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Global Market Report - 4 December

Emma Rapaport  |  04 Dec 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to fall after a late sell-off in New York pushed the S&P 500 into negative territory.

The Australian SPI 200 futures contract was down 7 points to 6,611 near 8am Sydney-time, reversing earlier gains, suggesting a negative start to trading.

The Nasdaq Composite Index closed at a record high on Thursday, lifted by Tesla Inc , while the S&P 500 fell after a report that Pfizer Inc had slashed the target for the rollout of its covid-19 vaccine.

The Dow Jones Industrial Average rose 0.29 per cent to end at 29,969.52 points, while the S&P 500 lost 0.06 per cent to 3,666.72.

Locally, the S&P/ASX200 benchmark index closed up 25.1 points, or 0.38 per cent, to 6,615.3 on Thursday, after US markets had mixed results.

The materials sector, which includes miners, was the standout and gained 3.79 per cent after two key developments.

Major Brazilian miner Vale overnight said it would not meet its production forecast for iron ore this year.

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The miner, like much of Brazil, has grappled with coronavirus infections and restrictions.

The report means more demand for Australian iron ore from Chinese steel makers.

Investors pounced. Fortescue Metals, which focuses on iron ore more than its main rivals, reached a record price of $20.77. Shares closed 13.27 per cent higher to $20.65.

Rio Tinto gained 6.87 per cent to $112.20 and BHP rose 4.94 per cent to $41.25.

There was more good news in data which showed exports rebounding, home loans at record levels and construction activity at a two-year high.

The monthly trade surplus grew to $7.5 billion from $5.8 billion in October, buoyed by a larger-than-expected five per cent jump in exports.

Other Australian Bureau of Statistics data showed the value of home loans for owner-occupiers in October rose 0.8 per cent to a record high $17.4 billion, to be more than 30 per cent higher than a year earlier.

Qantas boss Alan Joyce expects the number of people flying overseas will not improve until mid-next year, when a significant part of the world's population has been vaccinated for the coronavirus.

Macquarie Group is expanding and will buy a US wealth manager for $2.3 billion and partner with another.

Gold was up 0.3 per cent at $US1,837.16 an ounce; Brent oil was up 1.1 per cent to $US48.79 a barrel; Iron ore was up 0.6 per cent to $US137.08 a tonne.

Meanwhile, the Australian dollar jumped to a new mullti-month high on Friday morning, hitting 74.50 US cents.

Asia

China stocks ended lower on Thursday, weighed down by fresh tensions between Beijing and Washington after the US House of Representatives passed a bill that threatens to delist Chinese companies from US stock exchanges.

Both Democrats and Donald Trump’s fellow Republicans echoed the president’s hard line against Beijing, which has became fiercer this year as Trump blamed China for the coronavirus ravaging the United States.

Sino-US relations have been a key factor influencing market sentiment since the outbreak of the trade war in 2018. On Wednesday, US President-elect Joe Biden told the New York Times that he will not immediately cancel the trade agreement that President Donald Trump struck with China nor take steps to remove tariffs on Chinese exports.

At the close, the Shanghai Composite index was down 0.21 per cent at 3,442.14, while the blue-chip CSI300 index was down 0.2 per cent.

The smaller Shenzhen index ended up 0.08 per cent and the start-up board ChiNext Composite index was higher by 1.101 per cent.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.27 per cent, while Japan’s Nikkei index closed up 0.03 per cent.

Europe

European shares ended little changed on Thursday, as a surge in material stocks and Rolls-Royce helped counter downbeat business activity data from the region and Brexit trade deal uncertainty.

London’s FTSE 100 reversed losses to hit a six-month high, up 0.4 per cent, with miners Rio Tinto, Glencore and Anglo American providing the biggest boosts on record iron ore prices and buoyant copper.

Rolls-Royce surged 16 per cent to top London’s blue-chip index, as well as the pan-European STOXX 600 benchmark after a report said it was considering a possible re-entry into the narrow-body jetliner market.

Germany’s DAX led declines on the day, down 0.5 per cent, while France’s CAC 40 lost 0.2 per cent.

North America

The Nasdaq Composite Index closed at a record high on Thursday, lifted by Tesla Inc , while the S&P 500 fell after a report that Pfizer Inc had slashed the target for the rollout of its covid-19 vaccine.

Tesla surged 5 per cent after Goldman Sachs upgraded the stock to “buy” in the run-up to the electric car maker’s addition to the S&P 500 index.

Tesla was Wall Street’s most traded stock by value, with about $25 billion worth of shares exchanged, according to Refinitiv data, more than double Boeing, in second place.

The widely followed S&P 500 fell from all-time highs late in the session after the Wall Street Journal reported that Pfizer faced supply chain obstacles related to the vaccine, sending its stock down 1.7 per cent.

Progress in developing a working covid-19 vaccine before the end of the year has driven Wall Street’s main indexes to record levels in recent days. Despite the economic destruction caused by the pandemic, the S&P 500 has gained about 13 per cent in 2020.

Six of 11 S&P 500 sector indexes rose, led by a 1 per cent gain in energy.

The Dow Jones Industrial Average rose 0.29 per cent to end at 29,969.52 points, while the S&P 500 lost 0.06 per cent to 3,666.72.

is the editorial manager for Morningstar Australia. Connect with Emma on Twitter @rap_reports. You can email Morningstar's editorial team editorialAU[at]morningstar[dot]com

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