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Global Market Report - 27 April

Lex Hall  |  27 Apr 2020Text size  Decrease  Increase  |  
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Australian shares appear set for gains at the start of the trading week due to a gradual increase in world oil prices.

The SPI 200 futures contract was up 82 points, or 1.57 per cent, at 5,298 points at 7am Sydney time on Monday.

CommSec chief economist Craig James on Sunday tipped a rise for the ASX and said the resource sector would benefit from the steady recovery of oil.

Oil producers have cut production due to a collapse in travel and demand from the COVID-19 pandemic.

Mr James also said a 1.1 per cent lift on the US' Dow Jones on Friday would help Aussie stocks on Monday.

The Australian dollar was buying 63.84 US cents at 7am, up from 63.56 US cents at Friday's close.


Chinese shares fell on Friday and ended the week lower amid lingering coronavirus worries, but losses were limited as Beijing pledged more support to shore up the world's second- largest economy.

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The blue-chip CSI300 index fell 0.9 per cent to 3,796.97, while the Shanghai Composite Index dropped 1.1 per cent to 2,808.53.

In Hong Kong, the Hang Seng index fell 0.6 per cent, to 23,831.33, while the China Enterprises Index lost 0.5 per cent, to 9,656.19 points.

In Japan, the Nikkei share average closed 0.86 per cent lower at 19,262.00, with a weekly loss of 3.2 per cent.


European stock markets fell on Friday with investors disappointed by the lack of details in a trillion-euro emergency fund agreed by the bloc’s leaders as evidence grew of the global damage wrought by the coronavirus crisis.

After two days of gains, the pan-European STOXX 600 index closed 1.1 per cent lower. That took weekly losses to 1.2 per cent as it added to a sell-off due to a historic collapse in oil prices, ending the index’s two-week winning streak.

Late on Thursday, EU leaders approved an immediate rescue package of about 500 billion euros but left the divisive details of a bigger fund until the summer. They rallied around a larger common budget for 2021–27 with a recovery programme and tasked the European Commission to present detailed proposals by 6 May.

London's FTSE 100 fell 1.3 per cent with data showing UK retail sales crashed in March, a day after surveys signalled a collapse in April business activity across the globe and US jobless claims topped 26 million in five weeks.

The STOXX 600 has recovered this month from eight-year lows hit in March, partly on hopes the strict stay-at-home orders would be eased on signs the pandemic was peaking in the worst hit parts of the world.

BofA Global Research said it expected STOXX 600 to gain a further 20 per cent and hit 400 points by August, while business activity sentiment in the region could rise back to above 50 by the third quarter.

The travel and leisure led losses among major European sectors, down 3.4 per cent, with airline Lufthansa losing 8 per cent.

The carrier’s chief executive told employees he expects a smaller fleet and reduced staff after the coronavirus crisis, a day after it reported a first-quarter loss of 1.2 billion euros. Several brokerages cut price target on the stock, with Societe Generale double downgrading to “sell”.

The European banking index fell 2.9 per cent as S&P cut Commerzbank’s credit rating by a notch and lowered its outlook for Deutsche Bank to negative from stable.

Swiss food giant Nestle and French drugmaker Sanofi were the biggest boosts to the pan-region index after reporting strong first quarter results on pandemic induced panic buying of food products as well as pain and fever medicines.

North America

Wall Street rallied on Friday, led higher by Apple and Microsoft as investors finished a turbulent week of trading and some states prepared to relax coronavirus-related lockdowns.

Apple and Microsoft each climbed more than 1 per cent, lifting the S&P 500 more than any other companies. The two tech titans are on tap to report their March-quarter results next week, giving investors a glimpse at how the pandemic has affected their global businesses.

Boeing Co tumbled more than 6 per cent after a report the planemaker was planning to cut 787 Dreamliner output by about half.

All of the 11 S&P 500 sector indexes moved up, with information technology jumping 2.1 per cent and materials rallying 1.5 per cent.

Even with Friday’s gains, the S&P 500 ended the week lower, with investors fearful of a deep economic slump following a near-crash in April business activity and weekly jobless claims topping 26 million in five weeks.

The index has recovered more than 25 per cent from its March low and expectations are growing that more businesses will be allowed to reopen as coronavirus infections showed signs of peaking.

Georgia became the first state to push ahead with its plan to allow an array of small businesses to reopen on Friday despite disapproval from President Donald Trump and health experts.

Investors may be overestimating how quickly US businesses can go back to normal, and the S&P 500 could fall 5 per cent or more as it becomes evident that resuming normal economic activity may not happen for months, warned Eric Freedman, chief investment officer at US Bank Wealth Management in North Carolina.

Overall, analysts still expect a 15 per cent decline in S&P 500 first-quarter earnings, with profits for the energy sector estimated to slump more than 60 per cent, raising fears of debt defaults, layoffs and possible bankruptcies.

New orders for key US-made capital goods unexpectedly rose in March, but the gains are not likely to be sustainable amid the pandemic, which has abruptly shut down the economy and contributed to a collapse in crude oil prices.

The CBOE volatility index, known as Wall Street’s fear gauge, was down for the third straight session.

Amazon rose 0.4 per cent to a record high close ahead of its quarterly report on Thursday. With online shopping booming as people avoid traditional stores, Amazon's stock market value has ballooned by over $100 billion since 19 February, just before coronavirus fears gripped Wall Street.

The Dow Jones Industrial Average jumped 1.11 per cent to end at 23,775.27 points, while the S&P 500 gained 1.39 per cent to 2,836.74.

The Nasdaq Composite added 1.65 per cent to 8,634.52.

For the week, the S&P 500 fell 1.3 per cent, the Dow lost 1.9 per cent and the Nasdaq lost 0.2 per cent.

is senior editor for Morningstar Australia

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