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Global Market Report - 4 June

Lex Hall  |  04 Jun 2020Text size  Decrease  Increase  |  
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Australia

Traders can look forward to good early gains on the Australian share market after a broad rally on Wall Street overnight.

The SPI 200 futures contract was higher by 73 points, or 1.23 per cent, to 5,999.0 at 8am Sydney time on Thursday.

In the US, a spate of grim economic data was not as bad as economists feared, and recovery continues from the coronavirus pandemic.

A survey from payroll processor ADP said that private employers cut nearly 2.8 million jobs last month but that was much milder than the 9.3 million that economists told investors to expect.

That raises optimism that Friday's more comprehensive jobs report from the US government may also not be as bad as feared.

Financials, industrials and tech pushed the three major US stock indexes well into the black.

The S&P 500 rose 42.05 points to 3,122.87. The Dow Jones Industrial Average gained 527.24 points, or 2 per cent, to 26,269.89, and the Nasdaq composite rose 74.54, or 0.8 per cent, to 9.682.91.

In Australia, international and retail trade figures for April will be released on Thursday.

The federal government has announced a $688 million HomeBuilder scheme that should help companies in residential construction.

The scheme will offer grants to people who sign contracts to build or renovate their home until the end of the year.

The S&P/ASX200 benchmark index finished Wednesday close to the highs of the day, up 106.5 points, or 1.83 per cent, at 5,941.6 points, while the All Ordinaries index gained 104.8 points, or 1.76 per cent, at 6,064.9.

One Australian dollar was buying 69.22 US cents at 8am, down from 69.37 US cents on Wednesday.

Demand for iron ore is keeping the dollar hovering around its highest point since January.

Asia

China stocks pared earlier gains to end roughly flat on Wednesday, as worries persisted over the ongoing Sino-US tensions.

The blue-chip CSI300 index was unchanged at 3,983.65, while the Shanghai Composite Index rose 0.1 per cent to 2,923.37.

In Hong Kong, the Hang Seng index was up 329.68 points, or 1.37 per cent, at 24,325.62, its highest since 21 May. The Hang Seng China Enterprises index rose 0.92 per cent to 9,967.53.

The MSCI world equity index, which tracks shares in 49 countries, rose to its highest since 6 March, having gained throughout the Asian session.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.7 per cent, while Japan’s Nikkei index closed up 1.29 per cent.

Europe

European shares rallied on Wednesday, with insurers jumping after France’s AXA said it would pay a dividend, while improving global data spurred bets of faster economic recovery from the coronavirus crisis.

The pan-European STOXX 600 rose 2.5 per cent to close at its highest since 6 March, with Germany's DAX outpacing the rest of Europe with a 3.9 per cent gain.

The German index recorded its strongest close since Feb 27, and is just 9.5 per cent below its all-time high.

European markets have performed strongly so far this week as several countries eased strict lockdown measures, while hopes of more stimulus and encouraging developments on a potential COVID-19 treatment have helped the STOXX 600 recover more than 37 per cent from March lows.

China’s services sector returned to growth in May, a survey showed, while data from the euro zone suggested the worst of the pandemic’s economic impact was over.

The European Central Bank meets on Thursday and is expected to increase its bond purchases by 500 billion euros.

Insurers, automakers, banks and travel & leisure stocks led the gains, up between 3.8 per cent and 6.8 per cent, as investors found value in beaten-up cyclical sectors.

AXA jumped 10.4 per cent after saying it would pay a 2019 dividend to shareholders and shares in Allianz, Prudential and Generali also rose between 7.8 per cent and 8.5 per cent.

Renault surged 10.5 per cent after it finalised a 5 billion euro ($8 billion) loan from the French government and Goldman Sachs upgraded its stock to “buy”.

Shares in Infineon technologies, AMS and ASM International rose between 3.8 per cent and 7.3 per cent after US chipmaker Microchip raised its earnings forecast.

Lufthansa gained 7.7 per cent as it vowed to step up restructuring measures after posting a first-quarter net loss of 2.1 billion euros ($3.41 billion).

North America

Wall Street rallied broadly on Wednesday with the Nasdaq approaching record highs as signs of an economic recovery from mandated shutdowns helped investors look beyond US social unrest and pandemic worries.

Financials, industrials and tech pushed the three major US stock indexes well into the black. The S&P 500 and the Nasdaq each posted their fourth straight day of solid gains.

The Nasdaq, the S&P 500 and the Dow have rebounded sharply from March lows as coronavirus-related lockdowns shocked the stock market, and they are now 1.4 per cent, 7.8 per cent, and 11.1 per cent, respectively, away from overtaking all-time closing highs set in February.

The Nasdaq 100 is now just over 0.1 per cent below its February record, having briefly breached that level late in the session.

Nationwide protests over the death of an unarmed black man in police custody extended to an eighth night as protesters ignored curfews, but violence subsided after President Donald Trump threatened to deploy the military.

A spate of grim economic data was not as bad as economists feared, with ADP reporting many fewer private-sector job cuts in May than expected.

Market participants now await the US Labor Department’s more comprehensive May jobs report, which is expected to show unemployment soaring to a historic 19.7 per cent.

The Dow Jones Industrial Average rose 527.24 points, or 2.05 per cent, to 26,269.89, the S&P 500 gained 42.05 points, or 1.36 per cent, to 3,122.87 and the Nasdaq Composite added 74.54 points, or 0.78 per cent, to 9,682.91.

Of the 11 major sectors in the S&P 500, all but healthcare closed in positive territory, with industrials and financials enjoying the biggest percentage gains.

Boeing Co gave the biggest boost to the blue-chip Dow, its shares rising 12.9 per cent following news that billionaire investor Daniel Loeb’s Third Point had taken a stake in the company.

Lyft Inc jumped 8.7 per cent after the ride-sharing platform reported rides increased 26 per cent in May.

Microchip Technology Inc surged 12.3 per cent after the chipmaker raised its forecast for current-quarter sales and profit.

Teleconferencing firm Zoom Communications Inc nearly doubled its annual sales expectations, but also reported a sharp rise in costs. Its shares were up 7.6 per cent.

Cosmetics maker Coty Inc rose 13.4 per cent after announcing it was in talks to collaborate on a beauty line with reality TV star Kim Kardashian West.

Campbell Soup Co beat earnings expectations and hiked its full-year forecast, but troubles meeting surging consumer demand sent its shares down 6.1 per cent.

is content editor for Morningstar Australia

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