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Global Market Report - 29 July

Lewis Jackson  |  29 Jul 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise. The Nasdaq ended higher as Google joined Apple in posting record results. Following its meeting the Federal Reserve said higher rates are some time off.

The Australian SPI 200 futures contract was up 19 points or 0.26 per cent at 7,301 near 7.10 am Sydney time on Thursday, suggesting a positive start to trading.

The S&P 500 has ended little changed after Federal Reserve Chair Jerome Powell said the central bank was still a ways away from considering raising interest rates.

The Dow Jones Industrial Average fell 128.12 points, or 0.37 per cent, to 34,930.4, the S&P 500 lost 0.82 points, or 0.02 per cent, to 4,400.64 and the Nasdaq Composite added 102.01 points, or 0.7 per cent, to 14,762.58.

The Australian dollar was buying 73.66 US cents near 7.45am AEST, up from 73.52 at Wednesday’s close.

Locally, a boom in inflation is no reason for investors to flee the Australian share market, which eased from a record level the day earlier.

That was the view of BetaShares chief economist David Bassanese, who put Wednesday's news that the annual inflation rate had climbed to 3.8 per cent in perspective.

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Inflation can erode the value of investments, but Mr Bassanese noted Australia's levels were well below that of the US.

A sustained lift in inflation in Australia will be required for the Reserve Bank to act.

"The RBA can afford to let the economy run hot for several years if possible," Mr Bassanese said.

However surging share markets and house prices carry risks, he noted.

The inflation issue will be key when US Federal Reserve officials soon detail the decisions of their policy meeting.

Investors want to know when the central bank might start to reduce bond purchases. These purchases inject money into financial markets and keep interest rates low.

US markets closed lower overnight prior to the decision.

The poor US lead was compounded by the NSW government extending the coronavirus lockdown in Sydney and surrounds.

While South Australians and Victorians enjoyed being released from stay-at-home orders, millions in NSW must wait until August 28.

The ASX had its biggest loss in more than a week and all share categories bar property were lower.

Information technology shares fell most, by 2.13 per cent.

Afterpay lost 3.6 per cent to $99.00.

The major categories of financials and materials shed 0.88 per cent and 0.77 per cent respectively.

The benchmark S&P/ASX200 index closed lower by 52.1 points, or 0.7 per cent, to 7379.3.
The All Ordinaries closed down 54.4 points, or 0.71 per cent, to 7649.6.

After trading closed, Rio Tinto reported first-half profit had more than doubled on the same period last year.

Chinese demand for iron ore helped underlying earnings rise to $A16.55 billion.

The world's largest iron ore miner declared a massive interim dividend of $US5.61 ($A7.62) per share, up from $US1.55 last year.

Rio shares closed lower by 0.19 per cent to $132.22.

Among main rivals, BHP lost 1.67 per cent to $52.47.

The miner's investment arm has made a $350 million offer for Canadian miner Noront.

Noront has nickel, copper, platinum and palladium deposits in Ontario.

Meanwhile, iron ore specialist Fortescue was little changed at $25.81.

Spark Infrastructure shares climbed after a US consortium improved its offer.

The consortium is offering about $2.88 per stapled security.

The Spark board said it was in security holders' interest for the company to continue discussions with the consortium.

Shares were up 5.38 per cent to $2.74.

Sleep apnoea specialist Resmed had its shares hit new heights.

They traded for a record $36.00.

They eased to close higher by 2.18 per cent to $35.56.

The Boral board has pleaded with shareholders not to accept Seven's offer and says it undervalues the company.

Boral shares were little changed at $7.40.

In banking, the big four were all lower.

The Commonwealth was the only one to lose more than one per cent. Shares last traded at $99.30.

Spot Gold was up 0.1 per cent at $US1800.67 an ounce; Brent crude was up 0.7 per cent at $US74.97 a barrel; Iron ore was up 11 US cents at $US202.68

The yield on the Australian 10-year bond closed at 1.15 per cent.

Asia

At the close, China's Shanghai Composite index was down 0.58 per cent at 3,361.59.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed up 1.54 per cent at 25,473.88.

Japan's Nikkei 225 was down 1.39 per cent at 27,581.66

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 0.66 per cent at 461.70.

The German DAX was up at 15,570.36.

North America

The S&P 500 has ended little changed after Federal Reserve Chair Jerome Powell said the central bank was still a ways away from considering raising interest rates.

The Dow Jones Industrial Average fell 128.12 points, or 0.37 per cent, to 34,930.4, the S&P 500 lost 0.82 points, or 0.02 per cent, to 4,400.64 and the Nasdaq Composite added 102.01 points, or 0.7 per cent, to 14,762.58.

The Nasdaq ended sharply higher, with shares of Google parent Alphabet Inc hitting an all-time high as a surge in advertising spending helped it post record quarterly results.

In a news conference following the release of a new policy statement from the Fed, Powell also said the US job market still had "some ground to cover" before it would be time to pull back from the economic support the US central bank put in place in the spring of 2020 to battle the coronavirus pandemic's economic shocks.

"It looks like probably the most positive thing for the market was that they are nowhere near increasing interest rates," said Alan Lancz, president, Alan B. Lancz & Associates Inc, an investment advisory firm based in Toledo, Ohio.

The S&P 500 index reversed slight declines following the Fed's statement while the Dow pared losses and the Nasdaq added to its gains.

The Fed also kept its overnight benchmark interest rate near zero and left unchanged its bond-buying program.

In its statement that came at the conclusion of its latest two-day policy meeting, the central bank also said that higher inflation remained the result of "transitory factors".

Among decliners, Apple Inc eased after if forecast slowing revenue growth.

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

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