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Global Market Report - 30 July

Lewis Jackson  |  30 Jul 2021Text size  Decrease  Increase  |  
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Australia

Australia shares to edge higher after Wall Street closed up on strong economic data and corporate earnings. Chinese stocks continue to rebound.

The Australian SPI 200 futures contract was up 7 points or 0.10 per cent at 7,338 near 7.30 am Sydney time on Friday, suggesting a positive start to trading.

US stocks have ended higher, boosted by robust earnings and forecasts, while data showed the country's economy was above its pre-pandemic level.

The Dow Jones Industrial Average rose 151.49 points, or 0.43 per cent, to 35,082.42, the S&P 500 gained 18.31 points, or 0.42 per cent, to 4,418.95 and the Nasdaq Composite added 15.67 points, or 0.11 per cent, to 14,778.26.

The Australian dollar was buying 73.95 US cents near 7.45am AEST, unchanged from Thursday’s close.

Locally, mining giants' soaring earnings from the iron ore trade have added to investor faith the share market gravy train will not end soon.

Investors on Thursday lapped up the performance of two of the biggest miners on the ASX and powered the indices to near-record levels.

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Andrew Forrest's Fortescue Metals Group beat its annual forecast thanks to record fourth-quarter shipments of the steel-making commodity.

Shares closed up 1.9 per cent to $26.30.

Investors also paid plenty of attention to Rio Tinto's first-half earnings, given after trading closed on Wednesday.

Rio more than doubled profit from the same period last year. Shares closed up 1.47 per cent to $134.17.

BHP had nothing to say but still rose higher by 1.64 per cent to $53.33.

Most share categories rose and the benchmark S&P/ASX200 index closed higher by 38.1 points, or 0.52 per cent, to 7417.4.

The All Ordinaries closed up 45.6 points, or 0.6 per cent, to 7695.2.

The US lead was mixed but investors may have taken comfort from the Federal Reserve's messages after its policy meeting.

Federal Reserve Chair Jerome Powell said the economy was moving closer to the "substantial further progress" required to ease the $US120 billion in bonds it is buying each month.

He gave little regard to the coronavirus' Delta variant blocking economic recovery.

Delta is responsible for the lockdown in Sydney and surrounds.

Deep Data Analytics chief executive Mathan Somasundaram said the US central bank did not want to set a time for easing support.

US inflation was high, he said, and would slow economic growth in the medium term.

Mr Somasundaram said investors were reacting accordingly.

The short-term inflation boom was helping commodity prices and their stocks higher.

Technology stocks also gained as investors chased higher yield, he said.

Both share categories had the biggest gains on the ASX.

Technology shares jumped by 2.59 per cent after Google parent Alphabet overnight posted record quarterly results.

One of the best Aussie tech stocks was electronics design software vendor Altium. Shares jumped 4.03 per cent to $34.33.

Priceline Pharmacy owner Australian Pharmaceutical Industries rejected a takeover offer from Wesfarmers.

API said the $687 million offer for all shares, made earlier this month, undervalued the company.

Wesfarmers shares were down 0.19 per cent to $61.43.

Macquarie Group held its annual general meeting and trimmed its dividend payout range.

Shares were better by 0.29 per cent at $157.13.

The investment group was doing better than the big four banks.

They were all lower. NAB was worst and dropped 0.54 per cent to $25.77.

Share market software vendor Iress jumped 13.91 per cent to $14.25 after rejecting an improved takeover offer.

EQT Fund Management raised its offer from $14.80 per share to a range of $15.30 to $15.50.

The Iress board said this was not in shareholders' best interest. Iress has shared more financial data so EQT can offer more.

Shares in bookmaker PointsBet were in a trading halt after the company said it would raise $400 million.

Sleep apnoea specialist Resmed extended its record share price to $36.16.

Company leaders are due to report four quarter earnings on August 5

Spot Gold was up 1.3 per cent at $US1831.02 an ounce; Brent crude was up 1.1 per cent at $US75.58 a barrel; Iron ore was down 3.3 per cent at $US196.06

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

Asia

At the close, China's Shanghai Composite index was up 1.49 per cent at 3,411.72.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed up 3.30 per cent at 26,315.32.

Japan's Nikkei 225 was up 0.73 per cent at 27,782.42.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 0.46 per cent at 463.84.

The German DAX was up at 15,640.47.

North America

US stocks have ended higher, boosted by robust earnings and forecasts, while data showed the country's economy was above its pre-pandemic level.

The Dow Jones Industrial Average rose 151.49 points, or 0.43 per cent, to 35,082.42, the S&P 500 gained 18.31 points, or 0.42 per cent, to 4,418.95 and the Nasdaq Composite added 15.67 points, or 0.11 per cent, to 14,778.26.

The US economy grew solidly in the second quarter, putting the level of gross domestic product above its pre-pandemic peak but the pace of GDP growth was slower than economists had expected.

Among upbeat corporate reports on Thursday, Ford Motor Co jumped as it lifted its profit forecast for the year while KFC-owner Yum Brands Inc rose after beating expectations for quarterly sales.

Below-forecast GDP levels may be easing some investor concerns that the Federal Reserve's "easy money policy" may be going away soon, said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

Investors also saw "some pretty good earnings today".

Stocks were boosted on Wednesday after the Fedsaid it was not yet time to start withdrawing its massive monetary stimulus.

Economically sensitive groups including financials, materials and energy led S&P sector gains.

The S&P 500 real estate sector hit a record intraday high.

The Fed said there was "very little support" for cutting the $US40 billion ($A54 billion) in monthly purchases of mortgage-backed securities "earlier" than the $US80 billion in Treasuries.

On the down side, Facebook Inc shares fell as the company warned revenue growth would "decelerate significantly" following Apple Inc's recent update to its iOS operating system that would impact the social media giant's ability to target ads.

About half of the S&P 500 companies had reported second-quarter earnings as of Thursday morning.

Nearly 91 per cent of those companies beat profit estimates and second-quarter earnings now are expected to have jumped 87.2 per cent from a year ago, according to Refinitiv data.

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

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