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Global Market Report - 8 February

Lex Hall  |  08 Feb 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise following strong gains on Wall Street last week as stimulus, earnings and vaccine progress boosted sentiment.

The Australian SPI 200 futures contract was up 5 points, or 0.1 per cent, at 6,778 points at 8.30am Sydney time on Monday, suggesting a positive start to trading.

US stocks extended their recent rally on Friday and the S&P 500 and Nasdaq indexes scored their biggest weekly percentage gains since the US elections in early November, boosted by optimism over earnings, stimulus talks and progress on vaccine rollouts.

The Dow Jones Industrial Average rose 92.38 points, or 0.3 per cent, to 31,148.24, the S&P 500 gained 15.09 points, or 0.39 per cent, at 3,886.83 and the Nasdaq Composite added 78.55 points, or 0.57 per cent, at 13,856.30.

Locally, Treasury Wine Estates is investigating a three-way split of its global operations to create a stand-alone US business, a premium winemaker called Treasury Premium Products and a commercial wine company, splintering more than $7bn in wine assets originally brought together under the old Foster’s Group, The Australian reports.

The S&P/ASX200 benchmark index closed higher by 75 points, or 1.11 per cent, to 6,840.5 on Friday.

The All Ordinaries closed higher by 75 points, or 1.07 per cent, at 7,112.9.

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Gold was up 1.1 per cent at $US1,814.11 an ounce; Oil was up 0.9 per cent at $US59.34 a barrel; Iron ore was down 0.6 per cent to $US157.01 a tonne.

Meanwhile, the Australian dollar was buying 76.64 US cents at 8.30am, up from 76.03 US cents at Friday's close.

Asia

China stocks gained on Friday, on track to post weekly gains, as investors found support from a continued economic recovery, though Sino-US tensions remained a worry.

The CSI300 index rose 0.9 per cent, to 5,522.21 points at the end of the morning session, while the Shanghai Composite Index gained 0.5 per cent, to 3,518.09 points.

In Hong Kong, the Hang Seng index added 0.5 per cent, to 29,265.95 points, while the Hong Kong China Enterprises Index gained 0.2 per cent, to 11,582.40.

In Japan, stocks rose as gains in the Paper & Pulp, Railway & Bus and Real Estate sectors led shares higher.

At the close in Tokyo, the Nikkei 225 increased 1.54 per cent.

Europe

European stocks were little changed at the end of an upbeat week on Friday, with disappointing US data highlighting the economic impact of the coronavirus pandemic, while in Germany industrial orders declined.

US employment growth rebounded moderately in January but job losses were deeper than initially thought, bolstering the case for a large stimulus by President Joe Biden’s administration.

“The prospect of more stimulus remain elevated,” said Edward Moya, senior market analyst at OANDA. New York. “Any profit-taking should be limited.”

The STOXX 600 posted its best weekly performance since November with a rise of 3.5 per cent despite a lacklustre session on Friday, when gains in travel and leisure stocks, basic materials and banks were countered by losses in defensive sectors such as utilities, telecoms and healthcare.

Germany’s DAX index was flat after data showed orders for German-made goods fell more than expected in December, ending a seven-month streak of positive reports as fresh restrictions to contain the covid-19 pandemic subdued demand from other euro zone countries.

“Today’s data shows that stricter lockdown measures since mid-December, as well as the Christmas break, have finally hit German industry ... but at face value, this only looks like a temporary breather,” strategists at ING wrote in a note.

London’s FTSE 100 slid 0.2 per cent, extending losses to a third straight session, as a higher pound weighed on the internationally focused firms on the index.

Investors also parsed earnings reports from European companies.

Sanofi SA gained 1.5 per cent as the French drugmaker said it aimed to grow earnings per share this year after posting stronger-than-expected quarterly results.

Shares in Vinci were the biggest boost to the STOXX 600 after Europe’s biggest construction and concessions company beat full-year core profit forecasts, helped by some recovery in its contracting business. France’s CAC 40 rose 0.9 per cent to close at two-week high.

Insurer Beazley logged its best day in eight weeks as a loss in 2020 took a back seat to a forecast to return to profit and bring back its dividend during the course of this year.

Finnish oil refiner Neste fell 6.4 per cent to the bottom of the STOXX 600, after issuing a weak first-quarter outlook and unexpectedly cut its dividend.

North America

US stocks extended their recent rally on Friday and the S&P 500 and Nasdaq indexes scored their biggest weekly percentage gains since the US elections in early November, boosted by optimism over earnings, stimulus talks and progress on vaccine rollouts.

Both the Dow Jones industrial average and S&P 500 rose for a fifth straight session in their longest streak of gains since August, while the S&P 500 and Nasdaq posted record closing highs for a second day in a row.

A smaller-than-expected rebound in the US labour market last month highlighted the need for more government aid to shore up the economy. The Labor Department on Friday reported a 49,000 increase in nonfarm payrolls last month, but job losses in manufacturing and construction.

US President Joe Biden and his Democratic allies in Congress moved ahead with their US$1.9 trillion covid-19 relief package as lawmakers approved a budget plan that will allow them to muscle Biden’s plan through in the coming weeks without Republican support.

“The upcoming package of stimulus is going to be big,” said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm based in Toledo.

“You have a situation where there’s a lot of cash on sidelines and bonds have really underperformed, so that’s helped some sectors that have really done poorly.”

Upbeat earnings this week have also supported investor optimism. So far, stronger-than-expected corporate results in the fourth quarter have driven up analysts’ expectations, and S&P 500 companies are on track to post earnings growth for the period instead of a decline as initially expected.

The Dow Jones Industrial Average rose 92.38 points, or 0.3 per cent, to 31,148.24, the S&P 500 gained 15.09 points, or 0.39 per cent, at 3,886.83 and the Nasdaq Composite added 78.55 points, or 0.57 per cent, at 13,856.30.

For the week, the S&P 500 gained 4.65 per cent, the Nasdaq added 6.01 per cent and the Dow increased 3.89 per cent. The small-cap Russell 2000 index rose 7.7 per cent for the week, its biggest weekly percentage gain since the week ended June 5.

The Cboe Volatility index fell and had its biggest weekly point drop since the week ended 6 November.

The S&P 500 technology index ended down 0.2 per cent after hitting a record high earlier in the session.

Johnson & Johnson rose 1.5 per cent after the drugmaker said it had asked US health regulators to authorise its single-dose covid-19 vaccine for emergency use.

Shares of GameStop Corp, caught in the recent social media-hyped trading frenzy, rose 19.2 per cent on Friday, after online broker Robinhood lifted all the buying curbs imposed at the height of the battle between amateur investors and Wall Street hedge funds.

Clover Health Investments Corp shares ended up 5.7 per cent. It said it would cooperate with a request from the US Securities and Exchange Commission. US regulators are following up on a report about Clover by short-selling specialist Hindenburg Research.

With Reuters

is senior editor for Morningstar Australia

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