Global Market Report - 30 April

Australia

Australian shares are set to weaken despite another record high on Wall St as tech stocks reported strong earnings.

The Australian SPI 200 futures contract was down 16 points, or 0.2  per cent, at 7045 points at 8.30am Sydney time on Friday, suggesting a negative start to trading.

The S&P 500 closed at a record high on Thursday, fuelled by gains in Facebook following its strong earnings report, while Amazon jumped in extended trade following its quarterly report.

The Dow Jones Industrial Average rose 0.71 per cent to end at 34,060.36 points, while the S&P 500 gained 0.68 per cent to 4,211.47. The Nasdaq Composite climbed 0.22 per cent to 14,082.55.

Locally, a radical shake-up of Australia’s power grid has been floated, including mechanisms to ensure enough reliable generation is in place, more closely handling the exit of threatened coal plants and developing a national underwriting scheme to avoid states splintering on energy policy, The Australian reports.

Shares on the Australian market closed on Thursday at their highest level since the start of the coronavirus crash in February last year.

The benchmark S&P/ASX200 index closed higher by 17.6 points, or 0.25 per cent, to 7082.3.

It is less than 100 points from its record close of 7162.49, and a little more than 100 points from its record high of 7197.2.

The All Ordinaries on Thursday closed better by 26 points, or 0.36 per cent, to 7346 points.

Information technology shares were best, and rose 2.25 per cent.

Gold was down 0.4 per cent to $US1774.37 an ounce; Brent oil was up 2.0 per cent to $US68.60 a barrel; Iron ore was down 0.5 per cent at $US191.60 a tonne.

Meanwhile, the Australian dollar was buying 77.73 US cents at 8.30am, down from 77.95 US cents at Thursday’s close.

Asia

China stocks ended the session higher on Thursday, underpinned by gains in financials after some heavyweight companies reported robust first-quarter profits, while some mutual funds’ high allocations to the banking sector also lent support.

At the close, the Shanghai Composite index was up 0.52 per cent at 3,474.90, while the blue-chip CSI300 index was up 0.88 per cent to 5,164.17.

In Hong Kong, the Hang Seng index was up 231.92 points or 0.8 per cent at 29,303.26. The Hang Seng China Enterprises index rose 0.32 per cent to 11,049.88.

In Japan, the Nikkei 225 is up 62 points, or 21 per cent, at 29,053.97.

Europe

European stocks ended lower on Thursday, even as bank shares hit 14-month highs on strong quarterly earnings, as a rise in euro zone bond yields saw investors lock in profits at near-record levels.

The pan-European STOXX 600 index fell 0.3 per cent to 438.77, coming further off a record peak of 443.61 hit last week.

Traders cited the pullback to investors taking in profits after “stellar results”. The STOXX 600 had surged to record highs in anticipation of a strong earnings season, as well as optimism over steady COVID-19 vaccination programs.

Bank stocks were the best performers for the day, as Standard Chartered added another notch to a series of strong earnings reports this week, including those from HSBC and Santander.

The sector was also supported by a jump in euro zone bond yields, after US economic growth and German inflation data came in higher than expected, strengthening the case for a pullback in central bank stimulus. Treasury yields also hit a two-week high.

But the rise in yields put pressure on other European sectors, particularly cyclical stocks that have rallied this year. Travel and leisure stocks, the best-performing European sector this year, fell 0.7 per cent, coming off record highs.

Automobile stocks led losses on Thursday with a 2.6 per cent fall after US carmaker Ford said a global semiconductor shortage may slash second-quarter production by half.

Still, European earnings are seen jumping 71.3 per cent in the first quarter, according to Refinitiv IBES data. Almost a third of the STOXX 600 companies have reported so far, and a higher-than-usual 68 per cent have topped profit estimates.

Consumer goods giant Unilever rose 3.3 per cent as a pick-up in home cooking and a strong economic recovery in China drove better-than-expected quarterly sales.

Finnish telecom network equipment maker Nokia surged 8.4 per cent to the top of the STOXX 600, as growth in sales of network and 5G equipment boosted its earnings.

“The majority of the reported firms sound constructive on the outlook for the remainder of the year,” European equity strategists at Barclays wrote in a note, but added that the high expectations had been priced in.

Among decliners, steel pipe maker Tenaris’ Milan shares fell 6.8 per cent and were among the top losers on the STOXX 600 after the company posted a bigger-than-expected 30 per cent fall in first-quarter core profits.

Danish wind farm developer Orsted fell 6.7 per cent after lower wind speeds and cable problems hit its first-quarter earnings.

North America

The S&P 500 closed at a record high on Thursday, fueled by gains in Facebook following its strong earnings report, while Amazon jumped in extended trade following its quarterly report.

Facebook Inc rallied 7.3 per cent to an all-time high after the world’s largest social network beat quarterly revenue and profit late on Wednesday. It was its biggest single-day gain in five months and easily contributed the most upside to both the S&P 500 and Nasdaq.

The communication services index led the 11 sectors higher with a 2.75 per cent gain, boosted by Facebook and Alphabet.

Apple Inc dipped 0.07 per cent despite late on Wednesday posting sales and profit ahead of Wall Street estimates on strong iPhone and Mac sales.

“Investors are really looking for significantly outsized results, and also outsized guidance as they look ahead to upcoming quarters,” said Greg Bassuk, chief executive of AXS Investments. “We believe a lot of optimism has already been baked into the market, and we are cautioning investors to expect significant volatility.”

In extended trade, Amazon jumped 3 per cent after reporting quarterly sales that beat analysts’ expectations as the e-commerce giant continued to benefit from the COVID-19 pandemic-driven online shopping boom.

Also after the bell, Twitter tumbled 9 per cent following its quarterly report, with the company warning about rising costs and slower growth.

Of the 265 companies in the S&P 500 that have reported so far, 87 per cent have topped analysts’ earnings estimates, with Refinitiv IBES data now predicting a 45 per cent jump in profit growth.

US economic growth accelerated in the first quarter, fuelled by massive government aid to households and businesses, while a labor market report showed 553,000 people filed for unemployment benefits last week, compared with 566,000 in the prior period.

Caterpillar Inc dipped about 2 per cent after it reported higher quarterly earnings but warned of supply-chain bottlenecks.

Drugmaker Merck & Co Inc slid 4.4 per cent after posting a drop in quarterly profit.

McDonald’s rose 1.2 per cent after the burger chain beat Wall Street estimates for quarterly comparable sales and said it returned to pre-pandemic levels of growth.

The Dow Jones Industrial Average rose 0.71 per cent to end at 34,060.36 points, while the S&P 500 gained 0.68 per cent to 4,211.47.

The Nasdaq Composite climbed 0.22 per cent to 14,082.55.

With Reuters