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Global Market Report - 30 November

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

The ASX is set to rise after Wall Street rebounded from Friday's dip.

The Australian SPI 200 futures contract was up 45 points or 0.62% at 7259 near 7.30 am AEST on Tuesday, suggesting a positive start to trading.

Stocks bounced back from Friday's selloff, with investors betting that the Omicron Covid-19 variant will cause less damage to the global economic recovery than initially feared.

The S&P 500 jumped 1.3%, recouping many of its losses after the index suffered its worst one-day percentage decline in nine months. Friday's selloff came after South Africa identified a fast-spreading strain of the coronavirus, which the World Health Organization named Omicron, and countries around the world responded with a fresh wave of travel restrictions.

The Nasdaq Composite advanced 1.9% on Monday, boosted by investor appetite for technology stocks. The Dow Jones Industrial Average added about 236 points, or 0.7%.

The Australian dollar was buying 71.27 US cents near 7.00am AEST, up from the previous close of 71.21. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, was up at 90.21.

Locally, the S&P/ASX 200 closed 0.5% lower at 7239.7, paring early losses as futures pointed to US equities bouncing back from Friday's Omicron-driven selloff.

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The benchmark was down 1.4% in early trade before partially recovering amid hopes that the latest Covid-19 variant may not be as deadly as initially feared. Qantas, Webjet and Corporate Travel Management still lost between 2.0% and 2.8%.

Banking stocks continued their recent retreat, with Westpac, Commonwealth, NAB and ANZ falling between 0.8% and 1.7%. The financial sector has fallen 8.0% in November amid concern over squeezed lending margins.

The materials and tech sectors rose by 0.7% and 0.6%, respectively.

There's reason to look past the likely fall in third quarter GDP, due out this Wednesday, said NAB on Tuesday. Even if it comes in as weak as -3.8% on-quarter as expected, it will be of debatable significance given that it references a period when more than half the population was in lockdown, NAB said. Since then, activity has rebounded sharply with the level of payroll jobs now 0.8% higher than they were midyear.

Gold futures edged 0.1% lower to $US1786.40 an ounce; Brent crude was 0.15% higher at $US72.83 a barrel; Iron ore was up at 6.8% at US$103.27.

The yield on the Australian 10-year bond moved up to 1.74%; The US 10-year Treasury yield recovered some ground from Friday, rising to 1.52%.

Asia

Chinese stocks finished mixed on Monday as concerns about the Omicron variant of the coronavirus weighed on travel and tourism-related sectors, offsetting gains among liquor makers. The Shanghai Composite Index was flat, the Shenzhen Composite Index added 0.4% and the ChiNext Price Index was 1.0% higher.

Hong Kong shares ended 0.9% lower amid persistent worries over how the Omicron variant will weigh on the global economy. Casino stocks led the losses, as sentiment was also hit by news that an arrest warrant was issued for the head of Macau's largest junket group over cross-border gambling. Wynn Macau fell 7.8%, Galaxy Entertainment Group lost 5.4% and Sands China was 5.3% lower.

Japanese stocks closed mostly lower, led by sharp falls in auto and transportation stocks, as concerns grow about travel and other restrictions in response to the emerging Omicron variant. The Nikkei Stock Average fell 1.6%. Nissan Motor fell 5.6% and Tokyo Disney Resort-operator Oriental Land dropped 4.8%. The Japanese government announced it will bar new entry of foreigners to the country.

Europe

European stocks rebounded at the start of the week after big losses on Friday. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies rose 0.7%.

In London, the FTSE 100 started the week higher on Monday, one of the best performers in Europe, as it closed up 0.9%. The index has recovered gains following the major losses suffered on Friday following the news of the Covid-19 Omicron variant.

"The rebound today is a natural reaction to Friday's drama, which in itself was perhaps overdone and a reflection of the half day and low volumes prevailing on Wall Street. Dip buyers are emerging across a host of sectors, and as ever it will take a while for the market to claw back all the losses suffered last week," says Chris Beauchamp, chief market analyst at IG.

North America

Stocks bounced back from Friday's selloff, with investors betting that the Omicron Covid-19 variant will cause less damage to the global economic recovery than initially feared.

The S&P 500 jumped 1.3%, recouping many of its losses after the index suffered its worst one-day percentage decline in nine months. Friday's selloff came after South Africa identified a fast-spreading strain of the coronavirus, which the World Health Organization named Omicron, and countries around the world responded with a fresh wave of travel restrictions.

The Nasdaq Composite advanced 1.9% on Monday, boosted by investor appetite for technology stocks. The Dow Jones Industrial Average added about 236 points, or 0.7%.

"Friday was a panic selloff," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. "Traders have had time to sit back and breathe a bit," she added, noting that trading volumes were lower over the Thanksgiving holiday weekend, likely exacerbating declines.

Investors are awaiting more clarity on the transmissibility and severity of the Omicron variant and data on how well it can be contained by existing vaccines. Renewed travel bans and coronavirus restrictions could threaten the global recovery. In some of the tougher moves so far, Israel has banned foreigners from entry and Japan has said it would close its borders to foreign visitors until more information about the new variant is available.

President Biden said Monday that Omicron was "not a cause for panic." The administration is working with drug companies to develop contingency plans for vaccines or boosters in case they are needed to fight the new variant, he said. Some analysts expect the economic impact of Omicron to be limited as vaccine manufacturers update their shots to combat it.

"There's less likelihood we see sustained downside from something like a variant because our ability to adapt to it is higher than it was," said Hani Redha, a portfolio manager at PineBridge Investments. "The ability to tailor vaccines makes a huge difference."

Moderna shares shot up 11.8%. The biotech company's stock surged more than 20% Friday after Moderna said it was working to rapidly advance an Omicron-specific booster candidate. US-listed shares of BioNTech, which produces a Covid-19 vaccine with Pfizer, added 4.2% Monday.

Some travel and leisure stocks rebounded after steep losses on Friday. Royal Caribbean Group added 2.8%, while rival cruise operator Carnival rose 0.8%. But Delta Air Lines and American Airlines Group both fell around 1.2%, after swinging between gains and losses.

Technology was the best-performing sector of the S&P 500. Microsoft rose 2.1%, while Apple added 2.2%.

Shares of Twitter fell 2.7% after the social-media company said Jack Dorsey was stepping down as CEO, effective immediately, and being replaced by Parag Agrawal, who was previously Twitter's chief technology officer.

Bitcoin rebounded after the largest cryptocurrency was pummelled by Friday's selloff. The dollar value of bitcoin rose 3% from its level as of 5 pm New York Sunday to about $58,000. Its gains boosted cryptocurrency exchange Coinbase Global, whose shares rose 5.3%.

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

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