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Global Market Report - 6 August

Lewis Jackson  |  06 Aug 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to move slightly higher after the S&P 500 closed at a record high. Iron ore prices fell below $US175 overnight.

The Australian SPI 200 futures contract was up 3 points or 0.04 per cent at 7,423 near 7.10 am Sydney time on Friday, suggesting a positive start to trading.

The Nasdaq and S&P 500 have closed at their highest levels ever after data showed US unemployment claims declined further last week along with other mixed economic data in anticipation around Friday's job's report.

The Dow Jones Industrial Average rose 248.47 points, or 0.71 per cent, to 35,041.14, the S&P 500 gained 24.53 points, or 0.56 per cent, to 4,427.19 and the Nasdaq Composite added 109.26 points, or 0.74 per cent, to 14,889.79.

The Australian dollar was buying 74.03 US cents near 7.30am AEST, up from 73.96 US cents at Thursday’s close.

Locally, a second consecutive day of record heights for the ASX has ended with a pullback as investors learned of Victoria's latest lockdown.

The ASX200 record close might have been higher if not for late selling as Victorian leaders confirmed stay-at-home orders for seven days.

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Victorians will shelter from a coronavirus Delta outbreak like millions already doing so in Queensland and NSW.

The benchmark S&P/ASX200 index closed higher by 7.9 points, or 0.11 per cent, to 7511.1 on Thursday.

The index earlier rose to an intra-day record of 7526.4.

The All Ordinaries closed up 0.9 points, or 0.01 per cent, to 7779.6.

Losses of more than one per cent for materials and energy stocks weighed on the market.

Trade was subdued after US Federal Reserve Vice Chair Richard Clarida overnight said the central bank should be able to begin raising interest rates in 2023.

The US economy has bounced back from the pandemic.

Mr Clarida and three other Fed members also signalled a move to ease the bank's bond buying later this year or early next year.

Wall Street closed mostly lower.

GSFM investment strategist Steve Miller said US investors should not have been surprised by the comments.

"Equity markets are at what we hope is the end of a pandemic, and at record highs," he said.

Central banks have provided low rates and plenty of bond buying to encourage investment.
"At some stage the party had got to end," Mr Miller said.

"Traditionally, once rates start to increase and inflation takes hold, it's not good news for equity markets."

Meanwhile in Australia, Reserve Bank Governor Philip Lowe will be quizzed by the House of Representatives economic committee on Friday on the economic outlook and the RBA's monetary policy actions.

The central bank has committed to easing bond buying from September, despite virus outbreaks across the country.

The RBA will also give its quarterly statement on monetary policy. This has the latest economic forecasts.

While investors have largely looked beyond the impact of lockdowns, the leaders of Nick Scali were wary.

The executives will not forecast first-half earnings due to lockdowns having unpredictable impacts on sales.

This was despite the furniture trader having doubled its full-year profit to $84.2 million.

Shareholders will receive a final dividend of 25 cents per share. This is more than last year's final payout of 22.5 cents per share.

Shares on the ASX traded for a record $12.96.

They had since eased to be lower by 0.08 per cent to $12.31.

Resolute Mining shares rose steadily after a decision to sell a gold mine in Ghana for $US90 million.

Resolute is transferring the Bibiani mine to a company listed on the Canadian stock market, Asante Gold Corporation.

Shares in Resolute were up 4.5 per cent to 58 cents.

The biggest miners on the market had a forgettable day.

Fortescue lost 3.4 per cent to $23.27. BHP and Rio Tinto lost about 1.7 per cent and shares closed at $53.14 and $132.13 respectively.

Bendigo Bank will release $19.4 million of funds set aside to cover bad debts from the pandemic.

This will help second-half earnings. The bank will give its full-year earnings on August 16.

Shares were up 1.24 per cent at $10.58.

Among the big four banks, the Commonwealth fared best.

Its shares were the only ones of the group to gain more than one per cent. They closed higher by 1.15 per cent to $103.41.

Spot Gold was down 0.4 per cent at $US1804.88 an ounce; Brent crude was up 1.1 per cent at $US71.17 a barrel; Iron ore was down 6.6 per cent at $US171.55

The yield on the Australian 10-year bond closed at 1.15 per cent.

Asia

At the close, China's Shanghai Composite index was down 0.31 per cent at 3,466.55.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed down 0.84 per cent at 26,204.69.

Japan's Nikkei 225 was up 0.52 per cent at 27,728.12.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 0.37 per cent at 469.96.

The German DAX was up at 15,744.67.

North America

The Nasdaq and S&P 500 have closed at their highest levels ever after data showed US unemployment claims declined further last week along with other mixed economic data in anticipation around Friday's job's report.

The Dow Jones Industrial Average rose 248.47 points, or 0.71 per cent, to 35,041.14, the S&P 500 gained 24.53 points, or 0.56 per cent, to 4,427.19 and the Nasdaq Composite added 109.26 points, or 0.74 per cent, to 14,889.79.

Initial claims for state unemployment benefits fell by 14,000 to 385,000 in the week ended July 31 while lay-offs dropped to their lowest level in more than 21 years last month as companies held on to their workers amid a labour shortage, the Labor Department's report showed.

"The directional change has continued to be improving in the last few weeks and now it's a new low since beginning the pandemic," said Keith Buchanan, portfolio manager at Globalt Investments in Atlanta, Georgia.

"I think that's what (is) kind of leading to some optimism today and earnings to this point have been positive."

Nearly all of the 11 major S&P 500 sector indexes rose, with only healthcare stocks in the red as Cigna Corp slipped after predicting a bigger hit to full-year earnings from the pandemic.

Focus will now shift to the jobs report for July on Friday.

Analysts say a disappointing number might raise questions about an economic recovery but it could also lead the Federal Reserve to remain accommodative.

Meanwhile, Robinhood Markets Inc tumbled and was set to snap a four-day rally fuelled by interest from retail traders.

ViacomCBS Inc jumped as the company said it signed up the highest number of new streaming subscribers in the second quarter and struck a multi-year deal with Comcast Corp's Sky to launch the Paramount+ streaming service in Europe.

Concerns about the pace of economic growth and higher inflation have pressured the S&P 500 index but stellar corporate earnings so far have put it on track to end the week higher.
The index is now flirting with a record closing high.

Fed Vice Chair Richard Clarida, a major architect of the US central bank's new policy strategy, said on Wednesday he felt the conditions for raising interest rates could be met by the end of 2022.

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

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