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Global Market Report - 6 August

Lex Hall  |  06 Aug 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to open higher after gains on Wall Street, including an expected boost for Disney and optimism over a covid aid package.

The Australian SPI 200 futures contract was up 27 points, or 0.45 per cent, to 5,989 points at 8.30am Sydney time on Thursday, suggesting a lift in trading.

US stocks climbed on Wednesday on the heels of a surprise quarterly profit from Disney and as investors stayed optimistic that a deal was near for a US coronavirus fiscal aid package.

The Dow Jones Industrial Average rose 373.05 points, or 1.39 per cent, to 27,201.52, the S&P 500 gained 21.26 points, or 0.64 per cent, to 3,327.77 and the Nasdaq Composite added 57.23 points, or 0.52 per cent, to 10,998.40.

The S&P/ASX200 benchmark index closed on Wednesday lower by 36.3 points, or 0.6 per cent, at 6,001.3 points, while the All Ordinaries index closed lower by 30.6 points, or 0.5 per cent, at 6,135.9.

Spot iron ore rose 0.4 per cent to $US118.45, gold extended its rally, up 1.4 per cent to $US2049.30 and Brent oil gained 1.7 per cent to $US45.17.

Meanwhile, the Australian dollar is buying 71.98 US cents, at 8am, down from 72 US cents at Wednesday’s close.

Asia

China stocks on Wednesday ended higher for the fourth straight session, as investors clung to hopes of a post-pandemic recovery in the world's second-largest economy while the heavyweight services sector continued to expand.

The Shanghai Composite index closed up 0.2 per cent at 3,377.56.

The blue-chip CSI300 index edged up 0.03 per cent, the consumer staples sub-index gained 0.6 per cent and consumer discretionary shares added 0.3 per cent.

Hong Kong shares ended higher on Wednesday, tracking gains in Asia and mainland China, on hopes for more economic stimulus from global policymakers and a gradual recovery in the Chinese economy.

The Hang Seng index closed up 0.6 per cent at 25,102.54. The Hang Seng China Enterprises index rose 0.5 per cent.

Around the region, MSCI's Asia ex-Japan stock index firmed 0.6 per cent, while Japan's Nikkei index fell 0.3 per cent.

Europe

Positive earnings reports and a surge in commodities shares lifted European stock markets on Wednesday, but losses in defensive sectors and worries about surging coronavirus cases globally tempered the mood.

London-listed mining groups Rio Tinto, BHP Group and Glencore provided the biggest boost, sending the broader mining index up 4.0 per cent on the back of stronger metal prices.

Oil majors BP and Total gained about 2 per cent as oil prices surged on a drop in US crude inventories and a weak dollar.

The broader pan-European STOXX 600 index ended 0.5 per cent higher, with London's commodity-heavy FTSE 100 rising 1.1 per cent and Germany's DAX up 0.5 per cent.

IHS Markit’s final reading of euro zone business activity showed the bloc returned to modest growth in July as coronavirus restrictions were lifted. Separate data showed the volume of retail sales rebounded in June to levels recorded in February.

The numbers, along with some positive earnings reports, helped investors look past a worsening of diplomatic ties between the US and China and rising covid-19 cases in parts of Europe and the US.

In earnings-driven moves, German logistics group Deutsche Post gained 2.5 per cent after reporting a better-than-forecast rise in operating profit, benefitting from a jump in ecommerce during the pandemic.

Chipmaker Dialog Semiconductor rose 9.1 per cent after posting second-quarter revenue above its previous estimate, while residential real estate company Vonovia was up 3 per cent having confirmed its guidance for the year.

Travel & leisure stocks extended gains for a third straight session, with British Airways-owner IAG, Lufthansa and Easyjet up between 6.5 per cent and 10.5 per cent.

Among the decliners, BMW fell 3.5 per cent as a 25 per cent fall in deliveries of luxury cars during lockdowns pushed the carmaker to a second-quarter operating loss.

Defensive sectors such as food & beverage, healthcare and telecoms, which tend to decouple from the economic cycle, also fell, knocking 0.6 per cent off the Swiss equities index which is heavy on such companies.

North America

Walt Disney Co’s shares jumped 8.80 per cent, to put it among the biggest boosts to the S&P 500 and Dow. The stock notched its biggest daily percentage gain since 24 March as revenue declines for Disney parks and media networks were not as bad as feared.

The Dow Jones Industrial Average rose 373.05 points, or 1.39 per cent, to 27,201.52, the S&P 500 gained 21.26 points, or 0.64 per cent, to 3,327.77 and the Nasdaq Composite added 57.23 points, or 0.52 per cent, to 10,998.40.

Square surged 7.10 per cent after the payments processor reported a 64 per cent rise in second-quarter revenue, as consumers increased online buying and used its peer-to-peer Cash App platform during the pandemic.

As quarterly results have come in better-than-feared and heavyweight technology and technology-related companies have surged, a heavy dose of fiscal and monetary stimulus have helped fuel a rally in equities to bring the S&P 500 to less than 2 per cent from its closing record on 19 February.

With 384 companies in the S&P having reported earnings through Wednesday morning, results are coming in 23.5 per cent above expectations, in aggregate, according to Refinitiv data, the highest on record back to 1994.

Economic data painted a mixed picture, as US services industry activity gained momentum in July, according to an ISM survey, with new orders jumping to a record high. However, hiring declined, supporting views that a recovery in the labor market was faltering.

Earlier, the ADP National Employment Report, which can be an inconsistent precursor to the government payrolls report set for Friday, showed US private employers hired far fewer workers than expected last month.

Friday is being viewed as a deadline by one of the lead negotiators for the White House and some Senate Republicans in talks with congressional Democrats on a fresh round of coronavirus aid, or talks will be scrapped.

Financials, industrials and materials, that track economic growth, outperformed among the major S&P sectors.

Teladoc Health fell 19.01 per cent after agreeing to buy chronic care provider Livongo Health in a deal valuing the company at US$18.5 billion ($26 billion), betting on a boom in online care and consultations spurred by the coronavirus crisis. Livongo shares fell 11.40 per cent.

Electric truck maker Nikola Corp slumped 9.81 per cent after it reported a bigger quarterly loss in its first results as a listed entity.

is content editor for Morningstar Australia

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