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Global Market Report - 5 June

Lex Hall  |  05 Jun 2020Text size  Decrease  Increase  |  
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Australia

Shares on the Australian market are poised to slip in early trade after US investors ended a string of days of consecutive rises.

The SPI 200 futures contract was down 14 points, or 0.23 per cent, to 5986.0, at 8am Sydney time on Friday, indicating early losses.

In the US overnight, a report showed that the number of workers filing for unemployment benefits eased for a ninth straight week, roughly in line with the market’s expectations.

Yet economists saw pockets of disappointment after the total number of people getting benefits rose slightly. That number had dropped the prior week, which had raised hopes that some companies were rehiring workers.

In Australia today, the federal government will outline changes to foreign investment laws. The changes are designed to protect companies critical to Australia's national security.

The Australian Industry Group will publish data on the performance of the services sector for May.

The S&P 500 lost 10.52 points, or 0.3 per cent, to 3,112.35 after being on track earlier in the day for its longest winning streak since December.

The Dow Jones Industrial Average rose 11.93 points, or less than 0.1 per cent, to 26,281.82, and the Nasdaq composite fell 67.10, or 0.7 per cent, to 9,615.81.

The S&P/ASX200 benchmark index hit a peak of 6,040.2 before retreating somewhat to finish Thursday up 50.2 points, or 0.84 per cent, at 5,991.8 points.

The All Ordinaries index rose 47.1 points, or 0.78 per cent, at 6,112.

One Australian dollar was buying US69.39 cents at 8am, up from US68.90 cents at the close of trade on Thursday.

Asia

China’s main Shanghai Composite index closed down 0.14 per cent at 2,919.25 points on deepening worries about Sino-US trade tensions after the Trump administration barred Chinese passenger carriers from flying to the US, while the blue-chip CSI300 index ended down 0.04 per cent.

Hong Kong stocks edged up on Thursday after two major British banks backed China’s national security law for the city, easing concerns over the law’s impact on the local business community.

At the close of trade, the Hang Seng index was up 40.68 points, or 0.17 per cent, at 24,366.30.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.35 per cent, while Japan’s Nikkei index closed up 0.36 per cent.

Europe

A strong rally this week in European stocks stalled on Thursday as investors locked in profits, although euro zone banks surged after the European Central Bank ramped up its stimulus programme to prop up the coronavirus-hit economy.

The euro zone stock index closed 0.2 per cent lower after falling as much as 0.8 per cent earlier in the session, but the bloc’s lenders gained 1.1 per cent.

The ECB said it would increase the size of emergency bond buying by a wider-than-expected 600 billion euros ($980 billion) to 1.35 trillion euros and that the purchases would run until the end of June 2021, six month longer than originally planned.

An index of Italian banks jumped 1.1 per cent, while Spanish lenders BBVA and Banco Santander gained nearly 1.7 per cent.

However, the pan-European STOXX 600 fell 0.7 per cent, led by declines in automakers, utilities and healthcare stocks.

Equity markets have bounced strongly this week, with Wall Street's tech-heavy Nasdaq hovering below record levels, on signs of recovery from a coronavirus-forced recession, optimism over a vaccine and hopes of more stimulus.

Germany’s coalition parties agreed a 130-billion-euros ($212 billion) stimulus package to speed recovery on Wednesday, but shares in Daimler and Volkswagen fell between 1 per cent and 2.5 per cent as the measures favoured electric cars.

Germany unveiled a staggered tax on vehicles emitting large amounts of carbon dioxide, hitting sports utility vehicles. Shares of car parts suppliers such as Continental and Valeo were down 2.9 per cent and 4 per cent.

Airbus jumped 5.2 per cent after a report said it was looking to hold underlying jet output at 40 per cent below pre-pandemic plans for two years, an approach which adds new pressure to cut thousands of jobs.

French spirits company Remy Cointreau surged 11.3 per cent after it predicted a strong recovery in the second half, driven by China and the US.

German sportswear firm Adidas gained 1.8 per cent as it said sales had returned to growth in greater China faster than it had expected after the coronavirus lockdown.

North America

The S&P 500 lost ground on Thursday as investors took profits in advance of Friday’s jobs report, ending a four-day rally driven by rising economic sentiment.

The Nasdaq joined the S&P 500 in negative territory, while the blue-chip Dow posted a nominal gain.

Still, all three major indexes have shown remarkable resilience since their late March plunge, with the Nasdaq, the S&P 500 and the Dow about 2 per cent, 8 per cent and 11 per cent below their respective record highs reached in February.

Economic data showed the number of Americans filing for unemployment benefits dipped below 2 million for the first time since mid-March, and plummeting international commerce resulted in a net widening of the US trade gap.

Friday’s much-anticipated jobs report from the Labor Department is expected to show the US unemployment rate sky-rocketing to a historic 19.7 per cent.

Violent protests against the death of George Floyd appeared to abate overnight as prosecutors brought new charges against the officers implicated in the killing.

The European Central Bank approved a stimulus package that surpassed expectations, nearly doubling the size of its Pandemic Emergency Purchase Plan to 1.35 trillion Euros.

Its American counterpart, the US Federal Reserve, is due to meet next week for its two-day policy meeting.

The Dow Jones Industrial Average rose 11.93 points, or 0.05 per cent, to 26,281.82, the S&P 500 lost 10.52 points, or 0.34 per cent, to 3,112.35 and the Nasdaq Composite dropped 67.10 points, or 0.69 per cent, to 9,615.81.

Of the 11 major sectors in the S&P 500, all but financials, industrials and materials were in the red in a continuation of a rotation in cyclicals.

American Airlines Group Inc announced it would beef up its flight schedule in July to 55 per cent of its year-ago capacity as the US economy reopens, sending its shares soaring 41.2 per cent.

The hard-hit commercial airline industry also jumped on the news, with the ARCA Airline index gaining 10.1 per cent.

Global online commerce platform EBay Inc rose 6.3 per cent after raising current quarter forecasts due to a surge in customer orders.

The Department of Justice gave anti-trust approval for Charles Schwab Corp’s purchase of TD Ameritrade Holding Corp, sending their shares up 5.5 per cent and 9.0 per cent, respectively.

J.M. Smucker Co fell 4.8 per cent after the packaged food company forecast a decline in full-year sales.

is content editor for Morningstar Australia

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