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Global Market Report - 6 May

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

Australian shares are set for a dip when the ASX opens after US markets retracted late in the session overnight.

The benchmark SPI 200 futures contract was down 11 points, or 0.2 per cent, to 5,405.0 at 8am Sydney time on Wednesday, indicating a subdued start to trading.

Wall Street's main indices finished higher after healthcare stocks rallied, oil prices surged and a number of countries and US states eased coronavirus-induced restrictions in an attempt to revive their economies.

However, stocks pulled back sharply late in the session after US Federal Reserve vice chair Richard Clarida made downbeat comments about the depth of the economic contraction.

On the home front, the Australian Bureau of Statistics on Wednesday will publish its revised retail trade figures for March, which will shed more light on how COVID-19 and social distancing has changed consumer spending.

In April, the bureau published the preliminary figures for March.

The ABS will also publish lending indicators data.

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The S&P/ASX200 benchmark index finished Tuesday up 87.3 points, or 1.64 per cent, to 5,407.1, while the All Ordinaries index gained 88.6 points, or 1.64 per cent, to 5,478.1.

One Australian dollar buys 64.31 US cents at 8am, down from 64.46 US cents on Tuesday's close.

Asia

Hong Kong shares on Tuesday recouped some of the previous session’s sharp losses, tracking gains in broader Asia, as countries laid out plans to ease coronavirus-induced restrictions.

The Hang Seng index rose 0.5 per cent to 23,742.13 points, having lost more than 4 per cent on Monday as US-China tensions simmered. The Hang Seng China Enterprises index gained 0.4 per cent on Tuesday.

The sub-index of the Hang Seng tracking energy shares rose 1.1 per cent, the IT sector gained 0.8 per cent, the financial sector was 0.1 per cent higher and the property sector edged up 0.5 per cent.

In the wider region, MSCI’s Asia ex-Japan stock index was firmer by 0.8 per cent.

Europe

European stocks closed higher on Tuesday, shrugging off uncertainty over regional bond purchases as a swathe of positive earnings and an easing of coronavirus lockdown restrictions in some countries caused some optimism.

The pan-European STOXX 600 index closed about 2.2 per cent higher.

Germany’s top court ruled earlier on Tuesday that the Bundesbank must stop buying bonds under the European Central Bank’s stimulus scheme if the ECB cannot justify the purchase.

German shares closed 2.5 per cent higher and shares in Italy, whose debt is particularly vulnerable to changes in the ECB's bond-buying scheme, added 2 per cent.

Still, bank stocks, which are more exposed to ructions in the sovereign debt space, ended the day off session highs.

Total SA gained 7.9 per cent after it maintained its dividend despite reporting a sharp fall in first-quarter net adjusted profit due to a plunge in oil prices. Spain’s Repsol topped the STOXX 600 after its first-quarter profit beat expectations.

Europe’s oil and gas sector led gains among regional sectors for the day, as crude prices surged on expectations that fuel demand will begin to recover as some US states and countries in Europe and Asia start to ease measures imposed to try to curb the spread of the coronavirus.

European shares are hovering near two-month highs on massive stimulus measures and hopes that the coronavirus may have peaked in certain US and European hotspots.

Among other companies that reported, German meal-kit delivery firm HelloFresh surged nearly 10 per cent after it raised its 2020 forecast—continued lockdowns have boosted its first-quarter performance in international markets.

Copenhagen-based jewellery maker Pandora jumped 8.3 per cent after saying it was encouraged by higher online sales and the reopening of stores in Germany and some other countries.

Among decliners, Swedish real estate firm Samhallsbyggnadsbolaget fell 18 per cent and was at the bottom of the STOXX 600 after the company said its chief executive, Ilija Batljan, had been detained for allegedly violating market abuse regulations.

North America

Wall Street’s main indexes gained on Tuesday as healthcare stocks rallied, oil prices surged and a number of countries and US states eased coronavirus-induced restrictions in an attempt to revive their economies.

Stocks pulled back sharply late in the session after Federal Reserve Vice Chair Richard Clarida made downbeat comments about the depth of the economic contraction.

Some hard-hit countries, including Italy, as well as some US states including California are tentatively easing lockdown orders this week, raising hopes for a recovery in oil demand.

Healthcare shares led among S&P 500 sectors following developments in efforts to control the coronavirus from Pfizer and Regeneron Pharmaceuticals.

The Dow Jones Industrial Average rose 133.33 points, or 0.56 per cent, to 23,883.09, the S&P 500 gained 25.7 points, or 0.90 per cent, to 2,868.44 and the Nasdaq Composite added 98.41 points, or 1.13 per cent, to 8,809.12.

Shares of large tech and internet companies such as Microsoft and Apple also gained, giving lifts to the indexes.

Pfizer shares rose 2.4 per cent after the drugmaker said it and its German partner had begun delivering doses of an experimental coronavirus vaccine for human testing. Regeneron Pharmaceuticals shares gained 6.0 per cent after the company said its experimental antibody cocktail for COVID-19 may be available for use by the end of summer.

Stocks have rebounded sharply since late March from the coronavirus-fuelled sell-off, helped by massive monetary and fiscal stimulus. Investors are now watching efforts by a number of states trying to spark their economies by easing restrictions put in place to fight the outbreak.

Clarida said during an interview with CNBC that the US economy is likely to contract sharply during the second quarter as a result of intentional business shutdowns, but there is a chance the recovery could start in the second half of the year.

Data on Tuesday showed the vast US services sector fell into contraction in April for the first time in nearly 10½-years.

Investors are now bracing for data on the labour market through the week culminating with the employment report for the month of April due Friday.

In corporate news, shares of Norwegian Cruise Line Holdings Ltd (NCLH.N) tumbled 22.6 per cent as the world’s third-largest cruise operator raised doubts about its ability to keep running as a business.

is senior editor for Morningstar Australia

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