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Global Market Report - 26 November

Lex Hall  |  26 Nov 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to edge up following a mixed night on Wall Street as bleak job figures depressed risk appetite.

The Australian SPI 200 futures contract was up 9 points, or 0.1 per cent, to 6,686 points at 8.30am Sydney time on Thursday, suggesting a positive start to trading.

Wall Street was mixed on Wednesday as surging layoffs in the wake of a new round of shutdowns to contain spiraling covid-19 infections dampened investor risk appetite.

The Dow Jones Industrial Average fell 197.14 points, or 0.66 per cent, to 29,849.1, the S&P 500 lost 12.24 points, or 0.34 per cent, to 3,623.17 and the Nasdaq Composite added 29.74 points, or 0.25 per cent, to 12,067.06.

Locally, almost half a million Australian households have been spared the risk of losing their homes or being forced into housing stress because of covid-19 subsidies, The Australian reports, citing research from the University of Adelaide and Curtin University.

The S&P/ASX200 benchmark index closed higher by 39.2 points, or 0.59 per cent, to 6,683.3 on Wednesday. The index was at 6,684.1 on January 1, before the first session of the year the next day. The All Ordinaries on Wednesday closed up 32.7 points, or 0.48 per cent, to 6,888.2.

Gold was down 0.1 per cent at $US1,806.74 an ounce; Brent oil was up 2.3 per cent to $US48.96 a barrel; Iron ore was flat at $US127.41 a tonne.

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Meanwhile, the Australian dollar was buying 73.65 US cents at 8.30am, up from 73.52 US cents at Wednesday’s close.

Asia

China shares closed lower on Wednesday, posting the biggest intraday loss in nearly a month, as electric vehicle stocks fell on news of a government investigation into the sector.

At the close, the Shanghai Composite index was down 1.19 per cent at 3,362.33, the biggest slump within a day since Oct. 30.

The blue-chip CSI300 index was down 1.28 per cent, with its new energy vehicle sector sub-index lower by 2.16 per cent, the consumer staples sector down 2.52 per cent and the healthcare sub-index down 2.16 per cent.

Hong Kong shares ended higher on Wednesday, tracking the rallies of stock markets worldwide as investors cheered an improved global economic outlook, but profit-taking in tech shares contained the gains.

At the close of trade, the Hang Seng index was up 81.55 points or 0.31 per cent, at 26,669.75. The Hang Seng China Enterprises index fell 0.52 per cent to 10,557.83.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.56 per cent, while Japan's Nikkei index closed up 0.5 per cent.

Europe

European shares eased slightly, while staying near nine-month highs on Wednesday as a relaxation of coronavirus restrictions in the region and growing hopes that a vaccine would soon be ready kept sentiment afloat.

The pan-European STOXX 600 index inched lower by 0.1 per cent at 0925 GMT as gains in the utility and telecom sector were outweighed by losses in automobile stocks.

Promising results from three major pharmaceutical companies on their covid-19 vaccine trials and improving prospects for a smooth White House transition have sent US stocks surging to record highs and put European equities on track for their best month ever.

A Reuters poll expects the STOXX 600 to climb to 430 points by the end of 2021, just a whisker below February’s record highs, as economic activity returns to normal following the coronavirus-induced downturn.

“The overall feeling is that things are heading in the right direction,” said David Madden, analyst at CMC Markets.

“A mixture of vaccine optimism and the fact that the decline in economic output, because of most recent lockdowns, hasn’t been as bad as initially thought is going to continue to push the index higher.”

Germany and the United Kingdom unveiled plans to allow gatherings with limitations for Christmas, while France will start easing its lockdown this weekend after a sharp drop in new infections and hospitalisations.

French President Emmanuel Macron said on Tuesday a vaccine could start being administered as soon as the end of the year if approved by regulators.

German stocks dropped 0.1 per cent by 0920 GMT and Italian shares slipped 0.2 per cent, while France’s CAC 40 traded flat.

UK’s domestically focused mid-cap FTSE 250, however, underperformed after the EU’s chief executive said the European Commission cannot guarantee there will be a trade pact with Britain after its departure from the EU, and the coming days will be crucial.

Investors will turn to a spending review due to be delivered by British finance minister Rishi Sunak later in the day, where he will likely announce extra investment to ease a backlog in the health system, counter a surge in unemployment and build new infrastructure.

Virgin Money UK dropped 5.5 per cent after the lender reported a slump in annual profit as it took an impairment charge against an expected surge in bad loans.

United Utilities, one of the largest listed water companies in the UK, jumped 4.3 per cent as it proposed a higher interim dividend.

North America

Wall Street was mixed on Wednesday as surging layoffs in the wake of a new round of shutdowns to contain spiraling covid-19 infections dampened investor risk appetite.

The S&P 500 and the Dow Jones Industrial Average retreated from record closing highs, pulled lower by cyclicals and small caps that drove the rally earlier in the week.

“Days like we’re seeing today on the heels of strong growth is a response to the ebb and flow of the market,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. “It’s natural to see some profit-taking as people look at valuations and take money off the table.”

A wide range of data released in advance of Thursday’s Thanksgiving holiday was dominated by a second consecutive week of unexpected jobless claims increases, suggesting that new restrictions to combat spiking coronavirus cases could hobble the struggling labour market’s recovery.

The market appeared to be replaying the previous two weeks, which began with rallies driven by promising vaccine news but pivoted back to stay-at-home plays on near-term pandemic realities and lack of new fiscal stimulus.

Still, the vaccine developments and removal of uncertainties surrounding the US presidential election have driven Wall Street indexes to record closing highs, and put the S&P 500 on course for its best November ever.

“The move this month speaks to not only clarity regarding the election uncertainties but also the potential for new stimulus that is out there, an extremely accommodative Fed and tremendous amount of pent-up demand from the consumer’s standpoint,” Keator added.

Market participants believe US stocks have more room to climb. A recent Reuters poll showed analysts believe the S&P 500 will gain 9 per cent between now and the end of 2021. The index has surged about 66 per cent since the coronavirus-led crash in March and is up about 12 per cent so far this year.

The Dow Jones Industrial Average fell 197.14 points, or 0.66 per cent, to 29,849.1, the S&P 500 lost 12.24 points, or 0.34 per cent, to 3,623.17 and the Nasdaq Composite added 29.74 points, or 0.25 per cent, to 12,067.06.

Of the 11 major sectors of the S&P 500, energy suffered the largest percentage loss.

The economically sensitive banking sector lost ground, with the S&P 500 Banks index shedding 1.1 per cent.

Tesla Inc, which surpassed $500 billion in market capitalisation on Tuesday, extended its gain by 2.4 per cent even after the electric-car maker recalled about 9,500 vehicles.

The company also plans to start manufacturing electric vehicle chargers in China starting next year, according to documents it submitted to Shanghai authorities.

is senior editor for Morningstar Australia

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