Global Market Report - 27 July
Australian shares set to rise after Wall Street edged higher Monday as investors balanced expectations for record earnings against concerns over growth.
Australia
Australian shares set to rise after Wall Street edged higher Monday as investors balanced expectations for record earnings against concerns over growth.
The Australian SPI 200 futures contract was up 19 points or 0.26 per cent at 7,328 near 7.10 am Sydney time on Tuesday, suggesting a positive start to trading.
The S&P 500 has edged higher and eked out another record closing high, bolstered by optimism over earnings with heavyweight technology names reporting this week while caution ahead of a policy meeting by the Federal Reserve kept the market in check.
The Dow Jones Industrial Average rose 83.36 points, or 0.24 per cent, to 35,144.91, the S&P 500 gained 10.43 points, or 0.24 per cent, to 4,422.22 and the Nasdaq Composite added 3.72 points, or 0.03 per cent, to 14,840.71.
The Australian dollar was buying 73.84 US cents near 7.30am AEST, up from 73.53 at Monday’s close.
Locally, an all-time high for the Australian share market and record prices for some of its biggest companies proved major feats to start the trading week.
The ASX200 had only traded for five minutes on Monday when it rose to its all-time high, 7417.6 points.
A good lead from US markets last week helped momentum early.
The initial ASX gains helped some giants notch records, too. Miner BHP had its shares rise to a record $52.19. Wesfarmers, which owns Bunnings and Officeworks, had a record trade of $62.69.
Despite the records, investors did not continue their pursuit of shares. The ASX closed flat while most Asian markets closed lower.
IG Markets analyst Kyle Rodda noted the effect of China's crackdown on private education.
Beijing on Friday barred for-profit tutoring in some school subjects in a bid to lower living costs.
The move has put at risk billions of dollars of public and private capital.
Mr Rodda said investors had dumped the Asian region's stocks as they re-calculated risk.
The benchmark S&P/ASX200 index closed lower by 0.1 point, or 0 per cent, to 7394.3.
The All Ordinaries closed down 0.4 points, or 0.01 per cent, to 7670.5.
Materials shares rose one per cent and were the only category to move higher.
Rio Tinto will give its first-half earnings on Wednesday and was best of the big miners.
Rio shares closed up 2.37 per cent to $130.11.
Financials closed little changed.
US markets will provide plenty of interest this week when some of their biggest companies report earnings.
Tech giants Alphabet, Amazon, Apple, Facebook and Microsoft will report and outline the economic challenges ahead.
US markets were at record closing highs due to upbeat earnings reports and low interest rates.
Coronavirus lockdowns continued but appear set to end this week in South Australia and Victoria.
NSW's lockdown is likely to be extended to August.
In company news, Best & Less made its market debut and shares proved popular.
Shares in the family-friendly clothing chain closed up 11.11 per cent to $2.40.
Property group GPT scrapped its distribution guidance due to the lockdowns.
GPT cited the uncertainty of when restrictions would ease.
The group is due to give first-half earnings on August 16.
Shares were down 2.74 per cent to $4.62.
Crown Resorts slipped 5.19 per cent to $9.50 after the Perth Casino Royal Commission was given more time to complete investigations.
The commission has until March 4 to examine whether the company is fit to hold the licence for the casino.
A similar inquiry is being held in Victoria.
Boral will sell its Australian timber business to the Pentarch Group for $64.5 million.
Boral said proceeds would help reduce debt and any surplus would be given to shareholders.
Shares closed even at $7.41.
In banking, the Commonwealth was best of the big four. Shares closed little changed to $99.14.
The others of the group closed lower by less than 0.4 per cent.
Spot Gold was down 0.3 per cent at $US1796.68 an ounce; Brent crude was up 0.5 per cent at $US74.49 a barrel; Iron ore was up 0.7 per cent to $US202.74
The yield on the Australian 10-year bond closed at 1.18 per cent.
Asia
At the close, China's Shanghai Composite index was down 2.34 per cent at 3,467.44.
The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed down 4.13 per cent at 26,192.32.
Japan's Nikkei 225 was up 1.04 per cent at 27,833.29
Europe
The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was down at 461.14.
The German DAX was down at 15,618.98.
North America
The S&P 500 has edged higher and eked out another record closing high, bolstered by optimism over earnings with heavyweight technology names reporting this week while caution ahead of a policy meeting by the Federal Reserve kept the market in check.
The Dow Jones Industrial Average rose 83.36 points, or 0.24 per cent, to 35,144.91, the S&P 500 gained 10.43 points, or 0.24 per cent, to 4,422.22 and the Nasdaq Composite added 3.72 points, or 0.03 per cent, to 14,840.71.
Shares of Tesla Inc rose in after market trading after its earnings beat analyst expectations.
Other heavyweights including Alphabet Inc, Apple Inc, Amazon.com Inc, Facebook Inc and Microsoft Corp will report earnings through the week.
The vast majority of second-quarter earnings have handily beaten analysts' expectations so far, bumping up the already huge projected growth for the second quarter, according to Refinitiv data.
"We continue to see positive surprises, and even with a lot of optimism and increased estimates going into earnings season, we're still seeing companies exceed those expectations," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York, New York.
"As we get into the heart of (the earnings season), we get industrials and more cyclical names, it will be interesting to see not only how much there is in terms of recovery but also is there any impact from some of these issues, meaning inflation, the spike in prices."
Also due to report this week is 3M.
A two-day meeting of the Fed starts on Tuesday and all eyes may be on whether the US central bank expresses any new concerns about high inflation when it concludes its gathering on Wednesday.
In June, the Fed indicated it may start raising rates two times in 2023, which was sooner than previously expected.
Continued optimism about second-quarter earnings has helped offset recent concerns over the market impact of the Delta variant of COVID-19.
US-listed Chinese shares fell after China last week announced new rules on private tutoring and online education firms, the latest in a series of crackdowns on the technology sector that have roiled financial markets.
E-commerce company Alibaba Group and search engine Baidu Inc, two of the largest Chinese stocks listed in the United States, were lower.
Recent losses in Chinese stocks have been steeper than those recorded during the height of the China-US trade conflict in 2018, mainly due to Beijing officials' targeting of large technology firms.
Weapons maker Lockheed Martin Corp also fell after a classified aeronautics development program caused the firm to miss profit estimates.
