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Global Market Report - 4 February

Lex Hall  |  04 Feb 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to open weaker despite gains on Wall St, which included a strong result from Alphabet.  

The Australian SPI 200 futures contract was down 17 points, or 0.3 per cent, at 6,760 points at 8.30am Sydney time on Thursday, suggesting a negative start to trading.

The S&P 500 ended higher on Wednesday, registering a third straight session of gains, with Alphabet Inc’s shares jumping following its strong quarterly results.

The Dow Jones Industrial Average rose 35.13 points, or 0.11 per cent, to 30,722.61, the S&P 500 gained 3.77 points, or 0.10 per cent, to 3,830.08 and the Nasdaq Composite dropped 2.23 points, or 0.02 per cent, to 13,610.54.

Locally, Treasury is examining a HECS-style loan program for businesses, under which pandemic-affected firms can borrow money to be repaid once turnover returns to a predetermined level, The Australian reports.

The S&P/ASX200 benchmark index closed higher by 62 points, or 0.92 per cent, to 6,824.6 on Wednesday.

The All Ordinaries closed higher by 63.4 points, or 0.9 per cent, at 7,090.9.

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The property sector was best, up 2.56 per cent.

Larger sectors health and financials also had large increases of 1.99 and 1.47 per cent respectively.

Gold was down 0.2 per cent at $US1,833.86 an ounce; Oil was up 1.8 per cent at $US58.50 a barrel; Iron ore was up 1.9 per cent to $US152.65 a tonne.

Meanwhile, the Australian dollar was buying 76.20 US cents at 8.30am, up from 76.17 US cents at Wednesday's close.

Asia

China shares ended lower on Wednesday, as profit-taking in tech stocks with high valuations outweighed gains in automakers on expectations of strong sales growth this year.

At the close, the Shanghai Composite index fell 0.46 per cent to 3,517.31 and the blue-chip CSI300 index shed 0.29 per cent.

The CSI300 IT index lost 3.4 per cent, while the STAR50 index tracking Shanghai's tech-focused STAR Board, fell 1.9 per cent.

In Hong Kong, the Hang Seng Index edged up 0.2 per cent to 29,307.46 at the close,

Around the region, MSCI's Asia ex-Japan stock index was firmer by 1.35 per cent, while Japan's Nikkei index closed up 1 per cent.

Europe

European shares rose for the third session on Wednesday as focus remained on a busy day of earnings, with positive sentiment spilling over from Asian markets on hopes of a faster global economic recovery.

Siemens rose 1.8 per cent as the German engineering company raised its 2021 outlook after beating first-quarter expectations on faster-than-anticipated recovery from the covid-19 downturn in China and Germany.

Germany’s DAX index gained 0.8 per cent, while the STOXX 600 index rose 0.9 per cent.

Novo Nordisk added 3.2 per cent after the diabetes drug maker gave upbeat sales and profit forecasts for 2021.

All of the major European sector indexes were in positive territory in early trading.

Swedish truckmaker AB Volvo rose 0.7 per cent after reporting fourth-quarter core earnings above expectations, raising its forecasts for some of its main markets and rolling out a hefty shareholder payout.

Markets remained hopeful for US President Joe Biden’s proposed $1.9 trillion covid-19 aid bill as the Senate took steps to allow Democrats to pass Biden’s package without Republican support.

North America

The S&P 500 ended higher on Wednesday, registering a third straight session of gains, with Alphabet Inc’s shares jumping following its strong quarterly results.

Alphabet shares rose a day after its results, as it benefited from lockdowns that drove retail and other advertisers online.

S&P 500 companies are on track to post earnings growth for the fourth quarter of 2020, data from Refinitiv showed on Wednesday, which would defy expectations for profits to drop 10 per cent due to the pandemic.

The Cboe Volatility index eased, and wild swings in stock prices of GameStop and other social media favourites subsided following a recent trading frenzy.

“The broad tape continues to be strong,” said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.

The recent retail trading activity is likely “to be here for a while,” said O’Rourke. “I don’t know if it’s going to be here with the same intensity ... It’s hard to maintain that type of intensity. What we’ll probably see are coordinated movements in individual names by that crowd.”

Amazon.com Inc shares eased as Jeff Bezos’ surprise move to step down as chief executive quashed optimism about bumper quarterly results. However, analysts were upbeat on the promotion of its cloud computing head to the top job.

The Dow Jones Industrial Average rose 35.13 points, or 0.11 per cent, to 30,722.61, the S&P 500 gained 3.77 points, or 0.10 per cent, to 3,830.08 and the Nasdaq Composite dropped 2.23 points, or 0.02 per cent, to 13,610.54.

US Treasury Secretary Janet Yellen is calling a meeting this week of top officials, including from the US Securities and Exchange Commission and the Federal Reserve, to discuss market volatility driven by retail trading in shares of GameStop, silver and other stocks favoured on social media.

The SEC is reviewing social media posts for signs of potential fraud behind the recent trade frenzy in shares of GameStop and other companies, according to a Bloomberg News report, citing people familiar with the matter.

US President Joe Biden told congressional Democrats he would not back down on including $1,400 checks for struggling Americans in his covid-19 relief plan but would consider tighter limits on who gets them, lawmakers and aides said.

On the economic front, the ADP Report showed hiring by US private employers rebounded by 174,000 in January after a drop in December. A more comprehensive jobs report is expected on Friday.

A separate ISM survey showed US services industry activity raced to its highest level in nearly two years in January.

With Reuters

is senior editor for Morningstar Australia

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