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Global Market Report - 3 March

Lex Hall  |  03 Mar 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to follow Wall Street lower as Apple and Tesla fell and investors waited for stimulus approval.

The Australian SPI 200 futures contract was up 23 points, or 0.3 per cent, at 6,745 points at 8.30am Sydney time on Wednesday, suggesting a positive start to trading.

Wall Street ended lower on Tuesday, pulled down by Apple and Tesla, while materials stocks climbed as investors waited for the US Congress to approve another stimulus package.

The Dow Jones Industrial Average fell 0.46 per cent to end at 31,390.47 points, while the S&P 500 lost 0.81 per cent to 3,870.36. The Nasdaq Composite dropped 1.69 per cent to 13,358.79.

Locally, Reserve Bank governor Philip Lowe has put the onus on the nation’s banks to keep the lid on a rapidly inflating property market, urging them to maintain high lending standards even as he recommitted to keeping borrowing costs low for years, The Australian reports.

Australia's share market closed lower despite the Reserve Bank keeping rates at a record low and insisting they could remain low for three years.

The S&P/ASX200 benchmark index closed lower by 27.3 points, or 0.4 per cent, to 6,762.3 on Tuesday.

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The All Ordinaries closed lower by 32.8 points, or 0.47 per cent, at 7,009.9.

The indices were higher early, but fell throughout the day.

The RBA decision to maintain the cash rate at 0.1 per cent, and keep borrowing costs low, did not lead investors to buy more shares.

Gold was up 0.7 per cent at $US1,736.88 an ounce; Brent oil was down 0.2 per cent to $US63.57 a barrel; Iron ore was up 0.6 per cent to $US175.55 a tonne.

Meanwhile, the Australian dollar was buying 78.33 US cents at 8.30am, up from 77.55 US cents at Tuesday’s close.

Asia

China's benchmark stock indexes fell on Tuesday after the banking and insurance regulator said it was studying plans to manage inflows and prevent market turbulence, with consumer firms leading the decline on foreign investor selling.

The China Banking and Insurance Regulatory Commission warned of the risk of bubbles bursting in foreign markets, and said the country was studying measures to manage capital inflows to prevent domestic market turbulence.

The comments saw the benchmark Shanghai Composite index erase early gains to close 1.21 per cent lower at 3,508.59.

The blue-chip CSI300 index fell 1.28 per cent, with the consumer staples sector down 2.85 per cent, the financial sector sub-index down 1.02 per cent and the healthcare sub-index 2.28 per cent lower.

In Hong Kong, the Hang Seng lost 1.45 per cent.

In Japan, the Nikkei 225 Index ended 0.86 per cent lower at 29,408.17, while the broader Topix edged down 0.4 per cent to 1,894.85. Both the benchmark Nikkei and the Topix had gained more than 2 per cent on Monday.

Europe

European stocks benchmark fell on Tuesday after recording its strongest session in four months a day earlier as heavyweight mining and energy stocks retreated on weaker commodity prices.

The pan-regional STOXX 600 index fell 0.2 per cent, following Asian markets into the red after China’s top banking and insurance regulator expressed caution about the risk of asset bubbles in foreign markets.

Oil majors Royal Dutch Shell, BP and Total fell between 1.3 per cent and 2.4 per cent as crude prices dropped on worries about slowing demand in China.

The oil and gas sector fell 1.5 per cent, while miners declined 0.4 per cent.

European shares have pulled back from February peak with a rise in bond yields as investors fear that a potential rise in inflation due to global stimulus measures could prompt central banks to tighten monetary policies.

However, several European Central Bank officials have said this week the bank will prevent a premature increase in borrowing costs, including using the flexibility embedded in its bond purchase programme.

“When we look at Western markets, we are not anticipating rate moves, which is why I’m comfortable with the rise in yields,” said Lewis Grant, a senior portfolio manager at Federated Hermes in London.

“We need to acknowledge that yields move because of optimism over re-opening, and that is a good thing for equities.”

Gains in shares of consumer companies such as Nestle, Unilever and Reckitt Benckiser helped limit losses in Europe.

Swiss chocolate maker Lindt & Spruengli jumped 3.3 per cent after saying that it aimed for 6 per cent to 8 per cent organic sales growth this year thanks to pent-up demand after the pandemic hit its business.

German remote connectivity software company TeamViewer rose 3.6 per cent after it said it had acquired Upskill, a US company that specialises in augmented reality applications for front-line workers.

Britain’s third-largest homebuilder Taylor Wimpey rose 2.3 per cent after it said the 2021 selling season has started well and that it resumed dividend payment as promised.

Among decliners, HelloFresh shares, which have more than doubled in the past year, fell 4.1 per cent even as the German meal-kit delivery company reported fourth-quarter sales above market expectations.

North America

Wall Street ended lower on Tuesday, pulled down by Apple and Tesla, while materials stocks climbed as investors waited for the US Congress to approve another stimulus package.

Following strong gains in the prior session, technology shares dipped in the resumption of a rotation by investors out of stocks that outperformed due to the coronavirus pandemic and into others viewed as likely to do well as the economy recovers. The S&P 500 materials and consumer staples sector indexes rose.

Yields on the benchmark 10-year Treasury bonds have stabilized after hitting a one-year high last week.

“Part of it is just because technology went up so much last year, and if interest rates are on the rise then the value of their future cash flows is diminished,” said Tom Hainlin, global investment strategist at US Bank Wealth Management.

The S&P 500 on Monday logged its best day since June as markets cheered approval of a third covid-19 vaccine in the US and the US House of Representatives’ green light for a US$1.9 trillion ($2.56 trillion) coronavirus relief package.

The US Senate will start debating President Joe Biden’s relief bill this week when Democrats aim to pass the legislation through a maneuver known as “reconciliation,” which would allow the bill to pass with a simple majority.

Apple dipped and Tesla declined, with the two companies contributing the most to the S&P 500’s loss for the day.

The S&P 500 technology sector index dropped, extending a pullback from late last month after a selloff in the US bond market sparked fears over highly valued stocks.

The Dow Jones Industrial Average fell 0.46 per cent to end at 31,390.47 points, while the S&P 500 lost 0.81 per cent to 3,870.36. The Nasdaq Composite dropped 1.69 per cent to 13,358.79.

The Russell 2000 index of smaller companies declined, trimming its gain in 2021 to about 14 per cent, compared with the S&P 500’s rise of under 4 per cent in the same period.

Kohl’s Corp rose after it posted holiday-quarter results beyond market expectations on a boost in online sales and as the company reined in costs.

TV ratings provider Nielsen jumped after it sold its advanced video advertising business to television streaming platform provider Roku. Shares of Roku dropped.

With Reuters

is senior editor for Morningstar Australia

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