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Global Market Report - 5 August

Lewis Jackson  |  05 Aug 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to edge down as Wall Street ended mostly lower after data showed the US economy added fewer jobs than expected in July.

The Australian SPI 200 futures contract was down 13 points or 0.18 per cent at 7,398 near 7.30 am Sydney time on Thursday, suggesting a negative start to trading.

Wall Street's main indexes have closed mostly lower, with the S&P 500 falling from a record high hit a day earlier as data signalled a sharp slowdown in jobs growth in July, while General Motors tracked its worst day in more than a year despite a record pre-tax profit.

The Dow Jones Industrial Average fell 323.34 points, or 0.92 per cent, to 34,793.06, the S&P 500 lost 20.46 points, or 0.46 per cent, to 4,402.69 and the Nasdaq Composite added 19.24 points, or 0.13 per cent, to 14,780.53.

The Australian dollar was buying 73.80 US cents near 7.30am AEST, down from 74.14 US cents at Wednesday’s close.

Locally, the ASX200 has closed higher than 7500 points for the first time as robust economic forecasts and a falling dollar help investors look beyond coronavirus lockdowns.

The market reset records for the second day this week, helped by BHP gaining more than two per cent and a good US lead.

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ThinkMarkets analyst Carl Capolingua said US payment provider Square's $39 billion offer for Afterpay on Monday showed a lower Aussie dollar was helping shares look appealing to overseas investors.

"There is lots of cash out there, and with a falling Aussie dollar there are going to be lots of takeovers," he said.

Mr Capolingua also said it was possible investors may direct some money from China to Australia, given China's regulatory crackdowns.

Shares in US and European-listed gaming companies fell overnight after fears the sector could be next in regulators' crosshairs.

China recently set new rules for private education providers, which caused stock prices to slump.

Australia's economy has its own challenges. People in southeast Queensland and NSW are enduring coronavirus lockdowns. The latter again had more than 200 daily infections.

Yet the Reserve Bank on Tuesday said the economy would recover from the lockdowns and grow by more than four per cent next year.

Investors on Wednesday put much of their money into materials shares.

Rio Tinto improved by 1.52 per cent to $134.40. Fortescue was better by 0.38 per cent to $24.09.

There was also money for energy shares. They rose by 0.89 per cent.

The benchmark S&P/ASX200 index closed higher by 28.7 points, or 0.38 per cent, to 7503.2.

The index earlier achieved its best level in history of 7509.2.

The All Ordinaries closed up 28.2 points, or 0.36 per cent, to 7778.7.

Wesfarmers shares traded for the most in their history, $62.76.

The Bunnings owner has recently tried to buy Australian Pharmaceutical Industries but has so far been unsuccessful.

Shares closed higher by 0.55 per cent to $62.55.

Air New Zealand forecast a bigger financial hit after New Zealand suspended its travel bubble with Australia.

The airline forecast losses before significant items and tax to worsen from the previously stated $NZ450 million ($A427 million) to $NZ530 million ($A503 million) this financial year.

The company updated its estimate after New Zealand suspended quarantine-free travel from July 23 for eight weeks due to COVID-19 in Australia.

Shares were lower by 0.71 per cent to $1.40.

Genworth Mortgage Insurance reported a first-half earnings gain after a loss in the same period last year.

Low interest rates and a booming housing market helped a first-half net profit after tax of $59.4 million.

Shareholders will receive an interim payout of five cents per share. They received nothing at the same time last year.

Shares were up 7.55 per cent to $2.28.

In banking, the Commonwealth was best of the big four banks.

Its shares rose 0.77 per cent to $102.23.

Afterpay's momentum appeared to have subsided after Square's bid prompted gains of more than 30 per cent over the past two days.

Shares on Wednesday closed lower by 0.92 per cent to $126.67.

Property group Dexus said it had settled the sale of a property in North Sydney for $273 million.

The funds will be used to repay debt.

Shares were down 0.48 per cent to $10.40.

Spot Gold was up 0.1 per cent at $US1811.96 an ounce; Brent crude was down 2.5 per cent at $US70.61 a barrel; Iron ore was down 0.5 US cents at $US183.69

The yield on the Australian 10-year bond closed at 1.14 per cent.

Asia

At the close, China's Shanghai Composite index was up 0.85 per cent at 3,447.22.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed up 0.88 per cent at 26,426.55.

Japan's Nikkei 225 was down 0.21 per cent at 27,584.08.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 0.61 per cent at 468.22.

The German DAX was up at 15,692.13.

North America

Wall Street's main indexes have closed mostly lower, with the S&P 500 falling from a record high hit a day earlier as data signalled a sharp slowdown in jobs growth in July, while General Motors tracked its worst day in more than a year despite a record pre-tax profit.

The Dow Jones Industrial Average fell 323.34 points, or 0.92 per cent, to 34,793.06, the S&P 500 lost 20.46 points, or 0.46 per cent, to 4,402.69 and the Nasdaq Composite added 19.24 points, or 0.13 per cent, to 14,780.53.

Nine of the 11 S&P indexes were lower, with industrials and energy both slipping as data showed US private payrolls increased far less than expected in July, likely constrained by shortages of workers and raw materials.

The blue-chip Dow, heavily weighted toward economically-sensitive stocks, also declined.

The technology-heavy Nasdaq bucked the trend after another report showed a measure of US services industry activity jumped to a record high last month, suggesting a broader economic rebound was still on track.

"The ADP employment report this morning (is a) big miss... has people really locked in on tomorrow's initial claims and then Friday's non-farm payrolls report," said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky.

"To me that's a big driver (of the market today)."

"Broadly, the continued evolution of COVID-19, the Delta variant over the recent weeks and months kind of re-rating of the growth outlook" has the market coming to terms with what it means for the reflation trade and what it means to the bond market, Mayfield said.

After six straight month of gains, the benchmark S&P 500 has struggled to rise in August over concerns about the pace of growth as the economy rebounded from the depths of the COVID-19-driven recession, and fears of higher inflation overshadowed a stellar corporate earnings season.

Federal Reserve Vice Chair Richard Clarida said on Wednesday the US central bank should be in the position to begin raising interest rates in 2023.

Still, tech and tech-adjacent stocks such as Netflix Inc, Amazon.com Inc and Facebook Inc, which tend to perform better when interest rates are lower, outperformed the broader market.

Focus now turns to the Labor Department's monthly jobs report on Friday.

In earnings-related moves, BorgWarner Inc fell even as it beat profit expectations on strong consumer demand for new vehicles while Kraft Heinz Co tumbled after warning of margin pressure from higher prices of ingredients.

GM's shares tumbled, underscoring the uncertainty facing global car makers at a time of technological and economic disruption.

Shares of rival Ford Motor Co fell.

Robinhood Markets Inc soared as interest from star fund manager Cathie Wood and small-time traders set up the stock for a fourth session of gains after its underwhelming market debut last week.

is a reporter and data journalist with Morningstar. Tweet him @lewjackk or get in touch via email

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