Global Market Report - 26 August

Australia

Australian shares are set to fall after a mixed night on Wall Street, marked by a fall in Apple stock and upbeat news on trade and a vaccine.

The Australian SPI 200 futures contract was down 34 points, or 0.55 per cent, to 6,094 points at 8.30am Sydney time on Wednesday, suggesting a negative start to trading.

The S&P 500 and the Nasdaq hit all-time closing highs on Tuesday, but a drop in Apple stock capped gains from positive developments in US-China trade and fresh progress in the medical battle against the coronavirus pandemic.

The Dow Jones Industrial Average fell 60.02 points, or 0.21 per cent, to 28,248.44, the S&P 500 gained 12.34 points, or 0.36 per cent, to 3,443.62 and the Nasdaq Composite added 86.75 points, or 0.76 per cent, to 11,466.47.

The S&P/ASX200 benchmark index reached a five month high of 6,199.2 points earlier on Tuesday, then tapered off and finished up by 31.8 points, or 0.52 per cent, to 6,161.4. The All Ordinaries index closed higher by 31.7 points, or 0.5 per cent, to 6,332.0.

In local results, Cleanaway reported a statutory profit after tax of $112.6 million, down 6.6 per cent on a year ago. On an underlying basis, full year net profit rose 8.7 per cent to $152.9 million.

Gold was down 0.1 per cent to $US1,927.48 an ounce; Brent oil was up 1.8 per cent to $US45.92 a barrel; iron ore was down 1.8 per cent to $US122.99 a tonne.

Meanwhile, the Australian dollar was buying 71.93 US cents at 8.30am, up from 71.76 US cents at Tuesday’s close.

Asia

Shares on China's tech-heavy ChiNext board rallied for the second trading day on Tuesday as investors cheered the latest reform and relaxation of the bourse's listing and trading rules. 

At the close, the blue-chip CSI300 index was up 0.13 per cent, with its consumer staples sector up 1.85 per cent, while utilities index was down 1.75 per cent. The Shanghai Composite index was down 0.36 per cent at 3,373.58

Hong Kong shares closed lower on Tuesday, dragged down by healthcare and property stocks. 

The Hang Seng index ended down 65.36 points or 0.26 per cent at 25,486.22. The Hang Seng China Enterprises index shed 0.44 per cent to close at 10,291.85.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 1.38 per cent, while Japan's Nikkei index closed up 1.35 per cent.

Europe

European shares fell on Tuesday, hurt by losses in British blue chips, while mixed economic data and continued growth in novel coronavirus cases cut short optimism over a possible covid-19 treatment.

The pan-European STOXX 600 index closed down 0.3 per cent as Monday’s gains ran out of steam, putting the benchmark comfortably within its trading range since mid-May.

It had gained on Monday after the US authorised the use of blood plasma from patients who have recovered from covid-19 as a treatment.

Heavyweight British resource stocks were among the biggest drags on the index, due to strength in the pound weighing on their export margins.

The STOXX 600 is still some 15 per cent off a pre-pandemic record high, as a recovery from March lows stalled in the face of resurgent covid-19 cases and sluggish economic growth. Data last week showed business activity faltering in the region.

Markets had initially gained as top US and Chinese trade officials reaffirmed their commitment to the Phase 1 trade deal despite diplomatic rifts between the two countries.

The trade-sensitive German DAX closed flat after data showed Europe's largest economy contracted by a record 9.7 per cent in the second quarter, but marked a minor upward revision from an earlier estimate of minus 10.1 per cent.

Other data showed German business morale improved more than expected in August.

An unexpected drop in US consumer confidence also weighed, as it pointed to a likely stalling in the world’s largest economy.

Among individual movers, shares of AstraZeneca rose 0.2 per cent after the British drugmaker said it had started testing an antibody-based cocktail for the prevention and treatment of covid-19.

Technology stocks were among the biggest gainers on the day. Aveva Group rose 7.2 per cent after announcing a deal to buy OSIsoft, a privately held maker of industrial software, for an enterprise value of US$5 billion ($7 billion).

LVMH gained 0.9 per cent after a source told Reuters the French luxury goods giant and US jewellery chain Tiffany will give themselves another three months to complete their US$16.2 billion ($22.5 billion) tie-up.

SAS jumped 10.1 per cent after the airline said it was expecting to complete a 14 billion Swedish crown ($2.2 billion) recapitalisation plan to counter the effects of the pandemic by November.

North America

The Dow, which has yet to reclaim its February high, ended the session lower.

Apple Inc weighed heaviest on all three indexes, its stock retreating 0.8 per cent days ahead of its 4-to-1 stock split.

That split, which will reduce Apple’s weight in the Dow, prompted a reshuffle in the blue-chip industrial average, with Salesforce.com replacing Exxon Mobil Corp, Amgen Inc taking Pfizer Inc’s spot, and Raytheon Technologies Corp ousted by Honeywell International Inc.

Salesforce.com, Amgen and Honeywell shares advanced 3.6 per cent, 3.2 per cent and 5.4 per cent, respectively.

Trade officials in Washington and Beijing reaffirmed their commitment to Phase One of a bilateral trade deal, but goodwill between the countries soured as China called a US spy plane’s flight through a no-fly zone a “naked provocation.”

British drugmaker AstraZeneca has begun trials of its antibody-based drug for the treatment and prevention of covid-19, the latest development in a global race to combat the pandemic.

On the economic front, the Conference Board’s Consumer Confidence index plunged to a 6-year low this month, while a report from the Commerce Department showed sales of new homes in July surged to a more than 13½-year high.

Of the major sectors in the S&P 500, six ended the session higher, with communications services enjoying the largest percentage gain and energy falling the most.

American Airlines Group Inc dropped 2.2 per cent after announcing it would lay off 19,000 employees in October unless the government extends airline payroll aid.

Electronics chain Best Buy Inc beat analysts’ second-quarter sales expectations but warned of a current quarter slowdown following the work-from-home demand surge. Its shares fell 4.0 per cent.

Medtronic rose 2.5 per cent after the medical device maker’s quarterly profit beat consensus. The company said a revival in elective surgeries was boosting demand.

Salesforce.com jumped over 7 per cent in extended trading after posting results.