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Global Market Report - 8 May

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

Australian shares appear set for a modest start despite gains on Wall Street overnight.

The benchmark SPI 200 futures contract was up 5 points, or 0.09 per cent, to 5,373.0 at 8am Sydney time on Friday.

Stocks globally were bolstered on Thursday after Beijing reported a better than expected rise in exports in April, confounding expectations of a sharp fall. The US markets were also bolstered by upbeat earnings reports.

That mitigated the impact of US claims for unemployment benefits totalling a 3.169 million for the week ended 2 May.

The Dow Jones Industrial Average rose 0.89 per cent, to 23,875.89, the S&P 500 gained 1.15 per cent, to 2,881.19, and the Nasdaq Composite added 1.41 per cent, to 8,979.66.

Meanwhile the Reserve Bank is due to give its Statement on Monetary Policy later on Friday, after leaving the cash rate at 0.25 per cent on Tuesday.

Governor Philip Lowe will provide an updated forecast of how the board expects the economy to change during the coronavirus crisis.

Elsewhere, Macquarie Bank will issue its full-year results, Orica will publish its half-year results, and AMP and funerals provider Invocare will host virtual annual general meetings.

AMP has shelved its decision to divest its New Zealand wealth management operations, following the volatility of the COVID-19 pandemic.

The S&P/ASX200 benchmark index finished Thursday down 20.4 points, or 0.38 per cent, to 5,364.2, while the All Ordinaries index was down 14.9 points, or 0.27 per cent, at 5,449.9.

One Australian dollar buys 64.95 US cents at 8am, up from 64.54 US cents at Thursday's close.

Asia

China stocks ended lower on Thursday, as investors remain cautious on a bleak trade outlook globally that could slow the recovery in the world’s second largest economy from the coronavirus crisis.

The Shanghai Composite index closed down 0.23 per cent at 2871.52.

Hong Kong shares ended lower on Thursday, as sentiment was weighed by a bleak outlook for global trade after China reported a double-digit fall in imports in April and renewed tensions between Washington and Beijing.

The fall in China’s April imports signals more trouble ahead as the global economy sinks into recession, but data showed exports unexpectedly rose for the first time this year as factories raced to make up for lost sales due to the coronavirus crisis.

At the close of trade, the Hang Seng index was down 156.85 points or 0.65 per cent at 23,980.63.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.1 per cent, while Japan’s Nikkei index closed up 0.28 per cent.

Europe

European shares closed higher on Thursday as a surprise rise in China’s exports suggested some resilience in global demand, while a batch of mostly strong earnings also provided cheer.

The pan-European STOXX 600 ended up 1.1 per cent, led by gains in retail, basic resources and financial services.

ArcelorMittal, the world’s largest steelmaker, jumped 6.8 per cent after its first quarter profit beat expectations. Still, the French firm flagged much weaker profits in the medium-term due to the coronavirus.

German online fashion retailer Zalando rose 11.5 per cent, leading gains in the retail sector, after it said sales were recovering from an initial hit from coronavirus lockdowns, and despite a first-quarter loss.

Calming some fears over global demand, Beijing reported a 3.5 per cent rise in April exports, confounding market expectations for a sharp fall, as factories restarted production after the coronavirus pandemic.

The data also pushed up commodity prices, benefiting mining and oil stocks.

However, analysts were sceptical of the long-term outlook, given that steep economic contractions and spiking unemployment would likely cripple industrial and consumer demand.

European shares have held around two-month highs over the past few weeks but have struggled to move beyond a tight range as virus news and the threat of a renewed Sino-US trade spat resulted in caution.

Some disappointing earnings forecasts also cast a shadow, with Air France dipping more than 3 per cent as it predicted operating losses would widen “significantly” in the April-June quarter, with 95 per cent of flights expected to remain grounded.

British Airways-owner IAG fell around 3 per cent after it warned that passenger demand would not return to previous levels until 2023, and it would seek to defer deliveries of 68 aircraft.

Spanish telecoms company Telefonica SA fell after it withdrew its 2020 financial guidance and reported a sharp fall in first-quarter net profit.

North America

Wall Street's indexes have climbed following a clutch of upbeat earnings reports led by PayPal as investors looked past more weak jobs data caused by the coronavirus-induced economic downturn.

Energy, materials and financials, which have lagged this year, led the way among S&P 500 sectors.

Shares of PayPal Holdings soared and boosted the S&P 500 and the Nasdaq after the company said it expects a strong recovery in payments volumes in the second quarter as social distancing drives more people to shop online.

Shares of media company ViacomCBS Inc and ride-hailing firm Lyft also jumped after their earnings, as a first-quarter reporting season that Refinitiv estimates will show a 12 per cent decline in earnings begins to wind down.

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 to spark their economies by easing restrictions put in place to fight the outbreak.

The Dow Jones Industrial Average rose 211.25 points, or 0.89 per cent, to 23,875.89, the S&P 500 gained 32.77 points, or 1.15 per cent, to 2,881.19 and the Nasdaq Composite added 125.27 points, or 1.41 per cent, to 8,979.66.

US data showed millions more people sought unemployment benefits last week, suggesting lay-offs broadened from consumer-facing industries to other segments of the economy and could remain elevated even as many parts of the country start to reopen.

The US employment report for April is due on Friday.

Investors were also encouraged by news that China's exports unexpectedly rose in April for the first time this year as factories raced to make up for lost sales due to the coronavirus pandemic.

is content editor for Morningstar Australia

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