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Global Market Report - 27 August

Lex Hall  |  27 Aug 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise after momentum stocks pushed Wall St indices to new highs.

The Australian SPI 200 futures contract was up 13 points, or 0.2 per cent, to 6,093 points at 8.30am Sydney time on Thursday, suggesting a positive start to trading.

US stocks surged on Wednesday, pushing the S&P 500 to its fourth straight record closing high, as investors stayed focused on large-cap momentum stocks that have outperformed since the onset of the coronavirus pandemic.

The Dow Jones Industrial Average rose 83.48 points, or 0.3 per cent, to 28,331.92, the S&P 500 gained 35.11 points, or 1.02 per cent, to 3,478.73 and the Nasdaq Composite added 198.59 points, or 1.73 per cent, to 11,665.06.

The S&P/ASX200 benchmark index fell to a session low of 6,079.8 points before it finished down 45.0 points, or 0.73 per cent, to 6,116.4 on Wednesday. The All Ordinaries index closed lower by 37.5 points, or 0.59 per cent, to 6,294.5.

Locally, buy now, pay later star Afterpay has halved its annual net loss to $19.8 million as its expansion into global markets more than doubled its number of active customers.

Gold is up 1.3 per cent to $US1,953.44 an ounce; Brent oil is down 0.4 per cent to $US45.66 a barrel; iron ore is up 1.0 per cent to $US124.20 a tonne.

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Meanwhile, the Australian dollar was buying 72.33 US cents at 8.30am, up from 71.90 US cents at Wednesday's close.

Asia

Chinese shares closed lower on Wednesday, hurt by weakness in tech-heavy startup board ChiNext, after investors booked profits after two consecutive sessions of sharp gains.

The blue-chip CSI300 index ended down 1.2 per cent at 4,706.13 and the Shanghai Composite index shed 1.3 per cent to close at 3,329.74.

Hong Kong shares recovered from earlier losses and finished largely flat on Wednesday, as gains in the information technology sector offset weakness in mainland markets.

The Hang Seng index was roughly unchanged at 25,491.79, while the China Enterprises Index gained 0.1 per cent to 10,300.36.

Japanese shares inched lower on Wednesday as investors chose to book profit after the Nikkei briefly recovered to pre-pandemic levels in the previous session.

The benchmark Nikkei share average eased 0.17 per cent to 23,257.17 by the midday break, after closing 1.35 per cent firmer on Tuesday. It hit its highest level since Feb. 21 in the last session as covid-19 treatment hopes bolstered market sentiment.

Europe

European stocks closed higher on Wednesday as news of additional stimulus in Germany and anticipated economic recovery measures in France overcame concerns about rising covid-19 cases across the continent.

The pan-European STOXX 600 index added 0.9 per cent, with German stocks up 1 per cent and France's CAC 40 0.8 per cent higher.

Having led the recovery from March’s pandemic-driven lows, technology shares were the day’s best performers, mirroring gains on Wall Street.

Heavyweight German enterprise software maker SAP rose 2.2 per cent after US peer Salesforce.com raised its 2021 revenue forecast.

Germany’s coalition parties agreed to extend measures to cushion the economic effects of the coronavirus crisis at a cost of up to 10 billion euros, while France is set to present its economic recovery plan on 3 September.

Caution was, however, still evident as covid-19 cases on the continent continued to rise and two confirmed cases of coronavirus re-infections in Europe raised concerns about immunity to the virus.

Markets were also waiting for US Federal Reserve Chairman Jerome Powell’s speech on Thursday, which could offer further cues on the US economic recovery.

Economic data in the past week has muddied the outlook for the euro zone recovery, keeping the STOXX 600 in a holding pattern about 15 per cent below its all-time high, even as US stocks hit new peaks on easing US-China trade tensions and hopes of a coronavirus treatment.

Swedish radiation therapy equipment maker Elekta topped the STOXX 600 after posting a bigger-than-expected first-quarter profit.

HiQ International soared nearly 26 per cent after private equity firm Triton announced a 3.9 billion crown ($615 million) cash bid for the Swedish IT consultancy firm.

Telecom Italia rose 5.1 per cent after a local newspaper reported the Italian government had given approval to US investment firm KKR to buy a minority stake in its secondary grid.

Ambu, which makes diagnostic and life-support devices for hospitals, slumped 13.4 per cent after it cut its full-year earnings forecast.

North America

The Nasdaq also set an all-time closing high, its 39th year-to-date, compared with a total of 31 reached in all of 2019.

The Dow, which remains 4.1 per cent below its pre-covid record, and 0.7 per cent off showing a year-to-date gain, posted a more modest advance.

The MSCI world equity index surged past its February high to reach a record peak.

Salesforce.com, a software-as-a-service provider and soon-to-be Dow component, saw its shares soar 26.0 per cent following its beat-and-raise earnings report.

Netflix Inc shares had their best day in over three years, jumping 11.6 per cent. The stay-at-home favorite has surged 69.2 per cent since the final closing bell of 2019.

Facebook Inc rose 8.2 per cent giving the S&P 500 its biggest boost.

Energy was the biggest percentage loser among S&P 500 sectors, dropping 2.2 per cent as Hurricane Laura bore down on the Texas-Louisiana coastline, posing the largest threat to US energy assets since 2005’s Hurricane Katrina. The coming storm, now a Category 4, prompted crude producers and refiners to shut down their facilities.

Commercial air carrier stocks lost altitude, with the S&P 1500 Airline index dipping 1.8 per cent even after the White House announced President Donald Trump was weighing an executive action to avoid massive layoffs in the sector.

The US Federal Reserve is expected to unveil a new framework intended to soften the central bank’s inflation stance, which chairman Jerome Powell is expected to address during his remarks on Thursday as part of the Kansas City Fed’s virtual Jackson Hole symposium.

Communications services led the 11 major sectors in the S&P in percentage gains.

Hewlett Packard Enterprise Co rose 3.6 per cent after its full-year profit outlook beat expectations, while tax software firm Intuit Inc advanced 1.8 per cent on a 17 per cent rise in quarterly revenue.

Apparel retailer Nordstrom Inc tumbled 5.5 per cent following its bigger-than-expected quarterly losses after being forced by mandated lockdowns to shutter its stores.

is senior editor for Morningstar Australia

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