Global Market Report - 05 November
The ASX is set to rise as US stocks hit new highs and major central banks held dovish line.
Australia
The ASX is set to rise as US stocks hit new highs and major central banks held dovish line.
The Australian SPI 200 futures contract was up 20 points or 0.3 per cent higher at 7,419 near 8.00 am AEST on Friday, suggesting a positive start to trading.
The S&P 500 and Nasdaq Composite extended their record-setting streaks on Thursday, while investors digested the Federal Reserve's latest update on stimulus spending and interest rates.
The S&P 500 rose 0.4% and the tech-focused Nasdaq Composite gained 0.8% in the sixth consecutive record close for both indexes. The Dow Jones Industrial Average fell 0.1%, breaking a five-day winning streak to end at the Dow's second-highest close in history.
The Australian dollar was buying 73.97 US cents near 8.00am AEST, down from the previous close of 74.44. The WSJ Dollar Index, which measures the US dollar against 16 other currencies, rose to 88.66.
Locally, the S&P/ASX 200 closed 0.5% higher at 7428.0 despite a slump in energy stocks.
The financials and technology sectors, however, were standouts, rising 1.0% and 1.2%, respectively. The major banks closed between 0.2% and 1.4% higher, while Macquarie rose 1.3%.
In the energy sector, Beach Energy fell 5.2% after its CEO resigned, Worley lost 3.2% and Santos closed 3.1% lower.
Private health insurer Nib rose 5.8% after announcing that it had seen an 8.5% revenue increase in 1Q.
Domino's Pizza Enterprises lost 18% after its latest trading update showed a slowdown in sales in Japan.
The Reserve Bank and the Prudential Regulation Authority announced Thursday they will conduct more climate change analysis and research, and have committed to sharing the knowledge gained with other central banks and regulatory agencies.
Gold futures rose 1.7% to $US1793.50 an ounce; Brent crude slipped 0.4% to $US81.70 a barrel.
The yield on the Australian 10-year bond was down at 1.82%; The US 10-year Treasury note fell to 1.52.
Asia
Chinese stocks finished higher, with gains led by renewable-energy sectors and liquor makers. Solar-panel maker LONGi Green Energy rebounded 1.6% after slumping on Wednesday, and wind-turbine maker Xinjiang Goldwind surged 10%. The Shanghai Composite Index rose 0.8%, the Shenzhen Composite Index gained 1.3% and the ChiNext Price Index ended 1.1% higher.
Hong Kong shares ended higher, snapping seven consecutive sessions of losses amid broad-based gains. The benchmark Hang Seng Index closed up 0.8% while the Hang Seng Tech Index gained 1.6%. Sentiment may have been supported by hopes that Hong Kong will ease border restrictions.
The Nikkei Stock Average ended 0.9% higher supported by electronics and financial stocks. Fuji Electric and Toshiba each advanced 4.1%, while Hitachi added 1.8%. Other notable gainers included Toyota Motor, which gained 0.7% after raising its FY net profit view.
Europe
European markets ended higher as the oil cartel OPEC declined to increase production against the urging of the US and others. The pan-European STOXX 600 index, which tracks the performance of companies across 17 European companies, rose 0.4%.
In London, the FTSE 100 closed 0.4 higher% after the Bank of England surprised markets by keeping rates on hold. Bonds rallied on the news, sending yields on government debt around the world lower.
North America
The S&P 500 and Nasdaq Composite extended their record-setting streaks on Thursday, while investors digested the Federal Reserve's latest update on stimulus spending and interest rates.
The S&P 500 rose 0.4% and the tech-focused Nasdaq Composite gained 0.8% in the sixth consecutive record close for both indexes. The Dow Jones Industrial Average fell 0.1%, breaking a five-day winning streak to end at the Dow's second-highest close in history.
Investors were absorbing the Fed's Wednesday announcement that it would start scaling back its pandemic-driven bond buying. The Fed's plans were telegraphed ahead of time, said Mark Grant, the chief global strategist at B. Riley Securities, and more importantly, Fed officials didn't talk about hiking interest rates.
"The markets saw this as basically a kind of neutral move, even though they are cutting some," he said.
With the Fed news out of the way, equities investors have turned their attention back to corporate profits. A strong earnings season so far has shown that Americans are still eager to pay for companies' products and services, curtailing worries about the effect of higher prices.
Shares of Qualcomm gained $17.63, or 13%, to $156.11 after the mobile-phone chip company posted record quarterly sales and forecast further growth powered by surging demand for 5G smartphones. Tesla shares edged up $16.05, or 1.3%, to $1,229.91. The Wall Street Journal reported that the automaker and Hertz are negotiating over how quickly the rental-car company will receive deliveries from a bulk order of 100,000 Tesla vehicles.
Merck shares rose $1.86, or 2.1%, to $90.54 after U.K. health regulators cleared a Covid-19 drug it developed with partner Ridgeback Biotherapeutics. Moderna shares plunged $61.90, or 18%, to $284.02 after it cut its forecast for full-year 2021 Covid-19 vaccine deliveries, citing longer delivery lead times for international shipments.
Even with the reduction in the Fed's pandemic-driven stimulus, investors say the bond-buying program and low interest rates will continue to support stocks. Fed Chairman Jerome Powell on Wednesday played down the prospect of an imminent turn to raising interest rates.
"This liquidity being pumped into the market is the single most powerful force on earth," said Hani Redha, a portfolio manager at PineBridge Investments. "And yes, yesterday we got an announcement that the force is going to get weaker but even then you still have this force that is lifting the market."
Still, inflation concerns are clearly on investors' minds. After the Fed announcement, traders stuck with wagers on stubbornly high inflation. Rising prices also feed into other issues, like supply-chain problems and a tight labour market.
"The cost of going to the grocery store and filling your car with gas is the biggest issue right now," said Mr. Grant, of B. Riley Securities.
Fresh figures showed that 269,000 Americans applied for first-time unemployment benefits in the week ended Oct. 30, down from the week prior. Claims have fallen over the past few weeks.