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Global Market Report - 9 February

Lex Hall  |  09 Feb 2021Text size  Decrease  Increase  |  
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Australia

Australian shares are set to fall despite record gains on Wall Street, fuelled by stimulus and vaccine prospects.

The Australian SPI 200 futures contract was down 16 points, or 0.2 per cent, at 6,793 points at 8.30am Sydney time on Tuesday, suggesting a negative start to trading.

Wall Street set record closing highs on Monday as stimulus prospects and ongoing vaccine deployment boosted investor optimism over the pace of economic recovery from the pandemic recession.

The Dow Jones Industrial Average rose 236.78 points, or 0.76 per cent, to 31,385.02, the S&P 500 gained 28.75 points, or 0.74 per cent, to 3,915.58 and the Nasdaq Composite added 131.35 points, or 0.95 per cent, to 13,987.64.

Bitcoin touched a record high after Tesla Inc announced it had invested around US$1.5 billion ($1.95 billion) in the cryptocurrency and would begin accepting payment in bitcoin for its cars and other products.

Locally, ANZ has abandoned the world’s largest coal export port at Newcastle after refusing to keep funding the mega-facility under its new climate change policy that all but bans loans to the coal sector, The Australian reports.

The S&P/ASX200 benchmark index closed higher by 40.2 points, or 0.59 per cent, to 6,880.7 on Monday.

The All Ordinaries closed higher by 47.9 points, or 0.67 per cent, at 7,160.8.

The ASX200 has since Friday continued to rise above 6,800 points, a level which it struggled to top in recent months.

The index reached a record high of 7,197.2 in February last year, before much of the world realised the effects of the pandemic.

Gold was up 1.0 per cent at $US1,832.33 an ounce; Oil was up 1.8 per cent at $US60.39 a barrel; Iron ore was up 2.2 per cent to $US160.50 a tonne.

Meanwhile, the Australian dollar was buying 76.99 US cents at 8.30am, up from 76.74 US cents at Monday's close.

Asia

China stocks closed higher on Monday as the country reported zero new local cases of the novel coronavirus and investors cheered Beijing's latest reform measures for the stock market.

The blue-chip CSI300 index rose 1.5 per cent to 5,564.56, while the Shanghai Composite Index added 1 per cent to 3,532.45 points.

In Hong Kong, the Hang Seng rose 30.79, or 0.1 per cent to 29,319.47.

Japan's benchmark Nikkei Stock Average climbed above 29,000 to its highest point in more than 30 years Monday, as investors welcomed positive earnings reports and progress around US stimulus talks.

The Nikkei index surged to levels not seen since August 1990, gaining over 600 points, or 2 per cent, to close at 29,388.

Europe

European shares rose on Monday, led by economically sensitive cyclical sectors, as sentiment was lifted by hopes of a quicker recovery and multi-billion dollar deals in the region.

The pan-European STOXX 600 index rose 0.3 per cent adding to gains of 3.5 per cent in the previous week, in line with upbeat sentiment in global markets which saw Wall Street and an index of world shares hit all-time highs on stimulus hopes.

Dialog Semiconductor surged 16 per cent to its highest in over two decades and topped the STOXX 600 after Japanese chipmaker Renesas Electronics Corp agreed to buy the Frankfurt-listed chip designer for 4.9 billion euros ($7.65 billion) in cash.

“There are many other European shares which had fallen out of favour for international investors and this (the deal) indicates that global investors particularly American, Japanese or Chinese investors are looking to invest in such names,” said Chris Bailey, European strategist at Raymond James.

France’s Veolia Environnement SA said it is launching an offer for all of waste and water management company Suez, valuing it 11.3 billion euros after dropping efforts to win the backing of the Suez board.

The French firms closed lower as new legal hurdles awaited the deal and amid a government warning of an increasingly hostile takeover battle.

Cyclical sectors including basic resources, banks and chemicals rose between 0.8 per cent and 2.2 per cent, and were among top gainers on the main index. Technology shares gained 1.5 per cent.

The rollout of covid-19 vaccines globally and increased M&A activity have helped reduce recent pessimism around European equities. The STOXX 600, however, has yet to reach pre-pandemic levels, about 5 per cent away from 2020 highs.

“We are underweight European equities,” said BlackRock strategists in a note.

“The market has relatively high exposure to financials pressured by low rates. It also faces structural growth challenges, even given potential for catch-up growth in a vaccine-led revival.”

Data from Germany showed industrial output stagnated in December as lockdowns to contain the covid-19 pandemic held back the export-oriented manufacturing sector in Europe’s largest economy.

Frankfurt’s main index closed flat, retreating from record highs at the open.

This comes after data last week showed orders for German-made goods fell more than expected in December, ending a seven-month streak of positive data.

North America

Wall Street set record closing highs on Monday as stimulus prospects and ongoing vaccine deployment boosted investor optimism over the pace of economic recovery from the pandemic recession.

All three major US stock indexes advanced, with the S&P 500 and the Dow posting their sixth consecutive gains, their longest winning streak since August. Small-caps, often seen as “re-opening plays,” outperformed their larger peers.

“Investors are starting to play the economy opening up and the vaccine starting to work,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “And maybe they can go to a baseball game this summer.”

Still, the extended rally provides some cause for concern.

“Stocks have been overvalued for much of the past year,” Nolte added. “And the things we’re seeing now, with GameStop and Bitcoin, those are signs of speculation, not investing.”

Oil prices rose to their highest in over a year due to supply cuts and hopes for a stimulus-driven demand rebound, giving a solid boost to energy stocks.

Treasury Secretary Janet Yellen said if Congress approves the president’s US$1.9 trillion fiscal aid package, the US could return to full employment next year.

That package came closer to passage on Friday when lawmakers approved a budget outline that would enable Democrats to muscle it through Congress without Republican support.

Vaccine deployment, meanwhile, pushes ahead in the US, with at least 32,780,860 doses administered so far, and new infections trending lower, on average.

The Dow Jones Industrial Average rose 236.78 points, or 0.76 per cent, to 31,385.02, the S&P 500 gained 28.75 points, or 0.74 per cent, to 3,915.58 and the Nasdaq Composite added 131.35 points, or 0.95 per cent, to 13,987.64.

The fourth-quarter reporting season has passed the halfway mark, with 294 of the companies in the S&P 500 having reported. Of those, 83 per cent have beaten consensus estimates, according to Refinitiv.

Analysts see aggregate fourth-quarter S&P earnings posting a year-on-year gain of 2.4 per cent, a stark reversal from the 10.3 per cent annual decline seen at the beginning of the year, per Refinitiv.

Walt Disney Co, Cisco Systems Inc and General Motors Co advanced ahead of their earnings reports this week.

Bitcoin touched a record high after Tesla Inc announced it had invested around US$1.5 billion in the cryptocurrency and would begin accepting payment in bitcoin for its cars and other products.

“This is really, I view it, as almost a seminal moment in terms of where we are, in terms of Bitcoin from a transaction perspective, and the fact that now Tesla and Musk are putting their name behind,” said Daniel Ives, managing director at Wedbush Securities in Westfield, New Jersey. “I think this is really an eyebrow-raising move.”

Tesla inched up, while shares of cryptocurrency miners Riot Blockchain and Marathon Patent Group soared.

With Reuters

is content editor for Morningstar Australia

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