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Global Market Report - 8 July

Lex Hall  |  08 Jul 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are likely to start lower after US markets dropped on worries over surging coronavirus cases in the country and profit-taking after a recent rally.

The Australian SPI 200 futures contract was lower by 30.0 points, or 0.50 per cent, to 5,959.0 points at 8am Sydney time on Wednesday.

The Dow, S&P 500 and Nasdaq all dropped overnight after large parts of the US reported tens of thousands of new coronavirus infections.

New York expanded its travel quarantine for visitors from three more states, while Florida's greater Miami area rolled back its reopening.

Strategists said investors may also be taking profits after the recent run higher.

The Dow Jones Industrial Average fell 1.51 per cent to 25,890.18, the S&P 500 lost 1.08 per cent to 3,145.32 and the Nasdaq Composite dropped 0.86 per cent to 10,343.89.

On the Australian market this morning, casino operator Sky City Entertainment has completed a $50 million share purchase plan as part of a $230 million equity raising.

The ASX on Tuesday gave up all early gains after Victoria, Australia's second most populous state, reported a record 191 new cases of the virus.

Investors' fears of economic impact were justified when Premier Daniel Andrews ordered Melbourne back into lockdown for six weeks.

The S&P/ASX200 benchmark closed lower by 1.7 points, or 0.03 per cent, at 6,012.9.

Global oil prices were little changed as demand concerns due to a new surge in coronavirus cases overshadowed US government forecasts for lower production.

Brent crude futures settled at $US43.08 a barrel, down 2 US cents.

The Australian dollar was buying 69.45 US cents at 8am, down from 69.52 US cents at the close of trade on Tuesday.

Asia

Chinese blue-chip shares rose for a sixth straight day to close at a more than five-year high on Tuesday, as retail investors rushed to join an officially sanctioned bull market, but stocks pared gains late in the day as some traders booked profits.

The blue-chip CSI300 index finished the day up 0.6 per cent at 4,698.13, its highest close since 25 June 2015. The Shanghai Composite Index added 0.37 per cent to 3,345.34, its highest close since 6 February 2018.

Hong Kong shares fell on Tuesday as a rally that pushed the city’s benchmark index sharply higher over four days lost steam, with investors booking profits from recent gains.

At the close of trade, the Hang Seng index was down 363.50 points, or 1.38 per cent, at 25,975.66, after rising as much as 1.68 per cent in the morning session. The index had rallied 8.39 per cent over the previous four sessions.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.71 per cent, while Japan’s Nikkei index closed down 0.44 per cent.

Europe

European shares fell on Tuesday as surging US coronavirus cases and forecasts for a deeper-than-feared recession in the euro zone dimmed optimism around a post-pandemic rebound.

The pan-European STOXX 600 index slipped 0.6 per cent, falling back from a near one-month high.

The banking sector, which had risen 4 per cent in the previous session tracking a global rally, fell by 1.4 per cent, while real estate, technology and telecoms shares each dropped between 1 per cent and 1.8 per cent.

German drugs and pesticides maker Bayer slumped 5 per cent after a US judge questioned a long-negotiated settlement of lawsuits relating to its weedkiller Roundup.

As the economic impacts of the coronavirus crisis continue to be felt, the European Commission said the 19 nation single currency area would contract by a record 8.7 per cent before rising by 6.1 per cent in 2021, worse than its previous forecast.

Several US states posted record daily coronavirus case counts, prompting many to reverse reopening plans as the US death toll topped 130,000.

London's FTSE 100 was down 1.5 per cent as the pound rose to three-week highs on optimism that British and EU trade negotiators could find common ground.

The market focus will also be on signs of progress from talks this week in Brussels on a European recovery fund, which investors hope will be provided in part as grants, as proposed by the European Union.

Bleak forecasts for the rest of the year saw Micro Focus slide 19.6 per cent, while French catering and food services group Sodexo dropped 4.1 per cent.

Surging copper and iron ore prices saw Rio Tinto rise 0.4 per cent.

Italy’s UBI Banca and Intesa Sanpaolo both fell amid an increasingly bitter takeover battle, with UBI reiterating that Intesa’s bid does not adequately reward shareholders in the smaller bank.

North America

US stocks fell on Tuesday, adding to losses into the close, as investors took profits a day after the S&P 500 logged its longest streak of gains this year and as new US coronavirus cases rose further.

Large parts of the US reported tens of thousands of new coronavirus infections. New York expanded its travel quarantine for visitors from three more states, while Florida’s greater Miami area rolled back its reopening.

Mester said during an interview with CNBC that a resurgence in coronavirus cases across the country is making consumers more cautious, and more fiscal stimulus is needed to help the economy recover fully from the crisis.

US stocks have risen recently, with the S&P 500 registering a fifth straight session of gains on Monday, despite rising new coronavirus cases in the United States as a slew of upbeat data for June bolstered views that an economic recovery is under way.

The Nasdaq claimed another record intraday high and held gains for a good part of the session before ending the day lower.

The Dow Jones Industrial Average fell 396.85 points, or 1.51 per cent, to 25,890.18, the S&P 500 lost 34.4 points, or 1.08 per cent, to 3,145.32 and the Nasdaq Composite dropped 89.76 points, or 0.86 per cent, to 10,343.89.

The S&P 500 is still up more than 40 per cent from its March closing low.

Walmart Inc gained 6.8 per cent after a report that the retailer is close to launching its membership program, a direct competitor for Amazon.com’s Prime service. Amazon shares slipped 1.3 per cent.

Novavax Inc jumped 31.6 per cent as the US government awarded US$1.6 billion ($2.3 billion) to the drugmaker to cover testing, commercialisation and manufacturing of a potential coronavirus vaccine in the country.

is content editor for Morningstar Australia

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