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Global Market Report - 30 October

Lex Hall  |  30 Oct 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise as upbeat earnings from tech heavyweights and positive economic data boosted Wall Street.

The Australian SPI 200 futures contract was up 41 points, or 0.7 per cent, to 5977 points at 8.30am Sydney time on Friday, suggesting a positive start to trading.

US stocks closed higher on Thursday, with the technology heavyweights rallying ahead of major earnings reports and upbeat domestic economic data calming investor jitters about surging coronavirus cases.

The Dow Jones Industrial Average closed up 139.16 points, or 0.52 per cent, to 26,659.11. The S&P 500 gained 39.08 points, or 1.19 per cent, to 3,310.11 and the Nasdaq Composite added 180.73 points, or 1.64 per cent, to 11,185.59.

Locally, California-based private equity and credit investment giant Ares Management is in talks to buy embattled Australian wealth manager AMP, only six weeks after the 170-year-old company put itself up for sale, the AFR reports.

The S&P/ASX200 benchmark index finished up 6.7 points, or 0.11 per cent, to 6057.7 on Wednesday. The All Ordinaries closed higher by 15.3 points, or 0.24 per cent, to 6262.5.

Gold was down 0.4 per cent at $US1868.85 an ounce; Brent oil was down3.6 per cent to $US37.70 a barrel; Iron ore was down 0.7 per cent to $US116.00 a tonne.

Meanwhile, the Australian dollar was buying 70.26 US cents at 8.30am, down from 71.53 US cents at Thursday’s close.

Asia

China stocks eked out gains on Thursday, bucking a global selloff, supported by the consumer sector after leading companies posted robust third-quarter earnings.

The CSI300 index rose 0.5 per cent to 4,760.90 points at the end of the morning session, while the Shanghai Composite Index gained 0.1 per cent to 3,271.72 points.

The tech-heavy start-up board ChiNext added 0.7 per cent, while the STAR50 index inched up 0.2 per cent.

Leading the gains, the CSI300 consumer staples index rose 2.7 per cent while the CSI300 consumer discretionary index climbed 2.1 per cent

Hong Kong stocks fell to a one-week low, joining a global equity sell-off prompted by fears over rising covid infections and the US election outcome.

The Hang Seng Index fell by as much as 1.8 per cent in early trading before closing down 0.5 per cent at 24,586.60. Gains in some technology stocks helped pare the losses.

Japan’s Nikkei 225 slid 0.4 per cent.

Europe

European stocks ended a volatile Thursday weaker, hitting session lows after the European Central Bank left its ultra-easy policy unchanged and hinted at more support in December.

The pan-European STOXX 600 index closed down 0.1 per cent, having fallen up to 1 per cent after the ECB resisted pressure to unveil more stimulus amid a new wave of the pandemic, but provided the clearest hint yet of fresh easing at its next meeting in December.

Thursday’s moves follow a sharp sell-off in the previous session when Germany and France imposed nationwide restrictions—nearly as severe as the ones that drove the global economy this year into its deepest recession in generations—as coronavirus cases surged.

Rebounding from five-month lows, the German DAX advanced 0.3 per cent, supported by the communications and technology sector.

Spain's IBEX underperformed, closing down 1 per cent at a seven-month low. Bank of Spain called for a more bold response from the European Union to help firms and households weather any deterioration in the covid-19 crisis, warning of risks to the stability of the banking sector.

Europe's tech sector rose 1.1 per cent lifted by Dutch chip equipment supplier ASM International's 6.5 per cent gain as it raised its fourth-quarter guidance.

Oil major Royal Dutch Shell rose 3.6 per cent on raising dividend after handily beating third-quarter profit forecasts. This saw the energy sector rise more than 1 per cent despite sliding oil prices.

Leading gains was the travel sector, posting its biggest intraday gain in over three weeks, as Flutter Entertainment jumped 8.3 per cent on the possibility of entering the elite Euro STOXX 50 blue-chip index.

The jump helped Ireland's ISEQ log its best day since May.

In the busiest day for European reporting season, telecom stocks took a beating as Finnish telecom network equipment maker Nokia slumped 18.5 per cent after it cut its full-year profit forecast.

North America

US stocks closed higher on Thursday, with the technology heavyweights rallying ahead of major earnings reports and upbeat domestic economic data calming investor jitters about surging coronavirus cases.

The rebound came after a more than 3 per cent slide a day earlier in Wall Street’s main indexes, underscoring heightened market volatility ahead of the presidential election next week and growing fears of another covid slowdown.

Stocks rallied as investors anticipated strong results from a line-up of the biggest names in the US corporate universe—Apple, Amazon.com Inc, Google parent Alphabet Inc and Facebook—due after market close.

“The earnings season so far has resulted in significant positive earnings surprises,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “We think that’s helping to fuel today’s rally in anticipation of positive surprises from these companies.”

Tech companies have seen demand surge for their products and services from people stuck at home during the pandemic. Better-than-expected earnings from Pinterest, which forecast a rebound in ad spending, helped spur the rally. Shares of the image-sharing company soared more than 26.9 per cent.

Amazon’s third-quarter revenue beat Wall Street estimates as the pandemic pushed more people to shop online for groceries and other essential items on its platform. Net sales rose to US$96.15 billion from US$69.98 billion a year earlier.

Alphabet reported revenue rose to US$46.17 billion from US$40.5 billion a year earlier as the company returned to sales growth in the third quarter as businesses initially hobbled by covid resumed advertising.

Alphabet rose 7.9 per cent after the bell but Amazon shares fell.

The NYSE FANG+TM Index closed 3.85 per cent higher. Communication services, materials and technology rose the most among major S&P sectors.

Sentiment also got a boost from data showing the US economy grew at a record pace in the third quarter after the government poured out more than $3 trillion of pandemic aid. A separate report showed weekly unemployment claims fell last week.

“It’s positive data, but it’s a little bit backward looking because you have covid-19 cases on the rise again which doesn’t really send a strong signal about the fourth quarter,” said Shawn Snyder, head of investment strategy at Citi Personal Wealth Management in New York.

The CBOE volatility index surged to a 15-week high this week due to lack of fiscal stimulus, while the White House coronavirus task force urged for aggressive measures to curb the pandemic.

Democratic challenger Joe Biden holds a comfortable lead over President Donald Trump in national polls, but the race in battleground states that will likely decide the election are tighter than the national surveys.

The Dow Jones Industrial Average closed up 139.16 points, or 0.52 per cent, to 26,659.11. The S&P 500 gained 39.08 points, or 1.19 per cent, to 3,310.11 and the Nasdaq Composite added 180.73 points, or 1.64 per cent, to 11,185.59.

Volume on US exchanges was 9.74 billion shares.

Moderna Inc, the largest gainer on the Nasdaq 100, rose 8.4 per cent. The company said it was on track to report early data from a late-stage trial of its experimental covid-19 vaccine next month, offering the clearest timeline yet for when the world will know whether it is effective.

Coach owner Tapestry climbed 4 per cent as it beat quarterly profit estimates and forecast growth for the year as demand for luxury handbags and apparel rebounded in China from pandemic lows.

is content editor for Morningstar Australia

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