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Global Market Report - 9 August

Lewis Jackson  |  09 Aug 2021Text size  Decrease  Increase  |  
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Australia

The ASX is set to rise as Wall Street notched new records. A strong US jobs report beat expectations and reignited optimism over the economic recovery.

The Australian SPI 200 futures contract was up 30 points or 0.4 per cent at 7,475 near 7.10 am Sydney time on Monday, suggesting a positive start to trading.

The Dow and the S&P 500 indexes have closed at record highs following a stronger-than-expected jobs report, while investors shrugged off concerns over the Delta variant's impact on a nascent economic recovery.

The Dow Jones Industrial Average rose 144.78 points, or 0.41 per cent, to 35,209.03, the S&P 500 gained 7.49 points, or 0.17 per cent, to 4,436.59 and the Nasdaq Composite dropped 59.36 points, or 0.4 per cent, to 14,835.76.

The Australian dollar was buying 73.59 US cents near 7.10am AEST, down from 73.92 US cents at Friday’s close.

Locally, investors overcame lockdown gloom and helped Australian shares to record levels for the weekend, prior to a busy earnings week.

Iron ore miners' losses hampered the ASX for most of Friday, but a late market rally helped the indices close at an all-time high.

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Financial shares were among those to climb late as investors look forward to earnings next week from banks and insurers. This includes the Commonwealth Bank's full-year earnings on Wednesday.

Burman Invest chief investment officer Julia Lee said banks were still holding money set aside early in the pandemic to cover disastrous losses which had not eventuated.

"The market will be expecting that capital to be returned to shareholders," she said.
Bendigo Bank this week flagged it would release $19.4 million in its earnings report on August 16.

Yet the latest lockdowns caused by the coronavirus' Delta spread could complicate the matter.

Victorians on Friday joined millions of people in NSW and southeast Queensland under stay-at-home orders.

The Reserve Bank of Australia trimmed its economic growth forecast for the year from 4.75 per cent to four per cent.

Ms Lee said she was interested to see if banks would be conservative in releasing funds to shareholders, given the lockdowns.

Banks' updates on how many customers were able to repay loans would be important, she said.

The big four banks were all higher by less than one per cent and contributed to the day's record.

The benchmark S&P/ASX200 index closed higher by 27.3 points, or 0.36 per cent, to 7538.4.

The All Ordinaries closed up 26.9 points, or 0.35 per cent, to 7806.5.

Technology shares fared best and were up 2.07 per cent.

There were also record highs in the US overnight. The Nasdaq and S&P 500 closed at record levels after strong corporate earnings and a further decline in unemployment claims.

The ASX gains were limited by losses for the Aussie iron ore miners.

ANZ Bank researchers said China wants to limit steel makers' impact on its environment, and investors were reassessing demand for iron ore.

BHP dropped 1.96 per cent to $52.10.

Company leaders have not given up on the oil trade and said they will spend $US544 million on an oil project in the Gulf of Mexico.

The other iron ore mining shares to fall belonged to Fortescue, down 0.95 per cent to $23.05, and Rio Tinto, which slipped 1.57 per cent to $130.05.

REA Group leaders say housing markets currently flattened by lockdowns can recover quickly, as seen by an improved full-year profit and dividend.

The realestate.com.au owner revealed Sydney property listings for July were down 22 per cent due to the ongoing lockdown.

There may be fewer listings in southeast Queensland and Victoria too.

Yet REA said low interest rates and good bank liquidity ensured housing markets recovered quickly when lockdowns ended.

Shares were down 4.7 per cent to $159.42.

In the strongest category, technology, Afterpay improved in a strong week.

The buy now, pay later provider gained 5.5 per cent to $132.15.

Afterpay shares surged earlier in the week after US payments provider Square made a $39 billion offer for all shares.

Spot Gold was down 2.3 per cent at $US1763.03 an ounce; Brent crude was down 1.1 per cent at $US70.49 a barrel; Iron ore was up 0.6 per cent at $US172.51.

The yield on the Australian 10-year bond closed at 1.19 per cent.

Asia

At the close, China's Shanghai Composite index was down 0.24 per cent at 3,458.23.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, closed down 0.10 per cent at 26,179.40.

Japan's Nikkei 225 was up 0.33 per cent at 27,820.04.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was flat at 469.97.

The German DAX was up at 15,761.45.

North America

The Dow and the S&P 500 indexes have closed at record highs following a stronger-than-expected jobs report, while investors shrugged off concerns over the Delta variant's impact on a nascent economic recovery.

The Dow Jones Industrial Average rose 144.78 points, or 0.41 per cent, to 35,209.03, the S&P 500 gained 7.49 points, or 0.17 per cent, to 4,436.59 and the Nasdaq Composite dropped 59.36 points, or 0.4 per cent, to 14,835.76.

Nonfarm payrolls increased by 943,000 jobs last month, a Labor Department report showed.
Economists polled by Reuters had forecast payrolls would increase by 870,000 jobs.

The Labor Department's closely-watched employment report also showed strong wage gains, as employers competed for scarce workers, and a drop in the unemployment rate to a 16-month low.

"I think that investors are now saying we've got renewed confidence in the economic recovery," said Sam Stovall, chief investment strategist at CFRA. "And as a result, (investors) are rotating again into the cyclical, the value stocks, as well as the smaller-cap issues".

Around half of the 11 major S&P 500 sectors rose, with financials leading the growth. The S&P 500 technology sector index fell.

Although the three main indexes gained for the week following a stellar corporate earnings season, fears of higher inflation resulting in a sudden tapering in monetary policy have hurt sentiment.

Focus now turns to a meeting of Federal Reserve leaders in Jackson Hole, Wyoming, later this month to discuss policy and decide future stimulus strategy.

On the earnings front, American International Group Inc rose after it beat second-quarter profit estimates on Thursday.

Zynga Inc tumbled after issuing a disappointing forecast for bookings and announcing a potential acquisition worth over half a billion dollars.

Corteva Inc rose after raising its net sales forecast for the year.

Analysts expect second-quarter profit growth of 92.9 per cent for S&P 500 companies, according to IBES data from Refinitiv. Of the 427 companies in the index that have reported earnings so far, 87.6 per cent beat analyst expectations, the highest on record.

In other corporate news, shares of Robinhood Markets Inc soared on Friday after a roller-coaster week that has made the online brokerage among the hottest of so-called meme stocks, adding billions to its value.

is a reporter and data journalist with Morningstar. Tweet him @lewjackk or get in touch via email

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