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Global Market Report - 9 June

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

Australian shares set to edge higher at the open, while Wall Street ended mostly flat as investors wait on May's US CPI data due Friday AEST.

The Australian SPI 200 futures contract was up 10 points or 0.14 per cent to 7,314 near 7.30 am Sydney time on Wednesday, suggesting a positive start to trading.

Wall Street stocks have struggled to eke out closing gains as a lack of clear market catalysts keeps institutional investors on the sidelines while retail traders fuel the ongoing meme stocks rally.

The Dow Jones Industrial Average fell 30.42 points, or 0.09 per cent, to 34,599.82; the S&P 500 gained 0.74 points, or 0.02 per cent, at 4,227.26; and the Nasdaq Composite added 43.19 points, or 0.31 per cent, at 13,924.91.

The Australian dollar was buying 77.37 US cents near 7.30 AEST, down from 77.40 at Tuesday's close.

Locally, a record high for the Australian share market did not lead to big gains for investors, who remain wary of inflation data due in China and the US.

The ASX200 notched its record of 7315.6 points early in trade as it continues in unchartered territory.

The index has regularly reset records since May 31 when it climbed higher than pre-pandemic levels.

On Tuesday, information technology shares fared best, higher by 1.45 per cent.

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Next best were shares in healthcare, up 0.82 per cent.

The major category of materials shares dropped 0.39 per cent.

Financials, also a major category, were little changed.

The ASX200 closed higher by just 10.7 points, or 0.15 per cent, to 7292.6.

The All Ordinaries closed up 10.7 points, or 0.14 per cent, to 7542.3.

Burman Invest chief investment officer Julia Lee said inflation data due this week was one likely reason for modest gains.

"No doubt inflation is at the forefront of investors' minds," she said.

"This week is a big gauge."

China will publish consumer and producer inflation data in the next 24 hours, with US data due about one day later.

The figures should show whether prices are surging as major economies recover from the coronavirus pandemic.

Soaring prices and inflation can erode the value of investments.

Ms Lee said the China data would show how rising commodity prices were affecting Chinese producers.

Chinese steel-makers recently pushed iron ore prices to a record of about $US250 per tonne.

She added that the US inflation data would set interest rate expectations.

Soaring inflation could prompt the Federal Reserve to fast-track a rate rise and calm the economy.

Earlier, there were modest moves on US markets.

The Nasdaq had the biggest move, and was the only index higher, up by 0.49 per cent.

In Australia, Victorian leaders said they expect to ease coronavirus restrictions across the state this week.

Two infections were reported as Melburnians endure a second week of lockdown.

Business leaders reported great trading conditions in May, according to a regular survey.

The NAB business conditions index reached a new high for a second consecutive month.

NAB chief economist Alan Oster said this should mean more people getting jobs.

Ratings agency Standard & Poor's upgraded its outlook on the credit worthiness of Australian banks.

The agency improved the ratings from negative to stable.

This included the big four and Macquarie Bank.

On the ASX, NAB and Westpac were first to relay the news and closed higher by less than half a per cent.

ANZ and the Commonwealth closed lower by the same measure.

Fibre network provider Superloop is buying Australia's biggest privately-held internet service provider Exetel for $110 million.

Superloop is raising $100 million through a share sale to help fund the purchase.

The remaining $10 million will come from giving new shares to Exetel owners.

The company asked for trading of its shares to be paused prior to the news.

They last traded for $1.04.

Boral will on Thursday further respond to Seven Group's takeover offer.

Seven, which owns 20 per cent of Boral, in May offered $6.50 for each share it does not own.

Boral rejected the offer.

Shares in the building materials supplier were down 1.01 per cent to $6.85.

In mining, BHP, Fortescue and Rio Tinto all lost about one per cent.

Spot Gold was down 0.3 per cent at $US1893.15 an ounce; Brent crude was up 1.1 per cent to $US72.28 a barrel. Iron ore was up 3.5 per cent at $US209.50.

The yield on the Australian 10-year bond closed down at 1.61 per cent.

Asia

At the close, China's Shanghai Composite index was down 0.54 per cent at 3,580.11.

The Hang Seng index, used to record and monitor daily changes of the largest companies of the Hong Kong stock market, was down 0.02 per cent, to 28,781.38.

Japan's Nikkei 225 Index closed up 0.19 per cent at 28,963.56.

Europe

The pan-European STOXX 600 index, which tracks the return of the largest listed companies across 17 European countries, was up 0.1 per cent at 454.01.

The German DAX fell 0.23 per cent to 15,640.60.

North America

Wall Street stocks have struggled to eke out closing gains as a lack of clear market catalysts keeps institutional investors on the sidelines while retail traders fuel the ongoing meme stocks rally.

The Dow Jones Industrial Average fell 30.42 points, or 0.09 per cent, to 34,599.82; the S&P 500 gained 0.74 points, or 0.02 per cent, at 4,227.26; and the Nasdaq Composite added 43.19 points, or 0.31 per cent, at 13,924.91.

All three major US stock indexes ended the range-bound session near flat or higher, with the S&P 500 and the Dow closing within about 0.5 per cent of record highs.

The tech-laded Nasdaq Composite fared best, with Amazon.com Inc and Apple Inc providing the biggest boost.

"We're waiting for inflation numbers, waiting for more from the (Federal Reserve), waiting for earnings season," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

"There's not a lot motivating the market today."

"We're in this twilight zone until probably right after the Fourth of July, when we see earnings season kick in," Nolte added.

The CBOE volatility index, a measure of investor anxiety, touched its lowest level in over a year.

Smallcaps, once again buoyed by the ongoing meme stock retail frenzy, were outperforming their larger counterparts.

Clover Health Investments seized top billing among meme stocks, surging 85.8 per cent, the biggest percentage winner in the Nasdaq.

Other stocks whose recent explosive trading volumes have been attributed to social media buzz, including GameStop Corp, Bed Bath & Beyond Inc, Workhorse Group and others, ended the session between 7.0 per cent and 12 per cent higher.

"(Meme stocks) are where the action is, but you flip it over and look at crypto and that's a mess," Nolte said.

"Now the meme stocks are taking over from crypto as the place to be and it's all a consequence of very easy monetary policy."

Reports from the US Labor Department and National Federation of Independent Business appeared to confirm a labour shortage even as demand roars back to life, which could put upward pressure on wages, a precursor to wider inflation.

Market participants look to Thursday's consumer price index data for further clues regarding inflation and how it could influence the Federal Reserve's timetable for tightening its monetary policy.

Of the 11 major sectors in the S&P 500, consumer discretionary enjoyed the biggest percentage gain and utilities suffered the largest loss.

Sales of Tesla Inc's China-made electric cars jumped in May by 29 per cent, marking a 177 per cent year-on-year increase, according to the China Passenger Car Association.

The stock erased initial gains on the news to close down 0.3 per cent.

Boeing Co shares were boosted by Southwest Airlines' announcement that it had ordered 34 new 737 MAX aircraft, but the plane maker's shares pared gains to end the session flat.

GameStop, the company most closely associated with the Reddit-driven short squeeze phenomenon, is expected to report quarterly results after markets close on Wednesday.

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

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