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Global Market Report - 7 December

Lex Hall  |  07 Dec 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set for a strong opening as Wall St hit new highs on Friday amid hope poor jobs data will spur relief efforts.

The Australian SPI 200 futures contract was up 42 points, or 0.6 per cent, to 6,682 points at 8.30am Sydney time on Monday, suggesting a positive start to trading.

Wall Street’s main indexes rose to all-time highs on Friday as data showing the slowest US jobs growth in six months raised investors’ expectations for a new fiscal relief bill to help revive the coronavirus-hit economy.

The Dow Jones Industrial Average rose 248.74 points, or 0.83 per cent, to 30,218.26, the S&P 500 gained 32.40 points, or 0.88 per cent, to 3,699.12 and the Nasdaq Composite added 87.05 points, or 0.7 per cent, to 12,464.23.

Locally, Canada’s coal miners are ramping up to take advantage of Australia’s poor relationship with its biggest trading partner, as outgoing Glencore boss Ivan Glasenberg says China is getting the coal it needs from other sources during the trade and diplomatic spat between Beijing and Canberra, The Australian reports. 

The S&P/ASX200 benchmark index closed higher by 18.8 points, or 0.28 per cent, to 6,634.1 on Friday, after mixed results in US trade.

Financials was the best sector, up 0.83 per cent. Materials gained 0.38 per cent after being lower for most of the session in the wake of Thursday's surge.

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The All Ordinaries closed better by 18.0 points, or 0.26 per cent, to 6,865.3.

Gold was down 0.1 per cent at $US1,838.86 an ounce; Brent oil was up 1.1 per cent to $US49.25 a barrel; Iron ore was up 5.8 per cent to $US145.01 a tonne.

Meanwhile, the Australian dollar was buying 74.25 US cents at 8.30am, down from 74.32 US cents at Friday’s close.

Asia

China stocks inched up on Friday to post a third straight weekly gain, buoyed by robust data pointing to a recovery in the world’s second-largest economy, though the rally was capped by escalating Sino-US trade tensions.

The blue-chip CSI300 index rose 0.2 per cent to close at 5,065.92, while the Shanghai Composite Index advanced 0.1 per cent to 3,444.58.

For the week, CSI300 strengthened 1.7 per cent, while SSEC climbed 1.1 per cent, both logging their third weekly gains in a row on upbeat data.

Hong Kong stocks snapped four weeks of gains on Friday on Sino-US tensions although a poll pointing to a recovery in China’s economy helped them close higher for the day.

The Hang Seng index rose 0.4 per cent to 26,835.92 on Friday, while the China Enterprises Index gained 0.4 per cent to 10,624.65.

Japan’s benchmark Nikkei share average closed lower on Friday, retreating from a near 29½-year high as risk sentiment soured after US drugmaker Pfizer Inc said it had slashed the target for the rollout of its coronavirus vaccine.

The Nikkei share average fell 0.22 per cent to 26,751.24, but posted its fifth consecutive weekly gain. In the previous session, the index settled near its highest since April 1991.

Europe

Oil stocks lifted European shares on Friday, with London’s blue-chip index hitting nine-month highs, while disappointing jobs growth in the United States strengthened hopes for a fiscal stimulus.

London’s FTSE 100 rose 0.9 per cent as crude prices gained after a compromise between OPEC+ members to continue to increase output slightly from January but continue the bulk of existing supply curbs. Europe’s oil and gas index jumped 3.1 per cent

In the United States, data showed the economy added the fewest number of workers in six months in November, but markets quickly recovered as the report raised hopes of Congress pushing through a $908 billion aid package.

“Vaccines, the restart of talks about stimulus and the new (US) administration, and a less confrontational international background, are still going to be the themes that drive the market,” said Marvin Loh, senior global macro strategist at State Street Global Markets in Boston.

The pan-European STOXX 600 index rose 0.6 per cent, helping it edge into positive territory for the week—its fifth straight week in the black. Disappointing economic data and Brexit uncertainty had weighed on the index this week.

Progress on a post-Brexit trade deal still remained uncertain. European Union officials said a deal could finally be clinched this weekend, but London insisted that negotiations were still “very difficult”.

Germany’s DAX climbed 0.4 per cent, but ended 0.3 per cent lower on the week, having underperformed peers for most of the week. The index has risen about 60 per cent from its March lows compared with nearly a 46 per cent rise for the STOXX 600 over the same period.

Data on Friday showed German industrial orders rose more than expected in the month of October, raising hopes the manufacturing sector in Europe’s biggest economy started the fourth quarter on a solid footing.

Basic material stocks rose 1.4 per cent and were the biggest gainers this week, up 6.8 per cent in its best weekly performance in six months, as copper and iron ore prices soared.

Sweden’s Investment AB Latour dropped 12.7 per cent and was the worst performer in the STOXX 600 after its majority shareholder trimmed its stake in the company.

All eyes will be on the European Central Bank meeting on Thursday when it is expected to keep its policy rate on hold, but increase bond-buying.

North America

Wall Street’s main indexes rose to all-time highs on Friday as data showing the slowest US jobs growth in six months raised investors’ expectations for a new fiscal relief bill to help revive the coronavirus-hit economy.

So-called “cyclical” stocks seen as particularly sensitive to the economy, such as energy, materials and industrials, shined as most S&P 500 sectors rose.

The Labor Department’s closely watched report showed nonfarm payrolls increased by 245,000 jobs in November, below economists’ expectations of 469,000 jobs and the smallest gain since the labor recovery started in May.

President-elect Joe Biden said Friday’s “grim” jobs report shows the economic recovery is stalling and warned the “dark winter” ahead would exacerbate the pain unless the US Congress passes a coronavirus relief bill immediately.

“The bad news of the weakening jobs picture is potentially good news for investors because it means that the stimulus bill is much more likely to take place in a fairly short time frame,” said Ryan Detrick, senior market strategist at LPL Financial in North Carolina.

The Dow Jones Industrial Average rose 248.74 points, or 0.83 per cent, to 30,218.26, the S&P 500 gained 32.40 points, or 0.88 per cent, to 3,699.12 and the Nasdaq Composite added 87.05 points, or 0.7 per cent, to 12,464.23.

The Dow Jones Transportation Average and the small-cap Russell 2000 also posted record closing highs.

The benchmark 10-year yield hit its highest level since March at over 0.98 per cent, helping support financial shares which are highly sensitive to interest rates.

The energy sector jumped 5.4 per cent, bolstered by gains in oil prices. Shares of Diamondback Energy Inc surged 12.7 per cent and Occidental Petroleum gained 13.4 per cent.

“There is just a lot of catch-up happening with those sectors and sub-sectors that have really struggled year to date,” said Eric Freedman, chief investment officer at US Bank Wealth Management.

Utilities lagged the most among major sectors, falling 1 per cent.

Positive coronavirus vaccine updates from drugmakers have raised investor hopes for an economic recovery next year and overshadowed worries over a surge in US infections, helping the major indexes to another week of gains after the benchmark S&P 500 surged over 10 per cent in November.

In company news, Boeing shares fell 1.9 per cent as a top company executive said the company is reducing production of its 787 Dreamliner for the fourth time in 18 months.

is senior editor for Morningstar Australia

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