Markets
Global Markets Report - 9 December
Australian shares are set to edge higher following a gain on Wall Street.
Australia
Australian shares are set to edge higher following a gain on Wall Street.
ASX futures were up 24 points or 0.3% at 7205 as of 7:00am on Friday, pointing to a slight gain at the open.
US stocks rose in trade on Thursday, suggesting the S&P 500 could regain some ground after five consecutive sessions of losses triggered by worries about how severe an economic downturn might be.
The S&P 500 advanced 0.76% in the last hours of trade, while the Dow Jones Industrial Average gained 0.5% and the tech-focused Nasdaq Composite added 1.3%.
US stocks have endured a stretch of losses recently, with the benchmark S&P 500 falling for eight of the past nine trading days. Worries that the Federal Reserve will hold interest rates higher for longer have been a key driver of those losses, as traders have considered the possibility that officials next year could raise their benchmark rate above the 5% that is currently expected.
The implications for the US economy remain uncertain. Recent data, including last week's November jobs report, showed that the economy has been more resilient than anticipated. Fresh data Thursday on applications for US unemployment benefits showed just a slight increase from the previous week, offering another signal that the labor market remains tight.
Thursday's move higher in stocks came as a recent rally in Treasury bonds lost steam. The yield on the benchmark 10-year US Treasury note rose Thursday to 3.465% from 3.407% Wednesday. Yields rise when bond prices fall.
Investors are continuing to monitor the Treasury yield curve, or the gap between short- and long-term interest rates. While the yield on two-year Treasury notes has traded higher than the 10-year yield for several months -- a phenomenon known as a yield-curve inversion -- the growing spread continues to worry investors. An inverted yield curve is often seen as a red flag that a recession is looming.
In commodity markets, Brent crude oil slipped 1.10.% to $US76.32 a barrel, gold gained 0.1% to US$1,7788.11.
In local bond markets, the yield on Australian 2 Year government bonds rose to 3.08% while the 10 Year also increased to 3.36%. Overseas, the yield on 2 Year US Treasury notes declined to 4.32%and the yield on the 10 Year US Treasury also declined to 3.49%.
The Australian dollar hit 67.70 US cents up from the previous close of 67.22. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies edged down to 97.74.
Asia
Mainland Chinese stocks ended lower on investors' worries that the economy may be hit by Covid outbreaks following the easing of some Covid-19 restrictions. Software and hardware companies led the declines with Beijing Kingsoft Office Software falling 2.1% and Yonyou Network Technology declining 1.5%. Property stocks and financial companies gained. Gemdale Corp. rose 2.9%, China Vanke was 4.8% higher and Ping An Bank rose 1.6%. The Shanghai Composite Index declined 0.1% to 3169.35, the Shenzhen Composite Index fell 0.3% and the ChiNext Price Index closed 0.1% lower.
Hong Kong stocks ended sharply higher, rebounding from Wednesday's decline, to resume a rally on the back of optimism over China's reopening. The benchmark Hang Seng Index rose 3.4% to settle at 19450.23. Most sectors advanced, with consumption-related companies leading the pack. Sands China jumped 10%, Meituan was up 6.4% and Haidilao grew 6.2%. Analysts say the market would be watching how China deals with an expected infection surge and potential shortage in medical resources, following the looser anti-Covid measures.
Japanese stocks ended lower, dragged by falls in electronics stocks, as concerns persist over the US interest rate outlook. Nidec Corp. fell 2.9% and Sony Group declined 1.9%. The Nikkei Stock Average fell 0.4% to close at 27574.43. Investors are focusing on economic data, including US weekly unemployment claims due later in the day.
Europe
European stocks traded lower as gains for drug shares failed to make up for losses incurred by oil and mining companies following poor Chinese trade data. The pan-European Stoxx Europe 600 dropped 0.3%, the German DAX retreated 0.2%, while the British FTSE and the French CAC 40 both backtracked 0.1%. Pharmaceutical companies Sanofi, GSK, and Haleon gained after a favorable US court ruling relating to heartburn drug Zantac. "European markets have remained on the back foot today after the latest China trade numbers for November saw both imports and exports fall off a cliff," CMC Markets analyst Michael Hewson wrote.
North America
US stocks rose in trade on Thursday, suggesting the S&P 500 could regain some ground after five consecutive sessions of losses triggered by worries about how severe an economic downturn might be.
The S&P 500 advanced 0.76% in the last hours of trade, while the Dow Jones Industrial Average gained 0.5% and the tech-focused Nasdaq Composite added 1.3%.
US stocks have endured a stretch of losses recently, with the benchmark S&P 500 falling for eight of the past nine trading days. Worries that the Federal Reserve will hold interest rates higher for longer have been a key driver of those losses, as traders have considered the possibility that officials next year could raise their benchmark rate above the 5% that is currently expected.
The implications for the US economy remain uncertain. Recent data, including last week's November jobs report, showed that the economy has been more resilient than anticipated. Fresh data Thursday on applications for US unemployment benefits showed just a slight increase from the previous week, offering another signal that the labor market remains tight.
Even with Thursday's gains, investors are focused on upcoming inflation reports -- producer prices on Friday and consumer prices on Tuesday -- and next week's Fed meeting, said Louis Navellier, founder of Navellier & Associates. The expectation is for tame inflation reports and a dovish Fed statement. "We're just treading water, waiting to get all the good news," he said.
Still, a chorus of comments in recent days from major bank executives warning of a looming recession, as well layoffs at companies including Morgan Stanley and PepsiCo, have weighed on sentiment, investors say.
"The last couple days have felt more [focused on] growth concerns," said John Roe, head of multi-asset funds at Legal & General Investment Management. "If you start to see people who arguably should have the best understanding of where the economy is going actually making cuts, then maybe that's a bit more of a signal that growth should be the bigger concern."
