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Global Market Report - 28 July

Lewis Jackson  |  28 Jul 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to slide as European and US equities sold off. Asian markets hit a 2021 low as selling continued for a third straight day among troubled Chinese internet giants.

The Australian SPI 200 futures contract was down 24 points or 0.33 per cent at 7,316 near 7.30 am Sydney time on Wednesday, suggesting a negative start to trading.

US stocks have ended lower, led by declines in the Nasdaq, as investors were cautious before results from top tech and internet names and a Federal Reserve announcement.

The Dow Jones Industrial Average fell 101.19 points, or 0.29 per cent, to 35,043.12, the S&P 500 lost 20.6 points, or 0.47 per cent, to 4,401.7 and the Nasdaq Composite dropped 180.14 points, or 1.21 per cent, to 14,660.58.

The Australian dollar was buying 73.60 US cents near 7.45am AEST, up from 73.46 at Tuesday’s close.

Locally, there is no stopping the Australian share market after the indices hit record levels for the second consecutive day.

The ASX200 broke Monday's record after 23 minutes, then later sprung again to raise the all-time high to 7447.9 points.

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Investors were particularly keen to buy the big miners.

BHP and Rio Tinto shares set record prices prior to the latter's first-half earnings on Wednesday.

IG Markets analyst Kyle Rodda said higher commodity prices, particularly for copper, helped building materials stocks.

The other major miner, iron ore specialist Fortescue, was just shy of records and closed up 1.57 per cent to $25.82.

Energy shares were the next best contributor due to higher oil prices.

The benchmark S&P/ASX200 index on Tuesday closed higher by 37.1 points, or 0.5 per cent, to 7431.4.

The All Ordinaries closed up 33.5 points, or 0.44 per cent, to 7704.

Those record heights were also helped by Wall Street.

US markets were at closing highs overnight.

Investors remain optimistic the economic rebound from the pandemic will continue after plenty of strong corporate earnings reports.

Mr Rodda noted the next 48 hours would be particularly eventful.

Three giants of technology - Google owner Alphabet, Apple and Microsoft will report earnings.

Their performance and commentary on the economic outlook will influence market movements around the world.

The US Federal Reserve will deliberate as part of a two-day policy meeting.

Much attention will be on whether the central bank offers any concerns about high inflation.
Domestically, there was better news for the economy, which has had about half the nation's population in coronavirus lockdown.

South Australians and Victorians are set to be relieved of their stay-at-home orders in the next 24 hours.

People in Sydney and surrounds expect their lockdown to continue into August.

On the ASX, BlueScope Steel is set for record earnings.

The company said unaudited figures showed the best full-year underlying earnings ($1.72 billion) since its demerger.

Rising steel prices in the US and strong demand in Australia and New Zealand contributed.

Shares were up 6.4 per cent to $24.43.

The makers of a nasal spray claim it's more than 99 per cent effective against the COVID-19 Delta variant sweeping the world.

Biopharmaceutical group Starpharma published test results to show its Viraleze spray, already used in Europe and India, works well against the highly infectious Delta.

Starpharma is waiting for approval to sell the spray in Australia.

Shares were up 7.94 per cent to $1.36.

Oil Search said it was on track to meet full-year production and capital spending targets.
The company posted second-quarter earnings which included sales revenue improving by 21.5 per cent on the first quarter.

First-half earnings are due on August 24.

Shares were down 0.51 per cent to $3.93.

Miner IGO will form a joint venture with the Creasy Group to explore around the Silver Knight nickel-copper deposit in Western Australia.

IGO is paying the Creasy Group $45 million to form the venture and buy the deposit.

Shares were higher by 1.68 per cent to $9.08.

The big four banks were all higher.

The Commonwealth did best of the group and rose 1.58 per cent to $100.71.

Technology shares were the worst performing category and shed almost one per cent.

Artificial intelligence software vendor Appen had one of the biggest falls and lost 2.91 per cent to $12.03.

Spot Gold was up 0.2 per cent at $US1800.39 an ounce; Brent crude was down 0.2 per cent at $US74.39 a barrel; Iron ore was down 17 US cents at $US202.57

The yield on the Australian 10-year bond closed at 1.21 per cent.

Asia

At the close, China's Shanghai Composite index was down 2.49 per cent at 3,381.18.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed down 4.22 per cent at 25,086.43.

Japan's Nikkei 225 was up 0.49 per cent at 27,970.22

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was down 0.54 per cent at 458.65.

The German DAX was down at 15,519.13.

North America

US stocks have ended lower, led by declines in the Nasdaq, as investors were cautious before results from top tech and internet names and a Federal Reserve announcement.

The Dow Jones Industrial Average fell 101.19 points, or 0.29 per cent, to 35,043.12, the S&P 500 lost 20.6 points, or 0.47 per cent, to 4,401.7 and the Nasdaq Composite dropped 180.14 points, or 1.21 per cent, to 14,660.58.

Shares of Apple Inc, Microsoft Corp and Google parent Alphabet Inc, all set to report earnings after the bell, were down and weighed the most on the Nasdaq and S&P 500 along with Amazon.com Inc, which is expected to report results later this week.

Also, electric-car maker Tesla Inc fell following its results from late on Monday.

Shares of the heavily weighted tech and internet companies have run up recently and last week regained leadership in the market, putting their results in the spotlight even more.

"Expectations are so high. They're going to have good numbers... but we are expecting much more or maybe they will talk down the second half of the year," said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.

Adding to the cautious tone is the outlook for US-listed Chinese stocks, he said.

The shares including Baidu extended losses as fears over more regulations in the mainland persisted.

Caution was also high as the Fed began its two-day meeting, with investors looking for signs on when it intends to begin reining in its massive stimulus program.

In another sign that investors were in a risk-off mood, defensive sectors such as real estate and utilities were the two best-performing S&P 500 sectors for the day and US Treasuries prices rose.

Intel Corp shares sank after it said its factories would start building Qualcomm chips and laid out a road map to expand its new foundry business.

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

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