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Global Market Report - 9 December

Lex Hall  |  09 Dec 2020Text size  Decrease  Increase  |  
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Australia

Australian shares are set to rise following record gains on Wall St as upbeat vaccine news buoyed investors.

The Australian SPI 200 futures contract was up 14 points, or 0.4 per cent, to 6,709 points at 8.30am Sydney time on Wednesday, suggesting a positive start to trading.

US stocks rose on Tuesday as each of the major averages touched record levels in part due to a boost from the healthcare sector on positive covid-19 vaccine news, while uncertainty over fresh fiscal stimulus held gains in check.

The Dow Jones Industrial Average rose 147.64 points, or 0.49 per cent, to 30,217.43, the S&P 500 gained 13.89 points, or 0.38 per cent, to 3,705.85 and the Nasdaq Composite added 64.07 points, or 0.51 per cent, to 12,584.01.

Locally, Google and Facebook will be forced to pay for news content and share data collection methods with media companies and public broadcasters, under world-first laws that will deliver funding lifelines for community, regional and national outlets, The Australian reports.

The S&P/ASX200 benchmark index closed higher by 12.7 points, or 0.19 per cent, to 6,687.7 on Tuesday.

The All Ordinaries added 13.3 points, or 0.19 per cent, to 6,922.2.

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Gold was up 0.5 per cent at $US1,872.03 an ounce; Brent oil was up 0.1 per cent to $US48.87 a barrel; Iron ore was up 1. per cent to $US148.35 a tonne.

Meanwhile, the Australian dollar was buying 74.16 US cents at 8.30am, down from 74.25 US cents at Tuesday’s close.

Asia

China shares closed lower for a second straight session on Tuesday as Sino-US tensions weighed on the market, with financial and transport stocks leading the decline.

The blue-chip CSI300 index fell 0.3 per cent to 5,009.88, while the Shanghai Composite Index slipped 0.2 per cent to 3,410.18.

Among sectors, the CSI300 financials and the transport indexes both closed down 0.7 per cent.

Hong Kong stocks ended down on Tuesday, on persistent worries over Sino-US tensions, while fresh concerns about a surge in covid-19 infections also weighed on the market.

At the close of trade, the Hang Seng index was down 202.29, or 0.76 per cent, at 26,304.56. The Hang Seng China Enterprises index fell 0.61 per cent to 10,409.59.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.1 per cent, while Japan's Nikkei index closed down 0.3 per cent.

Europe

European shares slipped on Monday as rising tension between the US and China sapped some appetite for risky assets, while a battered pound on growing fears of Brexit without a trade deal buoyed London’s blue-chip index.

After adding about 14 per cent over the last five weeks, the pan-European STOXX 600 index fell 0.7 per cent with banks leading losses as euro zone bonds yields fell.

Finance-heavy indexes in Spain and Italy slipped more than 0.8 per cent, while France’s CAC 40 fell 1 per cent after scaling a more than nine-month high on Friday.

Germany’s trade-sensitive DAX index lost 0.8 per cent after Reuters exclusively reported that the US was preparing to impose sanctions on at least a dozen Chinese officials over their alleged role in Beijing’s disqualification of elected opposition legislators in Hong Kong.

“US-China relations was the hot topic last year and at the start of this year, so any return to that... is going to weigh on markets as they pull back from some very high levels,” said Connor Campbell, a financial analyst at Spreadex.

The news cast a shadow on data that showed German industrial output rose much more than expected in October. Adding to the gloom, the Ifo institute said production expectations for Europe’s largest economy have deteriorated for the coming months.

With Britain preparing to roll out the Pfizer/BioNTech covid-19 vaccine this week, London’s FTSE 100 rose 0.3 per cent after swinging between losses and gains in early trade. Consumer and healthcare stocks led gains.

The pound took a beating as negotiators struggled to reach consensus on a post-Brexit trade deal.

British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen are due to hold another call on Monday evening in the hope that stubborn differences over fishing rights in UK waters, fair competition and ways to solve future disputes will have narrowed by then.

“If we don’t get a signal by the end of today, there are talks that it’s sort of a de-facto no-deal Brexit,” Campbell said.

Failure to secure a deal would clog borders, upset financial markets and disrupt delicate supply chains across Europe and beyond.

Investors also await the outcome of a European Central Bank meeting on Thursday, with more emergency bond buying and cheap liquidity for banks eyed.

Among individual stocks, upbeat trading updates from Games Workshop and Pandora sent their shares to the top of STOXX 600, while UK homebuilders led declines.

Oil stocks slipped 1.3 per cent. A continued surge in coronavirus cases globally pressured crude prices as it forced a series of renewed lockdowns.

North America

US stocks rose on Tuesday as each of the major averages touched record levels in part due to a boost from the healthcare sector on positive covid-19 vaccine news, while uncertainty over fresh fiscal stimulus held gains in check.

Johnson & Johnson gained 1.67 per cent to help lift both the Dow and S&P 500 after the company said it could obtain late-stage trial results of a single-dose covid-19 vaccine it is developing in January, earlier than expected.

Pfizer Inc also advanced 1.67 per cent as it cleared the next hurdle in the race to get its covid-19 vaccine approved for emergency use, after the US health regulator released documents raising no new safety or efficacy issues.

Wall Street’s main indexes have traded in a tight range to start the trading week, as investors look for more stimulus in the face of surging covid-19 cases and fresh restrictions in California.

US House of Representatives Speaker Nancy Pelosi said Tuesday she supported including another round of $1,200 direct payments for Americans in a fresh package, which is currently not included in the $908 billion proposal put forth by a bipartisan group of lawmakers last week.

“The market has already priced in something, and what we are going to get now is probably less than what the market expected,” said Ken Polcari, managing partner at Kace Capital Advisors in Jupiter, Florida.

“The market is now expecting a US$900 billion ($1.2 trillion) package because that is what they made it sound like so if they get less than a US$900 billion package, the market will have priced in too much and it will back off a little bit.”

The Dow Jones Industrial Average rose 147.64 points, or 0.49 per cent, to 30,217.43, the S&P 500 gained 13.89 points, or 0.38 per cent, to 3,705.85 and the Nasdaq Composite added 64.07 points, or 0.51 per cent, to 12,584.01.

Investors are closely watching whether policymakers will be able to clinch an agreement on a long-awaited coronavirus relief bill and a US$1.4 trillion spending bill, with Friday eyed as a deadline to avoid a government shutdown.

The US Congress will vote this week on a one-week stopgap funding bill to provide more time for lawmakers to reach a deal on both spending and pandemic relief.

Positive developments related to the covid-19 vaccine have in recent weeks helped investors look past the surge in infections and anticipate an economic rebound next year.

Analysts now expect investor attention to gradually shift from vaccine approvals to their global distribution and any possible side effects that may occur.

Boeing Co shed 0.23 per cent after company data showed the planemaker lost another 63 orders for its newly ungrounded 737 MAX jet in November.

After spending the early part of the session in negative territory, Tesla Inc rose 0.64 per cent after the electric-car maker unveiled a $5 billion capital raise, its second such move in three months.

Drug developer Moderna Inc climbed 1.67 per cent, after Switzerland increased its confirmed orders for its covid-19 vaccine doses to 7.5 million from 4.5 million

 

is senior editor for Morningstar Australia

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