Global Market Report - 4 October
Australian shares are set to open higher after Wall Street rallies.
Australia
Australian shares are set to edge higher after Wall Street rallied at the start of Q4. Oil also rallied on the news that OPEC+ is set to consider its most drastic production cut since the pandemic.
Brent crude, the global oil benchmark, rose 4.4% to $88.86 a barrel.
ASX futures were up 102 points or 1.62% at 6554 as of 7:00am on Tuesday, pointing to a gain at the open.
US stocks started the new quarter higher, a tentative sign of relief for investors after a long and punishing stretch of down days. The Dow Jones Industrial Average climbed 2.7%. The S&P 500 added 2.6% and the Nasdaq Composite rose 2.3%. The broad-based gains came after stocks closed out a losing week, month and quarter on Friday, when all three indexes closed at their lowest levels of the year.
Stocks have sustained deep losses for the first nine months of the year as central bank officials have increasingly made clear that interest-rate increases and monetary tightening will continue. The Dow last week fell into a bear market, a decline of 20% or more from a recent high.
Investors are considering a combination of factors that have added to nervousness about the global economic backdrop and financial stability. OPEC and its allies are weighing a production cut to bolster prices. A U.K. economic plan recently caused a selloff in bond markets that rippled to pension funds.
"There are so many tensions and crises currently coming together," said Carsten Brzeski, ING Groep's global head of macro research. "That's leading to enormous volatility and uncertainty in markets."
In commodity markets, Brent crude oil jumped 4.43% to $US88.91 a barrel, gold edged up 2.3% to US$1,698.79
In local bond markets, the yield on Australian 2 Year government bonds rose to 3.45% while the 10 Year rose to 3.89%. Overseas, the yield on 2 Year US Treasury notes rose to 4.12% and the yield on the 10 Year US Treasury notes was up at 3.66%.
The Australian dollar hit 65.09 US cents up from the previous close of 63.99. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 103.37.
Asia
The Shanghai stock exchange is closed this week.
Japanese stocks end higher, led by gains in semiconductor and auto stocks, following selloffs last week amid concerns about the global economic outlook. Tokyo Electron gains 4.6% and Toyota Motor climbs 3.5%. The Nikkei Stock Average rises 1.1% to 26215.79. USD/JPY is at 144.89 after briefly rising above the 145.00 level for the first time since the Japanese government intervened in the market on Sept. 22. The pair was at 144.72 late Friday in New York. Investors are focusing on eurozone and US manufacturing-sector activity data due later in the day. The 10-year Japanese government bond yield falls half a basis point to 0.240%.
Hong Kong stocks ended the session lower, as the market lost momentum after briefly climbing into the green in morning trade. The benchmark Hang Seng Index fell 0.8% to settle at 17079.51. Chinese banks were among the top decliners, as investor concerns rose in part over Beijing's latest move to encourage state-owned banks to provide credit support to the real-estate sector. Postal Savings Bank of China slid 10%, China Merchants Bank was down 2.5% and Harbin Bank shed 2.4%
Europe
European stocks rose, recovering from earlier losses as US stocks rallied at the start of 4Q. The pan-European Stoxx Europe 600 rose 0.8%, the German DAX added 0.8% and the French CAC 40 gained 0.6%.
"Today's volatility seems to be mostly due to the prospect of a record oil output cut from OPEC+ countries this week, with indication that more than 1 million barrels a day could be slashed," ActivTrades analyst Pierre Veyret wrote.
In London, the FTSE 100 closed up 0.2% at 6,908.76 points after last week's volatile session in response to the UK’s plan for sweeping tax cuts to be funded by borrowing.
The session's top risers were BT Group PLC, Fresnillo PLC, B&M European Value Retail SA, closing up 4.4%, 3.8% and 3.7%, respectively. Scottish Mortgage Investment Trust PLC, Endeavour Mining PLC and Haleon PLC, on the other hand, were the index's top fallers, closing down 2.3%, 3.5% and 3%, respectively.
North America
US stocks started the new quarter higher, a tentative sign of relief for investors after a long and punishing stretch of down days.
The Dow Jones Industrial Average climbed 2.7%. The S&P 500 added 2.6% and the Nasdaq Composite rose 2.3%. The broad-based gains came after stocks closed out a losing week, month and quarter on Friday, when all three indexes closed at their lowest levels of the year.
Stocks have sustained deep losses for the first nine months of the year as central bank officials have increasingly made clear that interest-rate increases and monetary tightening will continue. The Dow last week fell into a bear market, a decline of 20% or more from a recent high.
Investors are considering a combination of factors that have added to nervousness about the global economic backdrop and financial stability. OPEC and its allies are weighing a production cut to bolster prices. A U.K. economic plan recently caused a selloff in bond markets that rippled to pension funds.
"There are so many tensions and crises currently coming together," said Carsten Brzeski, ING Groep's global head of macro research. "That's leading to enormous volatility and uncertainty in markets."
Still, some investors see more upside for stocks going into the final stretch of the year. "I believe the market will end the year higher than where we are today," said Andrew Slimmon, US equity portfolio manager at Morgan Stanley Investment Management.
Corporate earnings have been positive but expectations for earnings have been low, which makes for a very good setup for stocks, Mr. Slimmon said. He expects to see more favorable inflation data as commodity prices have come down, and stocks have a long tradition of rallying after midterm elections. The Federal Reserve, which has been raising interest rates to curb decades-high inflation, also could soften its tone next year, he added.
"If the Fed were actually to back off at some point, there are some stocks that are down so much that it could actually go the other way," Mr. Slimmon said.
All 11 sectors of the S&P 500 were trading in positive territory, with the energy sector up more than 5%. Marathon Oil posted a 10.6% gain. Dominion Energy and ConocoPhillips added 2.9% and 8%, respectively.
Shares of Tesla slipped 8.6% after quarterly vehicle deliveries for the electric-car maker fell short of analysts' forecasts.