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Global Market Report - 27 September

Lewis Jackson  |  27 Sep 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to edge higher after a mixed session Friday on Wall Street.

The Australian SPI 200 futures contract was up 2 points or 0.02 per cent at 7,304 near 8.00 am AEST on Monday, suggesting a positive start to trading.

The Dow Jones Industrial Average and the S&P 500 ticked up Friday, clinching weekly gains despite uncertainty over the fate of indebted property giant China Evergrande Group.

The Dow Jones Industrial Average (DJIA) added 0.1% and the S&P 500 rose 0.15%. The technology-heavy Nasdaq Composite was down less than 0.1%.

The session was a quiet end to an eventful week. Markets have been whipsawed by fears that the possible collapse of Evergrande could spill over into global markets and add to an already darkening outlook for global growth.

The DJIA and S&P 500 ended the session with weekly gains of 0.6% and 0.5%, respectively, while the Nasdaq was little changed for the week.

The Australian dollar was buying 72.56 US cents near 8.00am AEST, down from the previous close of 72.92. The WSJ Dollar Index, which measures the US dollar relative to 16 foreign currencies, rose to 87.89.

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Locally, the S&P/ASX 200 closed 0.4% lower at 7342.6 on Friday after a mixed session across sectors, with energy stocks emerging as the strongest performers. Washington H. Soul Pattinson rose 3.8%, while Santos climbed 1.9%.

The materials sector was among the weakest, with Silver Lake losing 5.1%, Northern Star down 4.3% and Newcrest falling 2.5%. BHP was also a drag on the market, shedding 1.7%. The major banks, however, rose between 0.1% and 1.0%.

The benchmark index was 0.8% lower for the week.

Also on Friday, the International Monetary Fund added to calls for regulatory steps to be taken to cool surging house price growth in Australia, warning of building "incipient risks" in the market.

Gold futures rose 0.1% to $US1748.10 an ounce; Brent crude was up 1.1% at $US77.16 a barrel; Iron ore was up 2.4% $US111.33.

The yield on the Australian 10-year bond rose to 1.40%; The yield on the US 10-year note rose to 1.45%.

Asia

Chinese stocks ended Friday mixed as investors remained on the sidelines amid uncertainty from China Evergrande's liquidity crisis. The benchmark Shanghai Composite Index fell 0.8% while the Shenzhen Composite Index edged 0.7% lower. The ChiNext Price Index, a measure for emerging industries and startups, gained 0.8%.

Hong Kong stocks ended the session lower amid risk aversion due to China Evergrande's liquidity difficulties. The Hang Seng Index closed 1.3% lower. Evergrande lost 12% after it gave no indication that it will make coupon payments due on a US bond on Thursday. Its electric-car unit, China Evergrande New Energy Vehicle, fell 23%.

Tech stocks further dragged on the market, with Alibaba losing 2.8% and Kuaishou ending 9.7% lower after losses deepened sharply toward the end of the trading day.

Japanese stocks closed broadly higher, led by especially sharp gains in shippers, as concerns ebbed about ripples from China Evergrande's troubles. The Nikkei Stock Average rose 2.1%.

Europe

The FTSE 100 closed Friday 0.4% lower. The index was up 1.26% for the week.

European markets fell as investors eyed Sunday's elections in Germany. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies, fell 0.9%. It ended the week 0.3% higher.

"Markets are facing a change of direction in Germany unlike anything seen in the past decade or more and the end of Merkel's tenure promises to be a watershed moment for the EU and global investors alike," IG analyst Chris Beauchamp says,

North America

The Dow Jones Industrial Average and the S&P 500 ticked up on Friday, clinching weekly gains despite uncertainty over the fate of indebted property giant China Evergrande Group.

The Dow added 0.1% and the S&P 500 rose 0.15%. The technology-heavy Nasdaq Composite was down less than 0.1%.

Friday's session was a quiet end to an eventful week. Markets have been whipsawed by fears that the possible collapse of Evergrande could spill over into global markets and add to an already darkening outlook for global growth.

Investors who own Evergrande's US dollar bonds hadn't received an interest payment by a Thursday deadline, raising concerns about a potential default. Evergrande shares fell 11.6% Friday in Hong Kong, and are down more than 84% this year.

"It is one of the largest companies in the second-largest economy in the world and if something pulls down Chinese growth it is going to pull down global growth," said Seema Shah, chief strategist at Principal Global Investors.

Such fears sparked a wave of selling at the start of the week, but the market recovered its footing Wednesday as investors seized the opportunity to buy the dip. The Federal Reserve also helped boost confidence that day when it said the US economy had made enough progress for the central bank to start dialling back its stimulus efforts as soon as November. The Dow rallied a combined 2.5% on Wednesday and Thursday, in its biggest two-day gain since March.

The Dow and S&P 500 ended Friday with weekly gains of 0.6% and 0.5%, respectively, while the Nasdaq was little changed for the week.

The week's rebound showed how many investors feel they have no alternative but to keep piling money into stocks, with bonds unattractive due to low interest rates, said Phillip Toews, chief executive of Toews Asset Management. "If you want to have gains anywhere, the stock market is the place to be," he said.

Cryptocurrencies have also been in the spotlight this week as the tremors from China and mounting pressure from regulators around the world jolted digital-asset markets.

On Friday, crypto prices fell after China's central bank declared all cryptocurrency-related transactions illegal. Bitcoin fell more than 5% from its 5 pm New York time level Thursday to about $42,330, according to CoinDesk. Ether slumped nearly 8%. Shares of cryptocurrency exchange Coinbase Global fell 2%.

Shares of Nike tumbled 6.3% after the sportswear giant lowered revenue guidance, citing supply-chain disruptions in Asia.

Government bond yields have climbed this week after several central banks—including the Fed—signalled they were on the path toward removing pandemic-era stimulus measures. The yield on the benchmark 10-Year US Treasury note rose to 1.459% on Friday, from 1.408% on Thursday. Bond yields and prices move in opposite directions.

Data released Friday showed that US new-home sales grew in August for the second consecutive month, coming in slightly higher than economists' forecasts.

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

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