Learn To Invest
Stocks Special Reports LICs Credit Funds ETFs Tools SMSFs
Video Archive Article Archive
News Stocks Special Reports Funds ETFs Features SMSFs Learn
About

News

Global Market Report - 28 September

Lex Hall  |  28 Sep 2020Text size  Decrease  Increase  |  
Email to Friend

Australia

Australian shares are set to rise following gains on Wall Street last week as a tech rally quashed virus fears.

The Australian SPI 200 futures contract was up 21 points, or 0.4 per cent, to 5,951 points at 8.30am Sydney time on Monday, suggesting a positive start to trading.

Technology stocks again rode to Wall Street’s rescue on Friday, lifting the main indexes more than 1 per cent, but the Dow and the S&P 500 still posted their longest weekly losing streaks in a year as fears of a slowing economy sparked an almost month-long rout.

The Dow Jones Industrial Average rose 358.52 points, or 1.34 per cent, to 27,173.96. The S&P 500 gained 51.87 points, or 1.60 per cent, to 3,298.46 and the Nasdaq Composite added 241.30 points, or 2.26 per cent, to 10,913.56.

The S&P/ASX200 benchmark index closed higher by 89 points, or 1.51 per cent, to 5,964.9 points on Friday. The index closed 1.71 per cent higher for the week. The All Ordinaries index finished the last session better by 84 points, or 1.39 per cent, to 6,140.5.

Gold was down 0.4% at $US1,861.59 an ounce; Brent oil was down 0.1% to $US41.92 a barrel; Iron ore was up 0.5% to $US115.21 a tonne.

Meanwhile, the Australian dollar was buying 70.32 US cents at 8.30am, down from 70.60 US cents at Friday’s close.

Asia

China’s major indexes ended little changed on Friday, but posted their worst weekly decline since mid-July as a resurgence in covid-19 cases globally raised concerns about the pace of economic recovery.

The blue-chip CSI300 index rose 0.2 per cent, to 4,570.02, while the Shanghai Composite Index slipped 0.1 per cent to 3,219.42.

Hong Kong stocks ended lower on Friday, posting their biggest weekly drop in six months, tracking a global correction as a resurgence in coronavirus cases globally raised concerns about the pace of economic recovery.

At the close of trade, the Hang Seng index was down 75.65 points, or 0.32 per cent, at 23,235.42. The Hang Seng China Enterprises index fell 0.73 per cent to 9,302.59.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 2.15 per cent, while Japan’s Nikkei index closed up 0.51 per cent.

Europe

European stocks recorded their worst weekly decline since mid-June on Friday, as investors feared that a second wave of coronavirus infections will hamper economic recovery, while banking stocks sank to an all-time low.

The pan-European STOXX 600 index slipped 0.1 per cent, failing to match Wall Street gains on signs that US lawmakers were making progress on a $2.2 trillion stimulus package that could be voted on next week.

The index shed 3.6 per cent in a week dominated by concerns about new coronavirus restrictions in Europe, a faltering stock rally in Wall Street’s technology giants and worrying economic data from both sides of the Atlantic.

France and Britain set new records of daily covid-19 infections on Thursday, while the Spanish government recommended reimposing a partial lockdown on all of the city of Madrid after the country surpassed 700,000 cases, the highest number in Western Europe.

“New restrictions in Europe, less fiscal support, fading liquidity impulse and election risk should weigh on activity in Q4,” European equity strategists at Barclays wrote in a note. “Economic surprises are starting to roll over from all-time high levels.”

European banks sank to a fresh record low as investors shunned the sector hit by a cocktail of lower global borrowing costs, rising bad loans due to the economic downturn and dirty money scandal that made it the worst performer this week.

British betting firm William Hill surged 43.5 per cent after revealing that it had received rival takeover proposals from buyout firm Apollo and US casino operator Caesars Entertainment.

Ladbrokes and bwin brand owner GVC jumped 16.7 per cent and Paddy Power owner Flutter Entertainment gained 6.8 per cent, helping reverse early losses in travel & leisure stocks, which were up 3.2 per cent.

Still, worries about new travel restrictions weighed on airlines, with British Airways-owner IAG, Lufthansa and Air France KLM down between 0.6 per cent and 3.3 per cent.

