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Global Market Report - 30 December

Emma Rapaport  |  30 Dec 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set for a modest rise at the open with US shares mostly rising in a choppy session.

The Australian SPI 200 futures contract was up 5 points or 0.1% at 7420 at 8am Sydney-time, suggesting a positive start to trading.

US stocks rose Wednesday in a choppy session exacerbated by thin trading volumes during the final days of the year.

The S&P 500 gained 0.14% to another closing record after swinging between gains and losses earlier in the session. The Dow Jones Industrial Average added about 90 points, or 0.25%, marking the blue-chip index's sixth consecutive session of gains. The technology-heavy Nasdaq Composite finished 0.1% lower.

The Australian dollar was last buying 72.52 US cents, down 0.39% from the previous close of 72.22. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, grew to 89.74.

Locally, the S&P/ASX 200 closed 1.2% higher at 7509.8 in the first session after the Christmas break, posting a fifth straight day of gains. All sectors finished the day in the green, with consumer staples, financials and energy stocks standouts. The S&P/ASX 200 has rallied 12.4 per cent so far in 2021.

Major banks were up between 1.2% and 1.5%, while Beach Energy and Woodside Petroleum were up 4.1% and 1.9%, respectively. Graincorp closed the day 5.1% higher and Bega Cheese was up 3.9%.

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Michael Hill International finished 22% higher after issuing a positive business update despite the ongoing Omicron outbreak. Whispir rose 6.3% after announcing it had secured a significant contract with Singtel.

In bonds markets, the yield on the benchmark 10-year U.S. Treasury note rose to 1.542% from 1.480% on Tuesday. That marked its highest yield since Nov. 24. Yields move inversely to bond prices.

Oil prices rose. Global benchmark Brent crude rose 0.4% to $79.23 a barrel.

Bitcoin wavered, and recently added about 0.1% compared with its level at 5 p.m. US ET on Tuesday. It recently traded around $47,608, according to CoinDesk, after declining the most in nearly a month the previous day.

Asia

Chinese shares ended lower as the market stuck to the range-bound trading pattern markets in recent days. The benchmark Shanghai Composite Index fell 0.9% to 3597.00, while the Shenzhen Composite Index slipped 0.8% to 2494.41. The emerging industry ChiNext Price Index gauge fell the most, losing 1.4% to end at 3281.90. Liquor makers led the downturn as the sector came under profit-taking pressure after an earlier rally. Kweichow Moutai fell 4.5%.

Hong Kong stocks ended the session lower, snapping a five-session upturn driven by China's easing monetary policies and its recovering property sector. The benchmark Hang Seng Index fell 0.8% to settle at 23086.54, as tech shares continued to suffer a broad downturn, which was exacerbated today following profit-taking pressure in the industry during overnight U.S. trading. The Hang Seng TECH Index dived 1.8% to end at its lowest closing since the index was launched in July 2020. Meituan fell 3.3% and Alibaba shed 2.6%.

Japanese stocks close lower, dragged by falls in food and electronics stocks amid thin trading and continued uncertainty over the Omicron variant. Beverage maker Kirin Holdings dropped 2.9%, while sensor company Keyence lost 2.4%. The Nikkei Stock Average fell 0.6% to 28906.88. Investors remain focused on any updates on the Covid-19 variant and governments' responses. USD/JPY is at 114.88 compared with 114.82 as of Tuesday 5 p.m. Eastern Time. The 10-year Japanese government bond yield falls half-a-basis point to 0.055%.

Europe

European shares largely fall, dragged lower by travel, tech, automotive and oil stocks amid jitters around rising coronavirus cases. The Stoxx Europe 600 is down 0.1%, the CAC 40 drops 0.3% and the DAX retreats 0.7%, though gains for utilities, industrial and retail stocks help boost the FTSE 100 by 0.7%. Brent crude backtracks 0.4% to $78.32 a barrel.

"Rising US and European Covid cases bring short-term concerns, but the Omicron variant also shows the potential to replace the deadlier Delta strain," IG analyst Joshua Mahony says. "Growth stocks are losing momentum in the US, with expectations of higher interest rates putting pressure on stocks with lofty valuations."

North America

US stocks rose Wednesday in a choppy session exacerbated by thin trading volumes during the final days of the year.

The S&P 500 gained 0.14% to another closing record after swinging between gains and losses earlier in the session. The Dow Jones Industrial Average added about 90 points, or 0.25%, marking the blue-chip index's sixth consecutive session of gains. The technology-heavy Nasdaq Composite finished 0.1% lower.

Both the S&P 500 and the Dow are on track to close at new records.

Stocks are in the midst of what is known as the "Santa Claus rally," or the period that includes the year's last five trading days and the first two sessions of the new year. Since 1950, the S&P 500 has ended higher about 77% of the time during the period, according to Dow Jones Market Data, with an average gain of 1.3%.

Heading into the new year, investors said there are reasons for optimism, with many expecting a continued economic recovery ahead. Money-managers said they are also becoming more comfortable with the view that the Covid-19 Omicron variant may not lead to harsh restrictions on commerce and movement. State governors are implementing light-touch measures to try to avoid disruptions.

"There's an element of positivity. The data continues to suggest that the disease itself caused by Omicron is materially less severe than the variants which have preceded it," said James Athey, an investment manager at Abrdn. "That's always been the endgame for the pandemic."

Investors' subsiding fears over the Omicron variant have helped propel stocks higher in recent sessions. The S&P 500 is now up 1.6% for the week and almost 28% for the year.
Movements this week, however, have been exacerbated by lower-than-average trading volumes due to the holiday season. Trading volumes reached the lowest level all year on Tuesday, according to a composite metric that includes the New York Stock Exchange and the Nasdaq. Investors said some of the choppiness this week has also likely been driven by portfolio repositioning.

"Institutions and indviduals are trying to get ahead of the year-end mark," said Jason Pride, chief investment officer for private wealth at Glenmede.

Among the S&P 500's 11 sectors, only the energy and communication services sectors fell in afternoon trading Wednesday. But technology and travel stocks also struggled. Chip-maker Advanced Micro Devices and American Airlines Group posted among the biggest declines in the S&P 500, with losses of 3.5% and 2.8%, respectively.

Apple added 0.2% and recently traded at $179.61. Investors have been keeping a close watch on the tech behemoth's trading as it edges closer to becoming the first company to close above a $3 trillion market capitalization. Apple would need to close above $182.856 to reach the milestone.

Tesla gained 0.1%. Chief Executive Elon Musk exercised the final batch of a package of vested stock options, a series of transactions that have boosted his stake in the company.

is the editorial manager for Morningstar Australia. Connect with Emma on Twitter @rap_reports. You can email Morningstar's editorial team editorialAU[at]morningstar[dot]com

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