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Global Market Report - 3 August

Lewis Jackson  |  03 Aug 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to edge down, as shares on Wall Street closed mostly lower. Investors await today’s policy statement from the Reserve Bank.

The Australian SPI 200 futures contract was down 19 points or 0.26 per cent at 7,367 near 7.10 am Sydney time on Tuesday, suggesting a negative start to trading.

The S&P 500 Index has closed slightly lower after erasing early gains as worries about the Delta variant of the coronavirus and a slowing US economy overshadowed optimism around more fiscal stimulus and a strong second-quarter earnings season.

The Dow Jones Industrial Average fell 101.33 points, or 0.29 per cent, to 34,834.14, the S&P 500 lost 8.12 points, or 0.18 per cent, to 4,387.14 and the Nasdaq Composite added 6.05 points, or 0.04 per cent, to 14,678.72.

The Australian dollar was buying 73.62 US cents near 7.30am AEST, up from 73.54 US cents at Monday’s close.

Locally, a mega takeover deal for Afterpay ignited technology shares and helped the ASX to a record high level.

US payments provider Square tabled a $39 billion offer for the buy now, pay later provider and investors sent the latter's shares surging by 18.77 per cent to $114.80.

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Afterpay investors will receive shares in Square on the New York Stock Exchange, rather than cash. The deal values each Afterpay share at $126.21.

The boon for the Aussie company caused technology shares to rise 6.54 per cent.
Yet it was not just technology shares helping the ASX higher on Monday.

There were gains of more than one per cent for shares in financials, healthcare, energy, utilities and consumer stocks.

The ASX200 notched its highest level of 7506.3 points.

The benchmark S&P/ASX200 index closed higher by 98.8 points, or 1.34 per cent, to 7491.4.

The All Ordinaries closed up 96.3 points, or 1.26 per cent, to 7760.5.

The ASX performance defied a negative lead from Wall Street on Friday.

The downbeat mood in US markets was due in part to Amazon's second quarter sales not meeting expectations.

Most Asian markets also bucked the lead on Monday.

IG Markets analyst Kyle Rodda said while there was no clear catalyst, US senators' nearly $US1 trillion infrastructure bill was probably helping sentiment.

The bill was produced on the weekend and promises plenty of stimulus for builders of roads, bridges, waterworks and broadband.

US corporate earnings have also more than met investors' expectations and kept US indices near record highs.

In Australia, the Reserve Bank will meet on Tuesday to consider a changed economic environment since its last meeting.

Coronavirus lockdowns have affected much of the nation, and economists tip gross domestic product to fall for the September quarter.

A lockdown for southeast Queensland, ordered on Saturday, has been extended to this Sunday. The NSW lockdown remains until August 28.

On the ASX, Afterpay was not the only high-profile takeover deal making headlines.
Oil Search's board endorsed Santos' implied offer of $4.52 per share.

The combined company would be among the 20 largest oil and gas providers in the world.
Oil Search shares were higher by 4.72 per cent to $3.99. Santos was better by 0.62 per cent to $6.49.

Building materials supplier Boral fell 4.18 per cent to $6.88. The decline comes after Seven Group's off-market share offer closed last week.

Seven has taken a more than 69 per cent stake in Boral.

In mining, an iron ore price drop caused a slump in Fortescue shares.

Shares dropped 2.09 per cent to $24.39.

Rio Tinto was also lower and fell 0.14 per cent to $133.23.

BHP climbed 0.39 per cent to $53.70.

In banking, there were strong showings for each of the big four banks.

NAB was best of the group and higher by 2.39 per cent to $26.55.

The Commonwealth and Westpac were also higher by more than two per cent. ANZ rose 1.8 per cent.

Spot Gold was up 0.1 per cent at $US1816.09 an ounce; Brent crude was down 3.5 per cent at $US72.75 a barrel; Iron ore was up 1.6 per cent at $US184.42

The yield on the Australian 10-year bond closed at 1.18 per cent.

Asia

At the close, China's Shanghai Composite index was up 1.97 per cent at 3,464.29.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed up 1.06 per cent at 26,235.80.

Japan's Nikkei 225 was up 1.82 per cent at 27,781.02.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 0.59 per cent at 464.45.

The German DAX was up at 15,568.73.

North America

The S&P 500 Index has closed slightly lower after erasing early gains as worries about the Delta variant of the coronavirus and a slowing US economy overshadowed optimism around more fiscal stimulus and a strong second-quarter earnings season.

The Dow Jones Industrial Average fell 101.33 points, or 0.29 per cent, to 34,834.14, the S&P 500 lost 8.12 points, or 0.18 per cent, to 4,387.14 and the Nasdaq Composite added 6.05 points, or 0.04 per cent, to 14,678.72.

Data earlier on Monday showed that although US manufacturing grew in July, its pace slowed for a second straight month as spending rotated back to services from goods and as shortages of raw materials persisted.

The softer than expected data also sent US bond yields to their lowest since July 20 and knocked the blue-chip Dow off an intra-day record high hit in early trading.

"An issue for the market... is the rise of the growth scare", said Rob Haworth, senior investment strategist at US Bank, "Whether it's more restrictions in China with infections rising in 14 provinces now, or questions about how far is the US going to have to go with mask mandates."

Square Inc, the payments firm of Twitter Inc co-founder Jack Dorsey, jumped after it said it would purchase Australian buy now, pay later pioneer Afterpay Ltd for $US29 billion ($A39 billion).

With manufacturing activity data coming in weaker than expected, investor focus now turns to services sector data on Wednesday and the Labor Department's monthly jobs report on Friday.

After mixed quarterly reports from technology behemoths last week, all eyes this week are on earnings from companies including Eli Lilly and Co, CVS Health Corp and General Motors Co.

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

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