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Global Market Report - 28 October

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

The ASX is set to slip after the S&P 500 and Dow fell alongside a drop in oil prices.

The Australian SPI 200 futures contract was down 40 points or 0.5 per cent higher at 7,380 near 8.00 am AEST on Thursday, suggesting a negative start to trading.

US stocks fell in choppy trading Wednesday, retreating from records set just the previous day.

The S&P 500 finished down 0.5%, a day after the broad stocks gauge closed at another all-time high. The Dow Jones Industrial Average fell 0.7%, while the technology-focused Nasdaq gave up early gains to finish flat.

Major indexes started the day higher following a string of upbeat earnings reports. Selling pressure then picked up in the afternoon, with shares of energy and financial companies posting among the steepest losses in the market.

The Australian dollar was buying 75.22 US cents near 8.00am AEST, up from the previous close of 74.98. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, fell to 88.16.

Locally, the S&P/ASX 200 closed flat at 7448.7 after stocks tumbled on 3Q data showing that inflation hit its highest since 2015.

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The benchmark had been up 0.4% but dropped into negative territory when data showed trimmed mean inflation of 2.1% for the September quarter. That was higher than the 1.8% expected by economists and could increase the chances of interest rate rises.

The ASX 200 subsequently rallied, gaining less than 0.1% for the fourth time in five sessions.

Westpac, Commonwealth and NAB banks rose by between 0.6%-1.4%, but iron-ore and gold mining stocks labored.

Consumer staples was the worst-performing sector, pulled lower by a2 Milk and Woolworths.

Gold futures rose 0.3% to $US1798.50 an ounce; Brent crude fell 0.3% to $US84.06 a barrel; Iron ore was 2% lower at US$119.86.

The yield on the Australian 10-year bond was flat at 1.80%; The US 10-year Treasury note fell to 1.55.

Asia

Chinese stocks finished lower Wednesday, with the Shanghai Composite index down 1%. Coal miners slipped after Beijing signalled plans to stabilize coal prices over the long term. Renewable-energy sectors strengthened, with solar-panel maker LONGi Green Energy up 2.3% and electric-vehicle battery maker CATL rising 2.9%.

Hong Kong's Hang Seng Index closed 1.6% lower after a selloff in Chinese tech shares, KGI Securities says. The Hang Seng TECH Index closed 3.2% lower. Alibaba Health Information Technology closed 6.0% lower, Meituan was off 5.1% and Tencent Holdings declined 3.0%.

Japan's Nikkei Stock Average closed flat, erasing earlier losses as US stock futures rose. Among the best performers were Shimano, which soared 8.2% after the maker of bicycle parts and fishing gear raised its fiscal-year revenue and net-profit forecasts.

Europe

European stocks were lower Wednesday amid a choppy session on Wall Street. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies, was down 0.36%.

In London, the FTSE 100 slipped 0.33% as UK Treasurer Rishi Sunak delivered a series of spending increases in the Autumn budget.

North America

US stocks fell in choppy trading Wednesday, retreating from records set just the previous day.

The S&P 500 finished down 0.5%, a day after the broad stocks gauge closed at another all-time high. The Dow Jones Industrial Average fell 0.7%, while the technology-focused Nasdaq gave up early gains to finish flat.

Major indexes started the day higher following a string of upbeat earnings reports. Selling pressure then picked up in the afternoon, with shares of energy and financial companies posting among the steepest losses in the market.

Investors say that, overall, corporate earnings have reassured them that companies have been able to take issues like supply-chain problems, inflation and a slowdown in Chinese economic growth in stride. Despite Wednesday's pullback, the S&P 500 remains on course for its biggest monthly advance since November.

"Investors got fairly gloomy in September, clearly against the backdrop of all sorts of macro concerns," said Paul O'Connor, head of the multiasset team at Janus Henderson Investors. "The broader story from results is that companies are managing these dynamics pretty well, and also managing expectations fairly well."

McDonald's shares rose $6.31, or 2.7%, to $242.73 after the fast-food chain said Wednesday that higher prices had lifted its US sales.

Coca-Cola gained $1.05, or 1.9%, to $55.52 after the beverage firm topped Wall Street forecasts for earnings and revenue.

Shares of Robinhood Markets dropped $4.13, or 10%, to $35.44 after the trading app recorded a 35% decline in revenue from the previous quarter, driven by lower volumes of crypto trading.

Meanwhile, energy stocks fell alongside the price of oil. The S&P 500 energy sector finished the day down 2.9%, posting the biggest decline of the broad index's 11 sectors. US crude for December delivery lost $1.99, or 2.4%, to $82.66, posting its steepest one-day percentage decline since mid-August.

Money managers still have worries, ranging from the fate of President Biden's infrastructure and social-spending plans to the potential unwind of Federal Reserve stimulus measures that have boosted markets since early 2020. In the latest sign the economy slowed in the third quarter, data out Wednesday showed durable goods orders fell 0.4% in September from August.

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

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