 39.24 points, or 0.1%, to 35405.50, up four straight days, while the Nasdaq Composite rose 22.06 points, or 0.1%, to 15041.86, also hitting a record.

All eyes are now turning to the Federal Reserve's annual Jackson Hole symposium. The highly anticipated meeting starts Friday and investors hope to gain fresh insights from Fed Chairman Jerome Powell around the central bank's thinking on fiscal-stimulus tightening and inflation. Money managers are torn over whether the Fed will proceed with scaling back its bond purchases in coming months, given the uptick in Covid-19 cases and some signs that the economic recovery is slowing.

"The market is focused on this inflation question and whether it has an impact on Fed policy," said Tom Martin, senior portfolio manager at Globalt Investments. He added that with markets at all-time highs while also facing massive uncertainties stemming from Covid-19, fresh investment opportunities have largely dried up beyond simply backing large-cap US stocks.

"There's so much uncertainty and so many conflicting pieces of information," Mr. Martin added, referring to the spread of the Delta variant of Covid-19. "It's difficult to evaluate what happens with people and businesses."

On Wednesday, financial stocks led benchmarks higher. In the S&P 500, the sector gained 1.2%, while in the Dow, shares of Goldman Sachs, American Express and JPMorgan Chase all counted as top contributors.

Industrial and material firms also rose, adding 0.6% and 0.4%, respectively. Among the gainers, shares of Caterpillar added $2.17, or 1%, to $214.76.

Stocks popular with bets on the economic reopening were also out front. Caesars Entertainment added $3.84, or 4.1%, to $97.70, while MGM Resorts International advanced $1.22, or 3%, to $42.13.

Energy stocks rose too, gaining 0.7% following a third straight drop in US crude inventories.

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

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