Automakers fell 1.4 per cent after an industry body said British car production fell by an annual 45 per cent in August, as the sector continues to suffer due to the fallout from the virus outbreak.

Paris Match publisher Lagardere surged 32.3 per cent after billionaire Bernard Arnault revealed he had built up a direct stake in the firm, which is under siege from several other investors.

Swedish home appliance maker Electrolux rose 2.9 per cent after saying that it would propose reinstating dividends after a recovery in earnings and cash flows during the third quarter.

North America

Investors started buying beaten-down shares after the Nasdaq confirmed a corrective phase earlier this month and the S&P 500 on an intra-day basis briefly broke that barrier this week.

Both the Dow and S&P 500 notched their fourth straight weekly declines, the longest weekly losing streak since August 2019. The Nasdaq closed higher for the week after falling the previous three, and is now up 22 per cent for the year. The S&P 500 is up a bit more than 2 per cent for the year.

Investors are looking at the long term and believe technology remains the investment of choice, said Edward Moya, senior market analyst at OANDA in New York.

“It’s dip buying,” Moya said. “When you look at the correction that we’ve seen in these tech giants, people are still going to want to hold US equities. The reality is that 2021 is going to be a much higher stock market and you’re probably going to see tech still lead the way.”

Shares of tech mega-caps Apple, Microsoft Corp and Amazon.com led the way, followed by Nvidia Corp and Facebook, rising at least 2.1 per cent.

The information technology index jumped 2.4 per cent as investors ditched value-linked stocks on signs of a slowdown in the broader economic recovery. Growth-oriented shares gained at a rate almost twice that of value stocks.

Volatility has also shot up as investors look for clarity on whether Congress will approve more stimulus ahead of the 3 November presidential election, which now appears unlikely.

The CBOE Market Volatility Index, known as Wall Street's fear gauge, fell 7.68 per cent.

“You’ve had this nice recovery through the summer, and coming into the fall the economy is just a little bit more vulnerable, particularly with a lot of the stimulus that we had starting to taper off now,” said Mike Dowdall, portfolio manager at BMO Global Asset Management in Chicago.

For the week, the Dow unofficially fell 1.74 per cent, the S&P 500 slid 0.63 per cent, and the Nasdaq gained 1.1 per cent.

Volume on US exchanges was 8.89 billion shares,

The S&P industrials sector rose 1.49 per cent as data showed new orders for key US-made capital goods jumped in August, while a 0.06 per cent slide in energy stocks gave them their worst week since mid-June.

Cruise liners Royal Caribbean Cruises, Norwegian Cruise Line and Carnival Corp jumped 7.7 per cent or more after Barclays upgraded their shares to "overweight."

Shares of Boeing Co rose 6.8 per cent and led the Dow higher after the US Federal Aviation Administration said its chief will conduct an evaluation flight of the grounded 737 MAX and European safety regulators indicated a potential resumption of flights by year end.

Costco Wholesale Corp fell 1.27 per cent as the warehouse chain recorded high coronavirus-related costs for a second straight quarter.

Novavax Inc jumped 10.9 per cent after the drugmaker launched a late-stage trial of its experimental covid-19 vaccine in the UK.

The number of coronavirus cases in the US topped 7 million, as Midwest states reported spikes in covid-19 infections in September, according to a Reuters tally.

is content editor for Morningstar Australia

AAP logo

© 2021 Australian Associated Press Pty Limited (AAP) or its Licensors. This is the Morningstar service with content provided by AAP where indicated. AAP reserves all rights, including copyright, in services provided by it. The information in the service is for personal use only, does not constitute financial product advice (whether general or personal) and may not be re-written, copied, re-sold or re-distributed, framed, linked or otherwise used whether for compensation of any kind or not, without the prior written permission of AAP. You should seek advice from a professional financial adviser before making decision to acquire or dispose of a financial product.

This service is published for general information purposes only without assuming a duty of care. AAP is not in the business of providing financial product advice (whether personal or general advice), and gives no warranty, guarantee or other representation about the accuracy of the information or images contained in this service. AAP is not liable for errors, omissions in, delays or interruptions to or cessation of the services through negligence or otherwise. The globe symbol and "AAP" are registered trademarks.

Email To Friend