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Global Market Report - 9 June

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

Investors are likely to see early gains on the Australian share market after a surprisingly upbeat US jobs report drove recovery hopes on Wall Street.

The local SPI 200 futures contract was higher by 41 points, or 0.67 per cent, to 6,138.0 at 8am Sydney time on Tuesday, indicating gains in share values early.

US investors helped the Nasdaq to a record high close, becoming the first of the major indexes to confirm a new bull market, and the Dow and S&P 500 jumped as expectations for a swift recovery from a coronavirus-driven downturn increased.

A closely watched monthly jobs report on Friday showed an unexpected fall in the unemployment rate, bolstering views that the worst of the economic damage from the virus outbreak was over.

The Dow Jones Industrial Average rose 461.46 points, or 1.7 per cent, to 27,572.44, the S&P 500 gained 38.46 points, or 1.20 per cent, to 3,232.39 and the Nasdaq Composite added 110.66 points, or 1.13 per cent, to 9,924.75.

The Australian dollar has reached its highest level since July last year, buying 70.21 US cents at 8am. That was higher from 70.02 US cents at the close of trade on Friday.

Asia

China stocks ended higher on Monday as poor domestic trade data reinforced hopes for further policy stimulus to shore up the coronavirus-stricken economy.

At the close, the Shanghai Composite index was up 0.24 per cent at 2,937.77.

Hong Kong stocks erased all gains to end flat on Monday, as losses in healthcare stocks countered strength in materials firms.

The Hang Seng index closed up 6.36 points or 0.03 per cent at 24,776.77, while the Hang Seng China Enterprises index fell 0.57 per cent to 10,008.88.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.34 per cent, while Japan’s Nikkei index closed up 1.37 per cent.

Europe

European shares pulled back from three-month highs on Monday, with losses in technology and healthcare stocks halting a recent rally on hopes of a post-coronavirus economic recovery.

The pan-European STOXX 600 closed 0.3 per cent lower, as investors moved out of sectors that remained resilient during the coronavirus-led sell-off earlier this year, while bidding up laggards such as banks and oil and gas firms.

Europe’s healthcare index dropped 0.6 per cent, with AstraZeneca sliding 2.7 per cent after Bloomberg reported it had approached US rival Gilead Sciences about a possible merger to form one the world’s largest drug companies.

Tech stocks were led lower by chipmakers ASML, ASM International and STMicroelectronics, which fell more than 4 per cent. Europe’s tech index is just 4.5 per cent below its all-time high.

Meanwhile, euro zone banks jumped 2 per cent, helping lender-heavy bourses in Spain and Italy outperform, supported by a bigger-than-expected pandemic-related stimulus by the European Central Bank last week.

Euro zone stocks have rallied 39 per cent from March lows, while the broader European index has climbed about 33 per cent as countries reopened from weeks-long lockdowns, while improving economic data and fresh stimulus raised hopes the worst is over.

Oil majors Royal Dutch Shell, BP and Total rose between 0.7 per cent and 3 per cent as crude prices climbed after major producers agreed to extend a deal on record output cuts.

BP also got a boost as Reuters reported it would cut about 15 per cent of its workforce in response to the coronavirus crisis.

Shares in travel and leisure stocks Carnival, Lufthansa and CineWorld rose between 8 per cent and 9 per cent, topping gainers on the STOXX 600.

Danske Bank jumped 7.5 per cent after Estonian bank LHV agreed to buy its Estonian corporate and public sector credit portfolio.

German card payments company Wirecard dropped 1.7 per cent after prosecutors opened proceedings against its entire management board as part of a market manipulation probe.

North America

The Nasdaq posted a record closing high on Monday, becoming the first of the major indexes to confirm a new bull market, while the S&P 500 ended in positive territory for the year as expectations for a swift recovery from a coronavirus-driven downturn increased.

Rising technology and communication stocks have driven gains in the Nasdaq, which confirmed a new bull market just 16 weeks after coronavirus fears crushed stocks and pushed the US economy into recession.

The Nasdaq has climbed 44.7 per cent from its 23 March bottom. A bull market is confirmed once the index makes a new high and is considered to have begun at the index’s low, according to a widely accepted definition.

The S&P 500 remains about 4.5 per cent below its record high close, while the Dow is about 6.7 per cent below.

A closely watched monthly jobs report on Friday showed an unexpected fall in the unemployment rate, bolstering views that the worst of the economic damage from the virus outbreak was over.

Stocks added to gains late in the session after the US Federal Reserve eased the terms of its “Main Street” lending program.

The energy sector climbed the most among the 11 major S&P sectors, rising 4.3 per cent, as major oil producers agreed over the weekend to extend a deal on record output cuts.

Beaten-down shares of cruise operators Carnival Corp and Norwegian Cruise Line Holdings Ltd continued to recover. The S&P 1500 airlines index jumped 9.9 per cent.

The Dow Jones Industrial Average rose 461.46 points, or 1.7 per cent, to 27,572.44, the S&P 500 gained 38.46 points, or 1.20 per cent, to 3,232.39 and the Nasdaq Composite added 110.66 points, or 1.13 per cent, to 9,924.75.

Investors will also focus this week on the Fed’s two-day policy meeting, ending on Wednesday, where the jobs report will most likely be discussed.

It would be the first meeting since April when Fed Chair Jerome Powell said the US economy could feel the weight of the economic shutdown for more than a year.

is content editor for Morningstar Australia

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