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Global Market Report - 30 September

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

Australian shares are set to follow Wall Street lower as investors staged a cautious retreat in the lead-up to the first presidential debate.

The Australian SPI 200 futures contract was down 47 points, or 0.8 per cent, to 5,888 points at 8.30am Sydney time on Wednesday, suggesting a negative start to trading.

Wall Street closed lower on Tuesday, snapping a three-day winning streak as investors took money off the table hours before the first US presidential debate.

The Dow Jones Industrial Average fell 131.4 points, or 0.48 per cent, to 27,452.66, the S&P 500 lost 16.13 points, or 0.48 per cent, to 3,335.47 and the Nasdaq Composite dropped 32.28 points, or 0.29 per cent, to 11,085.25.

The S&P/ASX200 benchmark index reached a session high of 5,995.4 in the first hour, but then mostly fell away to finish lower by 0.2 points, or 0 per cent, to 5,952.1 points on Tuesday. The All Ordinaries index closed higher by 6.6 points, or 0.11 per cent, to 6,141.5.

Locally, Commonwealth Bank says it’s received further proceeds of approximately $450 million from AIA Group as part of the divestment of the bank’s Australian life insurance business.

Gold was up 0.8 per cent at $US1,897.26 an ounce; Brent oil was down 3.9 per cent to $US40.79 a barrel; Iron ore was up 1.3 per cent to $US117.61 a tonne.

Meanwhile, the Australian dollar was buying 71.30 US cents at 8.30am, up from 70.81 US cents at Tuesday’s close.

Asia

Chinese stocks closed higher on Tuesday with tech shares leading the gains, buoyed by hopes of a sustained domestic economic recovery.

The blue-chip CSI300 index rose 0.2 per cent to 4,591.80, while the Shanghai Composite Index gained 0.21 per cent to 3,224.36 points.

Hong Kong stocks fell on Tuesday as growing concerns over the coronavirus pandemic outweighed China recovery optimism.

The Hang Seng index fell 0.9 per cent to 23,275.53, while the China Enterprises Index dropped 1.1 per cent to 9,281.52 points.

Japanese shares closed at a seven-month high on Tuesday. The Nikkei 225 Index erased early losses and ended 0.12 per cent higher at 23,539.10, the highest since 20 February. However, the broader Topix fell 0.23 per cent to 1,658.10.

Europe

European stocks slipped on Tuesday after solid gains in the previous session, with banks, energy and insurance sectors sliding as coronavirus cases mounted globally.

Investors were mostly in a wait-and-see mode as US Democratic presidential nominee Joe Biden and President Donald Trump prepared for their first debate, five weeks before the presidential election.

The 90-minute showdown will begin at 0100 GMT on Wednesday, with investors seeking hints on policy outlook.

The pan-European STOXX 600 closed down 0.5 per cent, in line with tepid moves across global markets also watching for progress in talks on more US fiscal stimulus.

Banks handed back some of the previous session's 5.6 per cent gain, while other economically sensitive sectors like insurers and energy fell more than 1.5 per cent as the global covid-19 death toll crossed 1 million, a Reuters tally showed.

Still, many investors counted on continued stimulus from central banks and governments to prop up the global economy reeling from the health crisis.

“Our stance on equities is still constructive in the medium-term, even if it’s a bumpy ride due to risks including Brexit, US-China trade friction and uncertainty around the US election,” said Michele Morganti, equity strategist at Generali Insurance Asset Management.

“We feel that recovery is still in place and cyclicals will continue to find favour, and that will help the undervalued regions like Europe versus US.”

Solid gains for European markets on Monday helped the STOXX 600 turn positive for the third quarter, while the benchmark is on course to end September with a more than 1 per cent drop, its biggest since a near 15 per cent decline in March, when pandemic fears hit a peak.

Sensor specialist AMS jumped 6.6 per cent to the top of STOXX 600, with traders pointing to supportive news about lighting group Osram, which it recently took over.

British plumbing parts distributor Ferguson gained 6.0 per cent as it restored its dividend after a series of cost-reduction measures and resilience in its main US business helped it report a 4.1 per cent rise in annual profit.

British baker Greggs slid 8.1 per cent as it cautioned that the outlook was uncertain because of the pandemic and it would have to cut staff jobs and hours.

Finnish valves maker Neles gained 2.2 per cent after Valmet approached the company with a merger proposal, challenging a US$2 billion ($3 billion) bid that Neles' board recommended from Swedish engineering group Alfa Laval. Valmet shares dropped 4.9 per cent.

North America

All three major US stock indexes lost ground. In a reversal from Monday, market leaders Apple, Microsoft Corp and Amazon.com weighed heaviest on the S&P 500 and the Nasdaq.

“Tonight’s presidential debate has the potential to move markets and investors are unlikely to take a large position in front of that,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “Right now, markets are clearly driven by events in Washington, be it fiscal stimulus or the presidential election.”

Market participants eyed the first head-to-head showdown between Republican President Donald Trump and Democratic challenger Joe Biden in a debate expected to air from Cleveland Tuesday evening.

The latest poll shows Biden leading nationally and in a number of battleground states.

While the election has implications for different sectors, notably healthcare, green energy and beneficiaries of Trump’s corporate tax cuts, Goldman Sachs analysts expected a Democratic sweep of the White House and both chambers of Congress would be beneficial to S&P 500 profits through 2024.

“We think markets can do fine with either Trump or Biden, but they need to know who the winner is,” Carter added. “But concern is rising about having a clear election winner in November due partly to so many mail-in ballots, which will take time to count.”

In the closing days of September and the second quarter, the major indexes were on track for their first monthly declines since March, when mandated shutdowns slammed the economy.

Despite September’s expected loss, the S&P and the Nasdaq were on course for their best two-quarter winning streaks since 2009 and 2000, respectively.

US House of Representatives Speaker Nancy Pelosi unveiled a new, US$2.2 trillion ($3 trillion) coronavirus relief bill proposed by House Democrats, a sign of potential progress in the partisan tug-of-war over the new aid package nearly two months after emergency unemployment benefits expired for millions.

Stocks were given a brief boost early in the session by data from the Conference Board, which showed consumer confidence surging past expectations this month with the largest point gain in 17 years.

Among 11 major sectors in the S&P 500, all but communication services closed in the red, with energy and financials suffering the largest percentage losses.

Sorrento Therapeutics jumped 14.3 per cent after the company's covid-19 antibody candidates showed promise in a study.

Fitbit advanced 5.8 per cent after Reuters reported Alphabet was poised to win EU approval for its US$2.1 billion acquisition of the fitness tracker maker.

is content editor for Morningstar Australia

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