Global Market Report - 17 September

Australia

The ASX is set to edge lower while Wall Street ended mixed amid growing concerns of an economic slowdown in China as creditors circle indebted property giant Evergrande.

The Australian SPI 200 futures contract was down 18 points or 0.2 per cent at 7,424 near 8.00 am Sydney time on Friday, suggesting a negative start to trading.

US stocks mostly fell as investors weighed mixed signals in the latest US economic data and a stock-market pullback in China.

The S&P 500 and the Dow Jones Industrial Average both slipped 0.2%, while the tech-heavy Nasdaq Composite rose 0.1%. Earlier in the session, the Dow industrials had been down more than 200 points for the day. New data added to the cloudy forecast for the economy. The number of Americans who applied for first-time unemployment benefits rose in the week ended Sept. 11 to 332,000, up from 312,000 in the week prior.

The US trading session followed another day of losses in China and Hong Kong, where indexes were hit by gathering fears around an economic slowdown and debt problems with giant property developer China Evergrande Group.

The Australian dollar was buying 73.90 US cents near 8.00am AEST, down from the previous close of 73.94. The WSJ Dollar Index, which measures the US dollar relative to 16 foreign currencies, rose to 87.48.

Locally, the S&P/ASX 200 closed 0.6% higher at 7460.2 despite data showing that the country's jobs market cratered amid Covid-19 lockdowns. The benchmark followed US stocks higher, wiping out the previous day's losses and moving 0.7% higher for the week.

The energy sector was again at the forefront of the price action, rising 1.3% amid higher oil prices. The health sector added 0.9% as Healius rose 3.9%. Telstra rose 0.5% after outlining dividend and earnings-growth aspirations through FY 2025.

Strict lockdowns in major Australian cities prompted a meltdown in the country's job market in August, with 146,300 jobs lost over the month as economic activity cratered. The job losses far exceeded the 80,000 drop expected by economists. Unemployment fell to 4.5% in August from 4.6% in July as fewer people participated in the job market, according to the Australian Bureau of Statistics.

Gold futures fell 2.1% to $US1756.70 an ounce; Brent crude was up 0.3% at $US75.67 a barrel; Iron ore was down 8.1% to $US107.21.

The yield on the Australian 10-year bond rose to 1.26%; The yield on the US 10-year note rose to 1.34%.

Asia

Chinese stocks finished lower on Thursday, weighed by electric-vehicle makers amid heightened regulatory scrutiny after an official called for consolidation in the market earlier this week. The Shanghai Composite Index lost 1.3%, continuing to weaken after last week's rally. The Shenzhen Composite Index fell 2.0%.

Hong Kong shares ended lower, extending their losing streak for the fourth day. The benchmark Hang Seng Index fell 1.5% to settle at 24667.85. Chinese developers led the downturn, as the Evergrande liquidity crisis continued to weigh on investor sentiment. Country Garden fell 7.2%, while its property services unit slumped 11%. China Evergrande ended 6.4% lower.

Macau casino operators continued to decline sharply, after the city's government on Wednesday signaled tighter licensing rules. Sands China fell 8.0% after tumbling over 30% yesterday.

Japan's Nikkei Stock Average ended 0.6% lower, dragged by declines in electronics, shipping, and brokerage stocks that led the recent surge.

Europe

The UK’s FTSE 100 closed up 0.2% to 7,027.48 on Thursday as investors speculated that the UK's traffic light system for managing the coronavirus pandemic might be scrapped. British Airways-owner International Consolidated Airlines, easyJet PLC and Wizz Air Holdings PLC were among London's top performers in the session.

The pan-European STOXX 600 index closed 0.44% higher at 465.95.

North America

US stocks fell Thursday as investors weighed mixed signals in the latest US economic data and a stock-market pullback in China.

Major indexes have lost ground this month as investors worry that stocks may be due for a setback after climbing throughout 2021. Analysts also are considering how the spread of the Delta variant of Covid-19 could damp economic growth.

"It can make consumers less confident to spend, for example, if they have some uncertainty about where the economy is headed based on what happens with case loads," said Lisa Erickson, co-head of the public markets group at US Bank Wealth Management.

The S&P 500 dropped 6.95 points, or 0.2%, to 4473.75. The Dow Jones Industrial Average lost 63.07 points, or 0.2%, to 34751.32. The tech-heavy Nasdaq Composite rose 20.39 points, or 0.1%, to 15181.92.

While many recent sessions have seen losses for stocks, they haven't been large ones: The S&P 500 on Thursday notched its 20th consecutive trading day without a 1% move -- its longest stretch without a move of that size since a span from October 2019 to January 2020, according to Dow Jones Market Data.

New data added to the cloudy forecast for the economy. The number of Americans who applied for first-time unemployment benefits rose in the week ended Sept. 11 to 332,000, up from 312,000 in the week prior.

Meanwhile, retail sales rose 0.7% in August, a sign of resilience despite the Delta-driven surge in Covid-19. Economists surveyed by The Wall Street Journal had expected retail sales to decline.

"This summer and then into the fall, it's all been about Delta," said Jim Smigiel, chief investment officer at asset management firm SEI. "We've been in this back and forth and back and forth, and we're seeing more of that today."

The US trading session followed another day of losses in China and Hong Kong, where indexes were hit by gathering fears around an economic slowdown and debt problems with giant property developer China Evergrande Group.

"Evergrande has brought forward that there are so many vulnerabilities in the China system and it's hard to know where the Chinese government steps in," said Seema Shah, chief strategist at Principal Global Investors. "There is that just weighing on confidence."

Gains by consumer discretionary stocks helped to support the S&P 500, while the materials and energy sectors lagged behind, falling more than 1%.