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Global Market Report - 31 August

Lex Hall  |  31 Aug 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to fall despite record gains on Wall St last week.

The Australian SPI 200 futures contract was down 40 points, or 0.7 per cent, to 6,004 points at 8.30am Sydney time on Monday, suggesting a negative start to trading.

Wall Street advanced on Friday, with technology stocks driving the S&P 500 to its sixth record closing high since confirming a bull market on 18 August.

The Dow Jones Industrial Average rose 161.6 points, or 0.57 per cent, to 28,653.87, the S&P 500 gained 23.46 points, or 0.67 per cent, to 3,508.01 and the Nasdaq Composite added 70.30 points, or 0.6 per cent, to 11,695.63.

The S&P/ASX200 benchmark index closed lower by 52.4 points, or 0.86 per cent, to 6,073.8 points on Friday.

The index finished down for the week by 0.61 per cent.

The All Ordinaries index closed lower by 49.8 points, or 0.79 per cent, to 6,260.8.

Locally, IOOF will report today amid expectations it will announce a deal to acquire NAB's MLC wealth business, The Australian reports.

Gold is up 1.8 per cent to $US1,964.83 an ounce; Brent oil is up 0.5 per cent to $US45.81 a barrel; Iron ore is up 1.8 per cent to $US124.37 a tonne.

Meanwhile, the Australian dollar was buying 73.61 US cents at 8.30am, up from 72.94 US cents at Friday’s close.

Asia

The Chinese stock market climbed on Friday, with blue-chip shares clocking their best week in four, as sentiment was supported by improving economic data and a slew of new listings.

The Shanghai Composite index closed up 1.6 per cent at 3,403.81. The blue-chip CSI300 index jumped 2.4 per cent.

Stocks clung on to a momentum this week that was fuelled by upbeat data showing improving industrial profits and a surge in the start-up Chinext board.

The CSI300 rose 2.7 per cent this week—its best in four—and Shanghai shares up 0.7 per cent for the week, their best in three.

Hong Kong's stock market rose on Friday, reaching its highest in over a month at one point, on expectations that global monetary policy will remain supportive and the spread of COVID-19 will further slow in the financial hub.

The Hang Seng index closed 0.6 per cent higher on Friday at 25,422.06, a bit lower than the one-month high hit earlier in the session, but the benchmark still managed a weekly gain of 1.2 per cent. The Hang Seng China Enterprises index fell 0.2 per cent.

Japanese shares fell on Friday by their most in almost a month on news Prime Minister Shinzo Abe will resign, bringing an abrupt end to his stable government and policy mix of aggressive monetary and fiscal stimulus dubbed Abenomics.

The Nikkei share average declined 2.65 per cent at one point before closing 1.41 per cent lower at 22,882.65.

Europe

European stocks slipped on Friday as investors dumped this year’s outperformers including technology and healthcare stocks and bid up banking shares after the US Federal Reserve unveiled its new policy framework.

The pan-European STOXX 600 index slipped 0.5 per cent, but still ended the week about 1 per cent higher after signs of progress in covid-19 treatments and vaccines spurred optimism earlier in the week.

Technology stocks, which have surged about 11 per cent this year, were down 0.8 per cent, and the healthcare index fell 1.1 per cent.

Fed Chairman Jerome Powell announced a new policy framework on Thursday, which focuses more on boosting US economic growth and less on worries that inflation could be running too high.

Interest rate-sensitive banks, which have so far lagged the broader markets, jumped nearly 1.7 per cent and were among the best sectoral performers this week.

Shares in BNP Paribas, HSBC and Banco Santander rose between 0.6 per cent and 3.6 per cent, providing the biggest boost to the STOXX 600.

Still, with coronavirus cases picking up again in Europe, investors fear that could impede an economic rebound from a crash in the second-quarter, though optimism around the development of a covid-19 treatment has helped calm some jitters.

Data on Friday showed German consumer morale worsened heading into September, casting some doubt on whether household spending in Europe’s largest economy is powerful enough to spur a recovery.

Norwegian Air tumbled 9.5 per cent after the budget carrier said it still needed more cash to weather the covid-19 pandemic as it reported a deep loss for the first half of 2020.

Italian state-owned bank Monte Dei Paschi di Siena gained 2.7 per cent as it received a conditional green light from the European Central Bank for its bad loan clean-up plan.

Shares in German drugs company Bayer fell 2.7 per cent. It said there were “bumps” in sealing its US$11 billion ($15 billion) settlement of US lawsuits over its Roundup weed killer after a US judge cast doubt on the progress of the agreement.

North America

The Nasdaq also set an all-time closing high and the blue-chip Dow is now in positive territory year-to-date.

The S&P 500 is close to wrapping up what appears to be its best August in 34 years.

All three major US stock indexes ended the week higher than last Friday’s close, marking the fifth consecutive weekly gains for the S&P and the Nasdaq.

Stocks extended their gains after a top aide to President Donald Trump said the president is willing to sign a US$1.3 trillion ($1.76 trillion) coronavirus relief bill, four weeks after emergency unemployment benefits expired for millions of Americans.

Economic data released before the bell showed American consumers, who account for about 70 per cent of the US economy, increased their spending more than expected in July but the savings rate, a barometer of consumer uncertainty, remained elevated well above pre-pandemic levels.

The personal consumption expenditures core index, which excludes food and energy, rose at a rate of 1.3 per cent year-on-year. On Thursday, US Federal Reserve Chair Jerome Powell unveiled a new monetary strategy adopting an average annual inflation target of 2 per cent, implying the central bank could keep key interest rates near zero even if inflation rises above its target.

Energy stocks ended the session with the largest percentage gain among the major S&P sectors, rising 1.9 per cent after Hurricane Laura passed through the Gulf region without causing widespread damage and oil rigs and refineries began to restart operations.

United Airlines and Coca-Cola Co rose 3.1 per cent and 3.3 per cent, respectively as they prepared for cost-cutting efforts including furloughs and voluntary separations.

But tech companies continue to benefit from companies shifting to a work-from-home model.

Business software company Workday Inc jumped 12.6 per cent after raising its annual subscription forecast and Dell Technologies Inc rose 6.1 per cent following its quarterly profit beat.

Walmart Inc announced it was joining Microsoft Corp in its bid for TikTok’s US assets from Chinese owner ByteDance.

Shares of Walmart and Microsoft advanced 2.7 per cent and 1.0 per cent, respectively.

Nutanix Inc soared by 29.2 per cent after the cloud service provider beat earnings expectations and Bain Capital invested about US$750 million in the company.

is content editor for Morningstar Australia

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