Markets
Global Markets Report - 23 January
Australian shares are set to gain today after US indices rallied on Friday.
Australia
Australian shares are set to gain today after US indices rallied on Friday. Strong earnings reports released last week encouraged investors.
ASX futures were 26 points or 0.35% higher as of 8:00am on Saturday, suggesting a rise at the open.
US stocks rose on Friday, boosted by some solid corporate earnings, though two major indices finished the week with losses after being weighed down by concerns about a slowing economy.
The S&P 500 index rose 1.89%, its first positive day after three days of declines. The Nasdaq Composite gained 2.66%, led higher by shares of Netflix and Alphabet. The Dow Jones Industrial Average was up 1.00%, about 330 points.
The Dow and S&P still suffered their first weekly declines of the new year, falling 2.7% and 0.7% respectively. The Nasdaq's rise on Friday gave the index a third consecutive week of gains.
Stocks have been pressured in recent days by sobering pictures painted by companies as they report their financial results for the final three months of 2022. News from some big companies late Thursday and early Friday provided a reprieve from that negativity.
In commodity markets, Brent crude oil added 1.82% to $US87.73 a barrel while gold edged 0.23% lower to US$1,927.86.
In local bond markets, the yield on Australian 2 Year government bonds edged up to 2.92% while the 10 Year rose to 3.39%. Overseas, the yield on 2 Year US Treasury notes declined to 4.17% and the yield on 10 Year US Treasury notes dropped to 3.49%.
The Australian dollar increased to 69.68 US cents from its previous close of 69.07. The Wall Street Journal Dollar Index, which tracks the US dollar against 16 other currencies, edged down to 95.11.
Asia
Chinese shares closed higher on Friday ahead of the Lunar New Year holiday. The benchmark Shanghai Composite Index rose 0.8% to 3264.81, the Shenzhen Composite Index gained 0.6% to 2125.81 and the ChiNext Price Index added 0.6% to 2585.96. Aviation stocks advanced amid expectations of a surge in domestic travel during the upcoming holiday. ANZ said in a note that the number of scheduled domestic flights is set to climb by more than 40% in late January. China Eastern Airlines was 0.9% higher, China Southern Airlines advanced 1.9% and Air China rose 0.7%. Markets in China will be closed next week for the Lunar New Year.
Hong Kong's Hang Seng Index built on early gains to end 1.8% higher at 22044.65, tracking a broad rise in Asian equity markets ahead of the Lunar New Year holiday. Energy stocks led gains, with Cnooc advancing 5.4%, PetroChina rising 3.6% and China Petroleum & Chemical Corp. climbing 3.2%. Consumer shares were higher, likely supported by expectations of holiday-driven demand. Sportswear company Li Ning rose 2.5%, hot-pot restaurant operator Haidilao added 2.7% and computer maker Lenovo gained 2.1%. Hong Kong markets will reopen on Thursday.
Japan’s Nikkei 225 index reversed its early losses to end higher on Friday, as sentiment was boosted by higher UK futures after Wall Street losses overnight and a weaker yen. The Nikkei ended the day up 0.56% at 26,553.53, having fallen as much as 0.3% earlier in the session tracking Wall Street losses. The index posted a 1.66% weekly gain.
India's benchmark Sensex index fell 0.39% to close at 60621.77, dragged by losses in consumer goods and financial stocks amid concerns over a global economic slowdown. Hindustan Unilever slipped 3.8%, Asian Paints (India) dropped 2.8% and Nestle India was down 2.4%. Bajaj Finance declined 2.6% and Bajaj Finserv lost 1.6%. Hindustan Zinc slid 6.5% after its Q3 net profit dropped 20% on year. Meanwhile, IndiaMART InterMESH rose 1.6% after its Q3 net profit climbed 61% on year.
Europe
European stocks rose on Friday as investors reacted positively to news from the tech sector. The pan-European Stoxx Europe 600 gained 0.35%, the French CAC 40 advanced 0.63%, and the German DAX climbed 0.76%.
Stocks have rounded off the week with gains and the tech sector has risen the most, according to IG. "There was a faint echo of the post-pandemic glory days for tech stocks this afternoon as the Nasdaq 100 led the way higher for indices following well-received earnings from Netflix and job cuts at Google," IG analyst Chris Beauchamp wrote.
Great Britain’s benchmark FTSE 100 index closed 0.30% higher on Friday after a strong start to the year, CMC Markets UK's chief market analyst Michael Hewson said in a note. While there may have been some profit taking in the week, Friday saw a modest rebound after earlier setbacks, he noted. "The FTSE 100 is lagging behind its European counterparts today, having found itself held back this week by weakness in some of its bigger cap components like Shell, Unilever and AstraZeneca," Hewson commented.
North America
US stocks rose on Friday, boosted by some solid corporate earnings, though two major indices finished the week with losses after being weighed down by concerns about a slowing economy.
The S&P 500 index rose 1.89%, its first positive day after three days of declines. The Nasdaq Composite gained 2.66%, led higher by shares of Netflix and Alphabet. The Dow Jones Industrial Average was up 1.00%, about 330 points.
The Dow and S&P still suffered their first weekly declines of the new year, falling 2.7% and 0.7% respectively. The Nasdaq's rise on Friday gave the index a third consecutive week of gains.
Stocks have been pressured in recent days by sobering pictures painted by companies as they report their financial results for the final three months of 2022. News from some big companies late Thursday and early Friday provided a reprieve from that negativity.
On Friday, Google parent Alphabet joined a chorus of tech giants announcing massive job cuts, amplifying fears that the UK may slip into a recession this year. Microsoft also announced layoffs earlier this week. Alphabet shares rose 5.3%. Netflix's stock jumped 8.5% after the streaming giant reported strong subscriber growth that handily topped expectations.
"This week could be pivotal," said Seema Shah, chief global strategist at Principal Asset Management. "It seems like the market narrative is shifting from a focus on the Fed at the end of its hiking cycle to the growth slowdown."
Markets started 2023 strong, boosted by hopes that inflation would continue to slow and that the Federal Reserve and other global central banks would pause interest rate campaigns in the coming months. Weak economic data and mixed earnings reports this week eroded some of that optimism.
Fresh economic data came on Friday, when the National Association of Realtors said that in 2022 sales of previously owned homes in the UK, which make up most of the housing market, fell to their lowest level since 2014.
Investors also remain broadly at odds with the Fed over how quickly the central bank will begin to ease monetary policy, a mismatch analysts believe could fuel more volatility in markets this year. Some investors are betting that the Fed will start to cut rates later this year, expectations that Fed officials have recently pushed back on.
Stocks in Toronto closed higher on Friday. Inflation, which was at 6.3% in December, remains a focus ahead of a rate decision by the Bank of Canada next week. Most sectors were pointing upward after Friday’s session, led by process industries and health tech, while utilities, consumer non-durables and consumer durables were the only declining sectors. BRP Inc., which houses the Ski-Doo and Sea-Doo brands, said it will build a new boat-manufacturing facility in Chihuahua City, Mexico, to better tap into demand for its marine products. Canada's S&P/TSX Composite Index gained 0.75% to close at 20494.81.
