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Global Market Report - 28 May

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

Australian shares are set to open higher, as Wall Street closed up on a positive job market report.

The Australian SPI 200 futures contract was up 58 points or 0.82 per cent to $7,148 near 7.35 am Sydney time on Friday, suggesting a positive start to trading.

US stocks advanced slightly Thursday as data showing improvement in the labour market helped bolster expectations in the economic recovery and spurred a minor rotation towards stocks seen as more likely to benefit from the rebound.

The Dow Jones Industrial Average rose 141.59 points, or 0.41 per cent, to 34,464.64, the S&P 500 gained 4.89 points, or 0.12 per cent, to 4,200.88 and the Nasdaq Composite dropped 1.72 points, or 0.01 per cent, to 13,736.28.

The Australian dollar was buying 77.42 US cents near 8.00 AEST, down from 77.52 at Thursday’s close.

Locally, Victoria's coronavirus lockdown sapped confidence on the share market on Thursday as some companies brace for a considerable hit to sales.

The ASX was higher before news of seven days of tight restrictions caused investors to force the indices below their opening level after 1100 AEST.

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While the market later recovered and closed little changed, Investsmart market strategist Evan Lucas said he was watching bellwether stocks.

Toll road operator Transurban, which manages Melbourne's Tullamarine Freeway and West Gate Tunnel, closed lower for a second consecutive day and lost 1.01 per cent to $13.66.

"Transurban has a significant chunk of earnings from the Tullamarine Freeway and freeway use will be significantly impacted by the lockdown," Mr Lucas said.

Sydney Airport, which has a steady stream of Victorian visitors, closed lower for a second consecutive day. Shares fell 0.35 per cent to $5.76.

Mr Lucas said the economic impact of the lockdown would show in more stocks.

"You want to see what happens to consumer confidence. What happens to retail sales in Victoria," he said.

The benchmark S&P/ASX200 index closed up by 2.4 points, or 0.03 per cent, to 7094.9 on Thursday.

The All Ordinaries closed higher by 12.4 points, or 0.17 per cent, to 7344.

Information technology shares were best and higher by almost two per cent.

The worst performers were utilities, which lost 1.18 per cent.

Earlier Wall Street indices had modest gains, with recent comments from Federal Reserve officials helping to quell concerns about runaway inflation.

US gross domestic product (GDP) figures due for release could prove pivotal to trading activity.

The US economy is recovering strongly from the pandemic, as seen by recent inflation figures which were higher than expected.

US Federal Reserve officials have said any tapering of the massive government stimulus is not on the agenda.

Yet Mr Lucas said higher than expected GDP figures could make it hard for Fed officials to maintain that rhetoric.

"Fed members are trying to clearly state that tapering (economic stimulus) is not on the horizon," he said.

"But if we keep getting strong data like we did with inflation, investors are going to start wondering when do we wind it back."

On the ASX, fruit and vegetable grower Costa Group dived 24.1 per cent to $3.37 after company leaders outlined price pressures and a higher Aussie dollar affecting overseas earnings. They spoke at the annual general meeting.

Healthcare shares were down 0.42 per cent after Fisher and Paykel Healthcare was unable to forecast earnings due to the unpredictability of the pandemic.

Shares in the company fell 5.99 per cent to $27.94.

The company's full-year net profit after tax was up 82 per cent from hospitals buying more supplies to combat the virus.

A final dividend of 22 cents per share was 42 per cent better than the previous equivalent payout.

Corporate regulator ASIC is taking wealth manager AMP to court for selling life insurance to dead people - one of the controversies from the banking royal commission.

AMP charged life insurance premiums and advice fees to thousands of customers between 2011 and 2019 despite being told they were dead.

ASIC is taking Federal Court action over those charged from May 2015 to August 2019.
AMP shares were up 8.45 per cent to $1.15.

In banking, ANZ was best of the big four and rose 0.14 per cent to $28.54. The others in the group fell by less than one per cent.

In mining, Fortescue was the standout and rose 4.95 per cent to $22.27, while BHP and Rio Tinto gained less than one per cent.

Spot Gold was down 0.02 per cent at $US1896.24 an ounce; Brent crude was up 0.4 per cent to $US69.12 a barrel. Iron ore was down at $US 189.73.

The yield on the Australian 10-year bond closed down at 1.63 per cent.

Asia

At the close, China's Shanghai Composite index was up 0.43 per cent at 3,608.85.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, was down 0.18 per cent, to 29,113.20.

Japan's Nikkei 225 Index closed down 0.33 per cent at 28,549.01.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 0.27 per cent at 446.44.

The German DAX fell 0.28 per cent to 15,406.73.

North America

US stocks advanced slightly Thursday as data showing improvement in the labour market helped bolster expectations in the economic recovery and spurred a minor rotation towards stocks seen as more likely to benefit from the rebound.

The Dow Jones Industrial Average rose 141.59 points, or 0.41 per cent, to 34,464.64, the S&P 500 gained 4.89 points, or 0.12 per cent, to 4,200.88 and the Nasdaq Composite dropped 1.72 points, or 0.01 per cent, to 13,736.28.

The number of people in the US filing new unemployment claims dropped more than expected last week to a 14-month low of 406,000 as pandemic restrictions continue to be lifted while a separate report showed business spending on equipment picked up speed.

The data helped lift US Treasury yields, with the benchmark 10-year note reaching a high of 1.625 per cent and denting the attractiveness of higher-growth names in areas such as technology while helping those seen as more likely to benefit from an improving economy such as financials and small caps.

Still, the 10-year yield remained within the range it has been in for several days, which served to keep inflation concerns in check and limited the rotation within sectors.

Investors have been closely watching economic data and comments from Federal Reserve officials for signs of runaway inflation and the possibility the central bank may begin to pull back on its massive stimulus measures.

"When you look at the jobless claims that actually shows we're continuing to make progress, if we get a strong jobs report in the next release that's going to provide some support, until then there's uncertainty so I don't think there's a lot of momentum either way," said Brad McMillan, chief investment officer for Commonwealth Financial Network, in Waltham, Massachusetts.

"We've had the Fed come out and say we're going to continue to support things but now we're starting to be a little bit nervous, that's obviously a headwind."

Weighed down by weakness in tech shares, the Nasdaq underperformed the Dow and S&P.

US plane maker Boeing climbed 3.87 per cent to lead the Dow higher after its European rival Airbus outlined an almost two-fold increase in production, citing a strong recovery in aviation from the COVID-19 pandemic.

Boeing supplier General Electric jumped 7.09 per cent and the two were the biggest boost to the S&P industrials, the best performing sector on the day.

Investors will now look to the personal consumption expenditure report due on Friday as it is the central bank's preferred inflation measure for its 2.0 per cent long-term target.

Fed officials have repeatedly maintained in recent days that the central bank is not ready to adjust its monetary support, although some have suggested they are open to begin discussing the reduction of its bond-buying plan.

On Thursday, Federal Reserve Bank of Dallas President Robert Kaplan said the labour market is tighter than many realise.

Nvidia Corp forecast second-quarter revenue above analysts' estimates but shares fell 1.35 per cent as the chipmaker could not say for certain how much of its recent revenue rise was driven by the volatile cryptocurrency-mining market.

is a reporter/data journalist for Morningstar. You can follow Lewis on Twitter @lewjackk

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